Over the past two decades, the talk among people in Israel's biomed industry would from time to time touch on the "Monitor Report" of 2001, which surveyed the challenges in the industry. "Nothing's changed," they would say to each other, "No, nothing's changed." But in the past few years, it seems that something has changed after all.
The report by Monitor Company proposed steps that the government could take to establish a prosperous biomed industry. The measure of prosperity? The emergence of large Israeli companies in the field and the entry of major global companies into Israel through development centers.
Several government initiatives have attracted international pharmaceuticals companies to Israel. The technological incubators in their privatized format boast of franchisees such as Johnson & Johnson, Takeda, and Amgen. Major companies like Roche and Bayer regularly scout early-stage technologies in Israel, while drug production company Lonza has set up a development center in Haifa. Now, the AION Labs incubator has entered the picture. AION Labs is a joint project by pharmaceuticals companies Teva, Merck Serono, Pfizer, and AstraZeneca, biotech investment fund IBF, and Amazon Web Services (AWS), which offers its cloud computing services.
The incubator is not focused on classic drug development, but, as incubator CEO Mati Gill puts it, "development of the drugs of the future," based on digital computing capabilities.
When the Monitor Report was written, the field was known as "bioinformatics", and it was held to be the future for pharmaceuticals. Special courses in it were even set up at some universities. The problem with the future is that it can take time to arrive. It seems that now, the field has matured in a way that justifies commercial-academic collaboration between Israeli research and leading global companies.
"I give a great deal of credit to the government for setting up this incubator," says Gil. "This time, they did something right. It's a pretty successful example of creativity on the part of the Innovation Authority, which would not have been possible in the past, when it was still called the Chief Scientist's Office and was attached to the government. Today, it's a genuine private-state partnership that can think like a business and create a variety of solutions. Here, they developed both the strategy and the smart, advanced investment tool that really did suit the pharma companies. The state rightly identified computer science as a field in which Israel had an advantage."
On the face of it, Israel also has an advantage in classic drug research.
Gil: "It does, but to set up a center like that in Israel is also a matter of infrastructure, intellectual property rights, incentives, and regulatory stability. Pharma companies are also looking for experienced talent. We have inexperienced talent. That is what we have been saying repeatedly in the sector all these years. We don't have manpower that has actually worked in laboratories on drugs that have reached the market. It isn't just us. After all, there aren't all that many pharma centers in the world. There's Boston, San Francisco, Britain, Germany, and Switzerland. Even Takeda no longer develops drugs in Japan, but rather in the US.
"All the same, the fact that so many talents in our academic institutions have not in the end led to the establishment of an industry here amounts to a market failure, and that's what we've come to fix."
Raising the chances of innovation
AION Labs has recruited as a partner and consultant Biomed X, which was founded to build up Heidelberg as a European biomed center, and, according to Dr. Christian Tidona, its founder and managing director, it has succeeded in doing that. In the past, Tidona initiated several similar projects. He is also a member of the International Board of the Weizmann Institute of Science.
"In order to set up a drug development community such as exists in Boston," he says, "Israel needs to attract or bring home experienced talents from around the world who will found companies here and won’t be in a hurry to sell them, but will enable them to function as stable companies over several generations, like Merck in Germany, which is still a privately-held company."
How was the group of companies taking part in the initiative put together?
Gil: "When the Innovation Authority issued the call for proposals, it naturally approached Teva and Merck, because these are companies that already have activity in Israel. Teva is of course Israeli, and Merck is one of the few companies that run a drug development center in Israel, and it also has its own incubator here, not financed by the Innovation Authority. Teva and Merck's managers talked about it, and reached the conclusion that if we went into this tender together, it would actually not be the most helpful thing for the Israeli biomed ecosystem, since we were already here. So each of the companies put together its own consortium with other companies.
"At a certain stage, we realized that a venture like this needed the support of many pharma companies, because none of them could or should build a tool like this alone. This is a pre-competition tool, which is meant to accelerate the activity of all the companies together, and one of the advantages of a venture like this is the ability of the companies to learn from one another. We gained the impression that the more major companies there were in the venture the better it would be, and that it also had to have venture capital backing, and we decided to band together."
What do the companies seek to achieve?
Tidona: "The intention is to set up from zero, out of the science, companies that will develop the tools most needed for developing drugs, according to the needs defined by the drug companies. Innovation generally happens at the interface between established fields, such as between IT and biology, or between academic research and industry. And we're building the interface in order to raise the chances of innovation."
Gil: "The advantages of AI and computational technology for the pharma world - that's something that still has to prove itself clearly."
Tidona: "Startup companies in this area usually have good entrepreneurs with a marvelous algorithm. When they come to the pharma companies and say 'Look what we've done', the companies say, 'Not interesting'. We guide the startups towards the most urgent challenges for the pharma companies.
"Another challenge is that even if the idea is good and necessary and the algorithm is successful, it needs validation on real data. With us, the entrepreneurs will receive the data and will gain experience in a real validation process of the pharma companies. Entrepreneurs coming from the world of technology or from academic institutions don't really understand in depth what that involves."
For their part, Tidona says, the pharma companies bring to the table problems that they haven't managed to deal with themselves. "The problems are too great for one pharma company, and that's why they're coming together. It took time for us to persuade them to create with us something that in the end none of them will necessarily own. The owners will be independent companies that will continue to exist."
"To develop capabilities for everyone's benefit
The accepted wisdom is that companies that develop new biological or digital tools for developing drugs must also develop a product of their own in order to achieve the full value. All the companies that we spoke to in this field, including the newer ones, think so.
Tidona: "Absolutely. At the beginning, these companies will depend on collaborations with the existing companies, and after that they'll have their own products."
So they'll compete with the pharma companies?
"Not exactly, because it's an ecosystem. If they really develop these capabilities, everyone will benefit. Ultimately, it’s the Genentech model. Today, Genentech belongs to Roche, but before that it created a whole world of biotechnology from which all the drug companies benefit."
What's the significance of the venture capital fund in the mix of founders?
Gil: "We sought its know-how in setting up a good startup from day one. Beyond that, IBF is a fund with a wealth of connections with experienced venture capital and biotech people all over the world, and its people really know Israel, with all its advantages and disadvantages."
Tidona: "It's easier to obtain venture capital investment in a company in which a well-known and highly-regarded fund has already invested."
We're looking for scientists at the start of their careers"
Tidona says that defining the big challenges of the pharma companies started with an open question to them: What do you think artificial intelligence and data will do for us in the next five to ten years, across the whole spectrum - from identifying new molecules to clinical trials?
"We held workshops with each of the companies separately, three to five hours with each, with 30-40 senior people from the company taking part," says Tidona. "We used the format developed at Biomed X, which facilitates finding their main challenges within a short time."
Gil: "And now Israel has access to this thinking process. No startup by itself could interview drug companies like that."
Of the thirteen challenges eventually submitted to the committee, four were chosen in which there was overlap between the companies. The next stage is that the challenges are presented to the leading research institutes, and proposals are requested, "mainly from scientists at the start of their careers," says Gil.
Why young scientists particularly?
Tidona: "Because more established scientists won’t have the flexibility to take part in our coaching process. But it's not a matter of age. It's the flexibility. When we went through this process in Heidelberg, 120 initiatives came from about 70 countries. I'm sure that Israel will be no less attractive."
Tidona: "I love this place. I believe that we'll receive proposals from returning scientists, but also from many others. We'll invite them to a boot-camp, and we'll form five groups with a founding entrepreneur more advanced in his or her career and a younger co-founder. We have a nice exercise that enables them to find who they want to work with. It's called 'my work, my life, my longings', and the algorithm matches them up.
"On the second day, they work in these groups, and we push them out of their comfort zones, with lack of sleep, criticism, but also pleasant trips that will make them fall in love with Israel. And if everyone agrees on a winner, he or she will be chosen and will receive a laboratory in Rehovot for four years, with close mentoring, access to infrastructures and data, and a reality check from the pharma companies on their progress in comparison with what's in the market."
The projects will receive $1 million for two years, after which the successful projects will receive a management envelope and another million dollars at least. More, if the venture warrants it.
"Israel is a hungry place'
Which challenges were chosen?
Gil: "We're revealing them gradually. The first is designing antibodies from zero. A platform that if you tell it against what you want an antibody, it will give you the make-up immediately. Today, the process consists first of all of inoculating an animal with an antigen, then producing the B cells from it (the cells responsible for producing antibodies - G.W.), and then you try to understand what the immunization was and try to turn it into something for humans.
"That mostly does not lead to an antibody with strong binding ability or a very specific antibody. Even when there's an antibody on the market, the attempt to produce a bio-similar antibody, antibody 'generics', is something that can take years and many millions of dollars. At present there's nothing really close to providing a computerized solution to this problem. We don’t have pretensions to providing the perfect solution, but something better than exists today. Further challenges will be revealed every two months, and will cover the value chain up to clinical trials."
Tidona: "This is the right time and the right place for a venture like this. Five years ago, it wouldn't have been possible. As an entrepreneur, I always thought about what would be the next place in which I would implement the Biomed X approach after Heidelberg. Israel is a better place to do that than Boston, because Israel is a hungry place."
Published by Globes, Israel business news - en.globes.co.il - on November 11, 2021.
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