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Or: Biology is really hard, and returns to investors in the space have been pretty tame, and taken longer than promised (expected). See commentary by Peter Thie

by warlog 7y ago

Or: Biology is really hard, and returns to investors in the space have been pretty tame, and taken longer than promised (expected). See commentary by Peter Thiel in Zero to One for more on this topic. In response to this reality, one tactic is to create a narrative that sells the vision of biotech as a tech or engineering discipline to an investor audience that is naive about biology and uber bullish on tech eg, this article). "Biology? It's just engineering, we can engineer things, we'll just engineer biology (please invest in us as if we're tech]". Never mind that engineering is a tradition built on minimizing variation, while biology is a science founded on understanding a built-in mechanism for generating variation. "Life finds a way". Indeed. I've been on numerous synbio projects and one thing is certain, evolution is always driving against the engineered design. And by driving against, I mean undoing. Entropy might slowly undue engineering, but mutation and selection? It's an entropic accelerant for engineered outcomes. Also, engineering is about "parts" and synbio is constantly dreaming of building things by putting parts (promotors, genes, etc) together from a catalogue. In reality, biology is interactions, where the expression of almost everything is dependent on the context of all the other parts. So outcomes aren't simply "the sum of the parts". When they are it's for a minority of cases. Finally, as you scale a process (say from a test tube to a 1,000,000L industrial sized fermentation tank, biology almost never cooperates. Biotech's dirty secret is that biology is Not engineering (it is still a discovery science)...but the music is still playing folks, dance on! (Sorry, it's early, I'm still pre caffeinated, and this topic always rankles me).

ohduran 7y ago
"Life finds a way", Jurassic Park jokes aside, was the moral of the whole saga: Thou shall not mess with systems you do not understand. Taleb talks about caution all the time for a reason, complex systems are, indeed, complex.
- TeMPOraL 7y ago
  And here I thought the moral was "thou shall not be stupid or arrogant". The only way we can understand a complex system is by messing with it.
  - zxcb1 7y ago
    At which level of abstraction?
    - TeMPOraL 7y ago
      At any. To verify your models about a system, you need to prod it and see if it responds the way your model predicted. Passive observations alone usually aren't enough to even build a correct model. Whether you're interested in understanding low level mechanics or high-level system behavior, the procedure is the same.
      - zxcb1 7y ago
        This is where ethics come into play
  - wincom 7y ago
    I think there is messing to find out how it works (works best with man-made technology), and there's applying/marketing stuff that we don't yet understand.
    - TeMPOraL 7y ago
      The latter would naturally be dishonest, i.e. malicious. Not (merely) stupid.
  - invalidOrTaken 7y ago
    I like your style.
  - emsy 7y ago
    I agree with you. I don't think you can learn anything without messing with it and it's in our best interest to learn and mess with it. On the other hand I most certainly would not want to see the SV mentality applied to a field that could bring about a global pandemic.
    - 7y ago
buboard 7y ago
I don’t see much issue with it. Today’s investing is faith based. Is it better to invest in WeWork or Uber? Why?
haihaibye 7y ago
Yeah, wake me up with bioinformaticians (computer programming + biology + statistics) make more than computer programmers. It's an incredibly interesting field, but over-hyped, extremely hard and not particularly profitable.
- DrScientist 7y ago
  Yep true. But you also missed out that biotechs are trying to cure/treat serious diseases like cancer etc and not simply trying to sell more advertising.
  - 1996 7y ago
    No good deed goes unpunished!
  - iso1337 7y ago
    This will be an unpopular opinion, but do you think that money could be better spent on other health initiatives like prevention? Is spending 10-100k per month so rich people in developed countries can live a few months longer really that much more moral? Consider that orphan diseases are often not worked on due to either 1) not enough rich people have the disease or 2) only poor people have the disease so it's not worth it. People in developing countries have serious diseases, but there's no money in it so no one is working on it (minus some efforts from people like Bill Gates).
    - fstopmick 7y ago
      I'd be really disappointed if your opinion is unpopular. I completely agree and find it depressing to see how our culture admires Gates as an idol of altruism. He's had impact, sure, in the same way that someone with an infinite river has the ability to extinguish forest fires but extinguishes a few brush fires instead... just enough to outpace his competitors and lock in the perception of being most benevolent. Worst form of social darwinism EVER.
      - throwaway07Ju19 7y ago
etrautmann 7y ago
Have you seen the magic that protein engineers have produced? GCaMP6f for instance? You’re right in that it’s still discovery science and is hard but we are making large strides towards proper engineering in certain domains.
- wademealing 7y ago
  This reminds me of the same discussion back in the late 90's
ArtWomb 7y ago
>>> Entropy might slowly undue engineering Order / disorder transitions constitute a double edged sword. Indeed proteins, dna, rna possess crystalline structure. It may even require decades of microgravity incubation to unlock these oases of stability within the seas of chaos. The great driver in Biotech is that results are immediately tangible. When we achieve the result that a 100 year old human preserves full memory recall and the neuroplasticity of a teenager. That will really be an accomplishment. One worth diverting even a small fraction of the current trillions spent on military hardware to hard tech bio R & D.
Gatsky 7y ago
This seems a fairly narrow view. In my field (oncology), there are many drugs saving lives that are the result of what is engineering in biological systems. Certain immunomodulating antibodies are the most recent example, one of which is earning it's pharma company many billions of dollars a year. Another proven class of drug is conjugating chemotherapy to the back end of an antibody. These drugs have undergone incremental improvement, with the latest versions showing greatly enhanced efficacy. This to me meets the criteria for engineering. Then there are CAR T cells. Researchers in this field actively describe their work as 'immuno-engineering'. Synbio has been disappointing admittedly, but then engineering an organism is orders of magnitude more difficult than any engineering problem in existence. It is bottlenecked by the lack of a truly useful DNA synthesis platform. One day, when you can dial up a genome and have it into a cell in < 24 hours, and do it in a high throughput fashion, things will be very different. This will happen in under 10 years I think.
- maxerickson 7y ago
  An enthusiastic way to look at this is that success will be very uneven in a field that is not well developed. That points towards acceleration.
- aaavl2821 7y ago
  I agree that great advances in biotech have come from bioengineering (all the way back to Genentech, the first biotech company) and I think that a lot of great advances in biotech will continue to come from bioengineering. But the narrative that "biotech is becoming more like software" basically ignores the fact that engineering's impact in biotech is limited by our understanding of biology. The biggest challenge in drug discovery is that most targets arent good, and most disease models and in vitro systems are poorly correlated with clinical outcomes You can engineer all you want, but if you are engineering a drug to optimally bind a target that isnt actually important for disease, all that engineering is wasted. Big pharma companies thought they could "solve" drug discovery with engineering / efficiency improvements in the early days of high throughput screening, but that only works if your biology is correct The exciting thing about checkpoint inhibitors for cancer is that their targets are actually really important in cancer's strategy to avoid the immune system. The engineering work required is very impressive as well and built upon decades of innovation in that field, but the big pharma companies had a lot of that engineering expertise already I believe. Once they learned the importance of PD-1 / PD-L1 they could execute development campaigns using their existing infrastructure
aaavl2821 7y ago
Biotech venture has actually outperformed tech venture in recent years. But the venture firms that have done well are specialist venture funds that only do biotech. I'm writing some detailed articles on the topic, but check out this chart from Previn on the top performing funds from 2007-2015: https://mobile.twitter.com/zavaindar/status/1159660549615116294 https://mobile.twitter.com/zavaindar/status/1159660549615116... All the $100M+ funds on this list are biotech funds: The column group, flagship, orbimed and foresite Tech VCs have seen these returns and want in, but they have not been major players to date. In 2018 less than 10% of series a rounds in biopharma were led by tech VCs [0] These days biotech startups can get very big very fast on comparable amounts as tech startups. But he structure in returns is such that you need more concentrated portfolios and low loss rates to do well I think the narrative about biotech becoming more like tech is a way for tech investors to try to fit more power law driven portfolio strategy into biotech. Bioengineering advances have been incredibly important the last few years, but it is not really correct to compare the pace of product development and value creation in bioengineering to software engineering. I also think it's a bit of a red herring. Biotech VC has done fine on its own. If anything software VCs should take some tactics from biotech funds [0] https://www.baybridgebio.com/blog/top_vcs_2018.html https://www.baybridgebio.com/blog/top_vcs_2018.html
- jwahba 7y ago
  I'd be careful reading too much into data on top performing funds. The law of large numbers makes it so that smaller funds are more likey to outperform (and underperform) since they have higher variance. Couple that with the strong correlation that speciality funds are more likely to be smaller and it's not surprising. A more accurate analysis would involve looking at all VCs and seeing if you can apply those rules in advance: What would your IRR be if you invested in all the specialty biotech funds as a basket?
  - aaavl2821 7y ago
    The small funds on that list are all tech funds. The larger funds are all biotech. Biotech funds are "specialist" but they aren't really small. Biopharma is a top 5 subsector of VC (by some estimates it is the 2nd biggest sector after software) and the largest sector by far of healthcare VC, with $17B+ invested in 2018. Orbimed manages $10B+ (though some of that is public equity). Flagship manages many billions (latest fund was $800M+). Foresite manages over $2B, last fund was $668M. Many other examples I mentioned i was writing a longer post on the topic, that chart is a snapshot. If you invested in biotech VC as a basket recently it would outperform tech [0]. There's more recent data as well but i dont have the link offhand [0] https://lifescivc.com/2016/11/biotech-venture-capital-mythbusting-redux/ https://lifescivc.com/2016/11/biotech-venture-capital-mythbu...
treebornfrog 7y ago
This is spot on, I graduated with a degree in genetics and cannot articulate this any better. Biology is very hard, it's more about discovery and iteration and a lot more deeper than tech. Very few understand this, so it's been amalgamated with tech to promote the narrative.
replicatorblog 7y ago
Veeva raised $4M in VC to build CRM for life sciences and currently has a $21B market cap. It's one of the 15 or so best exits of the last decade. I agree that comparing biology today to transistors in the 1950s might seem hubristic. But even if you don't buy that, I would bet on the notion that there are pretty massive opportunities at the intersection of tech and bio. I work in Boston and there's tremendous activity in the life science space, as traditionally defined. Doesn't seem crazy to believe that market could support many billion-dollar companies that build picks and shovels.
zelly 7y ago
Yup, and this piece had nothing more than the same fluff we have been hearing the past 15 yrs about bio"tech". Until we can literally simulate a biological system in software (then discovering a new drug would be more deterministic), it will always be a discovery discipline, not an engineering one.
- jakeinspace 7y ago
  We're 100 years away from that, at least at human-scale.

by warlog 7y ago

ohduran 7y ago

"Life finds a way", Jurassic Park jokes aside, was the moral of the whole saga: Thou shall not mess with systems you do not understand. Taleb talks about caution all the time for a reason, complex systems are, indeed, complex.

TeMPOraL 7y ago
And here I thought the moral was "thou shall not be stupid or arrogant". The only way we can understand a complex system is by messing with it.
- zxcb1 7y ago
  At which level of abstraction?
  - TeMPOraL 7y ago
    At any. To verify your models about a system, you need to prod it and see if it responds the way your model predicted. Passive observations alone usually aren't enough to even build a correct model. Whether you're interested in understanding low level mechanics or high-level system behavior, the procedure is the same.
    - zxcb1 7y ago
      This is where ethics come into play
- wincom 7y ago
  I think there is messing to find out how it works (works best with man-made technology), and there's applying/marketing stuff that we don't yet understand.
  - TeMPOraL 7y ago
    The latter would naturally be dishonest, i.e. malicious. Not (merely) stupid.
- invalidOrTaken 7y ago
  I like your style.
- emsy 7y ago
  I agree with you. I don't think you can learn anything without messing with it and it's in our best interest to learn and mess with it. On the other hand I most certainly would not want to see the SV mentality applied to a field that could bring about a global pandemic.
  - 7y ago

buboard 7y ago

I don’t see much issue with it. Today’s investing is faith based. Is it better to invest in WeWork or Uber? Why?

haihaibye 7y ago

Yeah, wake me up with bioinformaticians (computer programming + biology + statistics) make more than computer programmers. It's an incredibly interesting field, but over-hyped, extremely hard and not particularly profitable.

DrScientist 7y ago
Yep true. But you also missed out that biotechs are trying to cure/treat serious diseases like cancer etc and not simply trying to sell more advertising.
- 1996 7y ago
  No good deed goes unpunished!
- iso1337 7y ago
  This will be an unpopular opinion, but do you think that money could be better spent on other health initiatives like prevention? Is spending 10-100k per month so rich people in developed countries can live a few months longer really that much more moral? Consider that orphan diseases are often not worked on due to either 1) not enough rich people have the disease or 2) only poor people have the disease so it's not worth it. People in developing countries have serious diseases, but there's no money in it so no one is working on it (minus some efforts from people like Bill Gates).
  - fstopmick 7y ago
    I'd be really disappointed if your opinion is unpopular. I completely agree and find it depressing to see how our culture admires Gates as an idol of altruism. He's had impact, sure, in the same way that someone with an infinite river has the ability to extinguish forest fires but extinguishes a few brush fires instead... just enough to outpace his competitors and lock in the perception of being most benevolent. Worst form of social darwinism EVER.
    - throwaway07Ju19 7y ago

etrautmann 7y ago

Have you seen the magic that protein engineers have produced? GCaMP6f for instance? You’re right in that it’s still discovery science and is hard but we are making large strides towards proper engineering in certain domains.

wademealing 7y ago
This reminds me of the same discussion back in the late 90's

ArtWomb 7y ago

>>> Entropy might slowly undue engineering Order / disorder transitions constitute a double edged sword. Indeed proteins, dna, rna possess crystalline structure. It may even require decades of microgravity incubation to unlock these oases of stability within the seas of chaos. The great driver in Biotech is that results are immediately tangible. When we achieve the result that a 100 year old human preserves full memory recall and the neuroplasticity of a teenager. That will really be an accomplishment. One worth diverting even a small fraction of the current trillions spent on military hardware to hard tech bio R & D.

Gatsky 7y ago

This seems a fairly narrow view. In my field (oncology), there are many drugs saving lives that are the result of what is engineering in biological systems. Certain immunomodulating antibodies are the most recent example, one of which is earning it's pharma company many billions of dollars a year. Another proven class of drug is conjugating chemotherapy to the back end of an antibody. These drugs have undergone incremental improvement, with the latest versions showing greatly enhanced efficacy. This to me meets the criteria for engineering. Then there are CAR T cells. Researchers in this field actively describe their work as 'immuno-engineering'. Synbio has been disappointing admittedly, but then engineering an organism is orders of magnitude more difficult than any engineering problem in existence. It is bottlenecked by the lack of a truly useful DNA synthesis platform. One day, when you can dial up a genome and have it into a cell in < 24 hours, and do it in a high throughput fashion, things will be very different. This will happen in under 10 years I think.

maxerickson 7y ago
An enthusiastic way to look at this is that success will be very uneven in a field that is not well developed. That points towards acceleration.
aaavl2821 7y ago
I agree that great advances in biotech have come from bioengineering (all the way back to Genentech, the first biotech company) and I think that a lot of great advances in biotech will continue to come from bioengineering. But the narrative that "biotech is becoming more like software" basically ignores the fact that engineering's impact in biotech is limited by our understanding of biology. The biggest challenge in drug discovery is that most targets arent good, and most disease models and in vitro systems are poorly correlated with clinical outcomes You can engineer all you want, but if you are engineering a drug to optimally bind a target that isnt actually important for disease, all that engineering is wasted. Big pharma companies thought they could "solve" drug discovery with engineering / efficiency improvements in the early days of high throughput screening, but that only works if your biology is correct The exciting thing about checkpoint inhibitors for cancer is that their targets are actually really important in cancer's strategy to avoid the immune system. The engineering work required is very impressive as well and built upon decades of innovation in that field, but the big pharma companies had a lot of that engineering expertise already I believe. Once they learned the importance of PD-1 / PD-L1 they could execute development campaigns using their existing infrastructure

aaavl2821 7y ago

Biotech venture has actually outperformed tech venture in recent years. But the venture firms that have done well are specialist venture funds that only do biotech. I'm writing some detailed articles on the topic, but check out this chart from Previn on the top performing funds from 2007-2015: https://mobile.twitter.com/zavaindar/status/1159660549615116294 https://mobile.twitter.com/zavaindar/status/1159660549615116... All the $100M+ funds on this list are biotech funds: The column group, flagship, orbimed and foresite Tech VCs have seen these returns and want in, but they have not been major players to date. In 2018 less than 10% of series a rounds in biopharma were led by tech VCs [0] These days biotech startups can get very big very fast on comparable amounts as tech startups. But he structure in returns is such that you need more concentrated portfolios and low loss rates to do well I think the narrative about biotech becoming more like tech is a way for tech investors to try to fit more power law driven portfolio strategy into biotech. Bioengineering advances have been incredibly important the last few years, but it is not really correct to compare the pace of product development and value creation in bioengineering to software engineering. I also think it's a bit of a red herring. Biotech VC has done fine on its own. If anything software VCs should take some tactics from biotech funds [0] https://www.baybridgebio.com/blog/top_vcs_2018.html https://www.baybridgebio.com/blog/top_vcs_2018.html

jwahba 7y ago
I'd be careful reading too much into data on top performing funds. The law of large numbers makes it so that smaller funds are more likey to outperform (and underperform) since they have higher variance. Couple that with the strong correlation that speciality funds are more likely to be smaller and it's not surprising. A more accurate analysis would involve looking at all VCs and seeing if you can apply those rules in advance: What would your IRR be if you invested in all the specialty biotech funds as a basket?
- aaavl2821 7y ago
  The small funds on that list are all tech funds. The larger funds are all biotech. Biotech funds are "specialist" but they aren't really small. Biopharma is a top 5 subsector of VC (by some estimates it is the 2nd biggest sector after software) and the largest sector by far of healthcare VC, with $17B+ invested in 2018. Orbimed manages $10B+ (though some of that is public equity). Flagship manages many billions (latest fund was $800M+). Foresite manages over $2B, last fund was $668M. Many other examples I mentioned i was writing a longer post on the topic, that chart is a snapshot. If you invested in biotech VC as a basket recently it would outperform tech [0]. There's more recent data as well but i dont have the link offhand [0] https://lifescivc.com/2016/11/biotech-venture-capital-mythbusting-redux/ https://lifescivc.com/2016/11/biotech-venture-capital-mythbu...

treebornfrog 7y ago

This is spot on, I graduated with a degree in genetics and cannot articulate this any better. Biology is very hard, it's more about discovery and iteration and a lot more deeper than tech. Very few understand this, so it's been amalgamated with tech to promote the narrative.

replicatorblog 7y ago

Veeva raised $4M in VC to build CRM for life sciences and currently has a $21B market cap. It's one of the 15 or so best exits of the last decade. I agree that comparing biology today to transistors in the 1950s might seem hubristic. But even if you don't buy that, I would bet on the notion that there are pretty massive opportunities at the intersection of tech and bio. I work in Boston and there's tremendous activity in the life science space, as traditionally defined. Doesn't seem crazy to believe that market could support many billion-dollar companies that build picks and shovels.

zelly 7y ago

Yup, and this piece had nothing more than the same fluff we have been hearing the past 15 yrs about bio"tech". Until we can literally simulate a biological system in software (then discovering a new drug would be more deterministic), it will always be a discovery discipline, not an engineering one.

jakeinspace 7y ago
We're 100 years away from that, at least at human-scale.