Reducing Costs and Accelerating Innovation in Biotech Startups

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Elizabeth Iorns, PhD, Science Exchange

Operating a biotech startup has presented increased difficulty and risk to entrepreneurs over the past decade.

The costs of development for biotech startups have grown so much as to become a barrier to entry. Up-front capital costs for equipment now range from $200,000 for a scanning electron microscope to $740,000 for an Illumina next-generation sequencing platform (Wall Street Journal, 2012). It is in turn quite cost-prohibitive to establish in-house research platforms on basic startup funding. The high probability of failure further contributes to the costs, with studies showing 65% of target validation projects lacking reproducible outcomes (Nature, 2011), and thus contributing to the billion-dollar pharma development timeline (Forbes, 2012).

The risk associated with such costs has unfortunately impacted available venture capital as well. Startup and seed investments for biotech companies have dropped from an average of $747.5M per year between 2006-2010, to $291M per year from 2011-2012. The number of total startup investments has dropped as well, from an average of 140 deals per year from 2006-2010, to 69 deals per year from 2011-2012. (PWC Moneytree)

It is in this funding environment that I sought to conduct my own independent research after leaving a post-doctoral fellowship at the University of Miami. In doing so, I realized the inefficiencies in the research paradigm and cost-prohibitive nature of running a lab outside an academic affiliation. In an effort to improve access and reduce costs associated with scientific research, I created Science Exchange (www.scienceexchange.com) – an online marketplace for scientific services.

Improving Access To University Resources

Whether at a biotech startup or independent lab, the resources available are inherently limited. From sequencing to spectroscopy, the up-front capital costs associated make it difficult for early-stage companies to run such experiments outside of traditional collaborations or partnerships with university labs.

To assist in accessing such equipment, I focused on building Science Exchange as a consolidated platform for unutilized university equipment and resources. Such resources are routinely available on a fee-for-service basis for external use, at cost-effective rates, but often lack the business units or financial platforms to process payment. Additionally, searching for such services via ad hoc referrals or Google queries is largely inefficient, and otherwise difficult without a direct university affiliation.

Science Exchange in turn consolidates these resources through an online marketplace, making it easy to search and order from the 4800 scientific services at 71 of the top 100 US institutions. The consolidated marketplace affords increased transparency for previously invisible university resources, helping startups to filter through expert vendors with search results ordered by user ratings and price. An integrated payment platform in turn assists with automatic purchase order and credit card payment options, making it easier for a startup to expedite bureaucratic university payment solutions.

Saving Costs Through Expert Vendors

By utilizing resources on the Science Exchange network, biotech startups can not only gain access to high-end equipment, but save significant costs associated with the service as well.

Rather than purchase an Illumina HiSeq 2500 for $740,000, you can instead outsource a few samples for sequencing to a commercial lab for only $1000 per lane. Or instead of purchasing a quadropole mass spectrometer for $300,000, you can pay a university-based resource for as low as $64 per hour

The ability to compare costs between vendors also permits for further cost reduction. The Science Exchange platform permits for multiple quote generation from a single request, allowing vendors to bid on your request to lower cost options. And many vendors are able to leverage economies of scale, either working on requests in bulk or pooling your biotech’s samples with others for lower per-unit costs.

Projects involving qPCR, HTS screening, and electron microscopy have accordingly saved up to 54% across a range of quotes received, helping to identify those solutions that balance quality and price.

Ensuring Quality and Reproducibility of Outcomes

Leveraging university and commercial-based resources on Science Exchange has the added benefit of ensuring greater quality of outcomes as well.

The resources on the platform operate strictly on a fee-for-service basis, ensuring high quality results. The vendors performing the service focus on the respective equipment as a full-time job, making them highly specialized to their service with lower risk of failure. With no claims to your startup’s intellectual property or publication rights, the vendor has little incentive for false positive results either.

As a check on overall quality and responsiveness, the Science Exchange platform also stores key metrics on user testimonials, completed projects, responsiveness, and price. This assists not only in assessing quality of outcomes, but ensuring an extra level of prudence in the vendor's work as it will be registered and reviewed.

Combining the respective issues, you can effectively leverage a platform like Science Exchange to identify low cost solutions to your biotech pipeline, and save on up-front capital costs while increasing the robustness of research outcomes. You may very well find yourself able to cut down on internal technician time, capital expenditure, and even office space, instead leveraging cost-effective university resources on a contract basis. Quite soon, all you may really need to run your startup is a laptop, Internet connection, and the experimental method.

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