Cloudsciencing [sic]

A potential game-changer in contract research services domain & I’m talking about the latest concept that calls “Putting Science in the Cloud” in its intro of Emerald Cloud Laboratory, essentially what looks like an idle infrastructure monetization initiative of the 'stealth start-up', Emerald Therapeutics.

Pun apart, if indeed this turns out like it’s promised, a scientist in any part of the world will be able to simultaneously prescribe & iterate-on (with the robotic handlers) the experiments that she/he outsourced. This in turn will make it easy for more drug discovery start-ups to emerge (including some garage innovators too..) & pursue their dreams in a quicker, cheaper & more efficient way (~ the likes of DNAnexus claim that as scale emerges, it’s possible that a whole human genome can be sequenced for a mere $1000!)

The above scenario also implies that scale is a possibility & efficiency at scale an absolute need for any player in this emerging domain.

With only JIT availability of both laboratory & equipment consumables as a probable potential 'scale-limiting' bottleneck, I won't be surprised if the domain of cloud contract laboratory services (I wouldn’t yet call this research..) is quickly populated & dominated by the likes of Life Technologies, a process likely starting with acquisition of buyer organizations by these technology platform & consumable behemoths.

An exciting prospect surely for a scientist currently hyperventilating while awaiting the outcome of an outsourced experiment.

Funds-on-Tap is passé & Drip-Funding is the new reality.

It’s probably been true for IT/ ITES (particularly for e-commerce and social media & app-developers) much longer, but for the drug discovery start-ups hitherto unaccustomed to expecting anything under a mio given their rather pricey research, the writing on the wall is abundantly clear - Funds-on-Tap is a pipe dream & Drip-Funding is the new reality.

Over the past year, more and more VCs have started to unveil & employ their own versions of a ‘return-maximizing, risk-mitigated investment model’ that typically involves multiplying the early-stage portfolio & bringing down the average-size of seed-investment while maintaining the overall seed-stage investment at no greater levels than earlier - A case-in-study being the recent Seed-class of Atlas Ventures & equally demonstrated by Index Ventures developing its proprietary version of MonteCarlo simulation for optimally distributing precious funds across its portfolio of biotechs' with assets across different phases of clinic.

This holds largely true for the increasingly active Pharma CVCs too that not only are mimicking the VCs in increasing their early-asset portfolio, but have taken derisking a notch higher with their joining forces* with other CVCs (competing pharma) in funding rounds, quite apparently compromising on the eventual ownership of the commercial potential &/or IP generated in the bargain.

* OPSONA (Novartis, Roche, Baxter among other VCs) AILERON (Novartis, Roche & Lilly among other VCs); MERUS (Novartis, J&J & Pfizer among other VCs)

While this may sound like life sciences venture funding is slowly turning into a mere statistical exercise (venture-farming…?), a la the stock market, knowing what it takes to separate wheat from the chaff in the complex world of drug discovery, the users of these models will surely need a lot more than a practical knowledge of the probability theory – which even a cursory read of the above posts again will make it very evident. Just may be, a biotech VC can still showcase ‘proprietary deal-flow’ as a core-strength while making a pitch to the LPs.

Now how does this lean-funding scenario impact the development strategy of the start-up? – while a few indicators of change are already out there like the CROs being encouraged (~arm-twisted) to share risk with the biotech while providing services, I believe this'll trigger bigger changes & hopefully nudge the drug-discovery towards an innovation pathway that’s a lot more rational & predictable – but then this is something Drug Baron should talk about.