Conversation with Gail Maderis

President & CEO, BayBio, the trade association representing the 1,400 life science companies in Northern California; and former President & CEO, FivePrime Therapeutics

“We must repurpose capital that’s sitting idle and, through tax incentives, put that into small entrepreneurial innovation entities in areas of strategic national importance. From this could come the cure to cancer or Alzheimer’s. This is one of the most important opportunities we have to keep America strong.”

Gail Maderis believes biotechnology will be a key driver of the 21st century economy. She sees a healthcare paradigm shift toward custom, tailored, highly cost-effective treatment and prevention. She’s concerned about K-12 education and the severe shortage of funding for long, costly clinical trials. And her interest in biotech is personal as well as professional.

What do you tell people who don’t know much about biotech?
Biotechnology is creating novel treatments and innovative therapies, diagnostics, and medical devices that heal the sick. And one of the most effective things we can do in healthcare is to keep people well, avoid chronic diseases, reduce invasive procedures, and reduce institutionalization. Drug therapy is a very cost-effective way to do that. And we’ve learned that the more we advance one technology in this area, the more that becomes possible.

And you talk about economic impact, I imagine?
In California, the life sciences are a huge economic driver. We create high-paying jobs that also have huge leverage. Because of the infrastructure required in biotech research and development, for every direct biotechnology job, there are 5.5 additional support jobs created. We’re a service-intensive industry, so that’s everything from the people who come to calibrate equipment, accountants, lawyers, clinical trial and technical trades, to hotels, to caterers. Life sciences will be one of the key drivers of the 21st century economy.

Has the recession affected this great story on jobs?
Unemployment in California was at 12.5% last year. During that time, life science jobs grew last year. We’ve been one of the few bright spots.

Do people really understand what’s happening in biotech?
In the fall of 2009, a survey in five metro areas, three of which were big biotech hubs, found that only a third of respondents had heard anything about biotechnology in the past several months. We do a very poor job of letting people know what we’re doing. Generally, when people look at our industry, it’s because a loved one is sick. They start digging on the internet for new treatments. But most of our workforce has its head down, working in labs, and working on clinical trials … not bragging to the world about what we’re doing.

And there are rich career opportunities…
Careers in life sciences are some of the most important available. It’s a chance to do good and do well. Jobs are rewarding and high-paying. You work with creative, talented, highly educated people. You work on very important, serious projects.

Related to those careers, do you have views on education?
We must get our K-12 children to see science as a rewarding, interesting career path. When we don’t get them intrigued at an early age, they lack the proper foundation when they get into higher grade levels and college. We are really losing our competitive edge over this issue.

What’s possible because of biotech?
We’re changing our fundamental thinking about medicine. We now have the ability to understand the genetics behind disease – who exactly is at risk, what the precise causes of that risk are, what preventive measures are most appropriate, etc. Our entire approach to treatment will be profoundly more tailored. It’ll not longer be heart disease or cancer as one large disease area. It’s a complete paradigm shift.

Is foundational research well funded today?
The federal government needs to continue to adequately fund basic research through the National Institutes of Health (NIH). The government historically has been good at funding NIH. But when you look at the last 4-5 years, and you pull out cost-of-living increases – except for last year’s stimulus package – NIH funding in real dollars has gone down.

Is that the extent of the funding challenge?
Typically, discoveries from government or academia go to biotech, pharmaceutical, or medical device companies to pursue commercialization. That process now costs upward of a billion dollars per drug and takes 10-15 years. With the recession, we’re finding a real crisis in funding for that important “translational” research. When new treatments get into costly clinical trials, companies are running out of money. All the investment in the world in early-stage research won’t result in a product without the funding to carry it through clinical testing.

What should Washington do?
We need the government to encourage investment at all levels – to create opportunities for early stage investment through tax incentives and reasonable rules on investment. Unfortunately, with financial reform under discussion, new proposed requirements for individual investors may further restrict angel investments in biotech. That’s going counter to the direction we need.

How does the U.S. cultivate our life sciences ecosystem?
We need to look outside the box for ways to significantly increase capital flow into this industry. For instance, biotech companies need the ability to access offshore profits that essentially are inaccessible today. We need to bring those back and put them to work. There’s a tremendous opportunity for a one-time tax holiday to repatriate those profits. We must repurpose capital that’s sitting idle and, through tax incentives, put that into small entrepreneurial innovation entities in areas of strategic national importance. From this could come the cure to cancer or Alzheimer’s. This is one of the most important opportunities we have to keep America strong.

I understand you have a very personal connection to medical innovation.
I was diagnosed with Multiple Sclerosis a few years ago. I’m now on a treatment that was developed by a biotech company, one that didn’t exist when I started in the industry. I owe the industry for my ability to walk in here today.