BB&T Contributing Editor

Chris E. Rivera

WBBA President

Chris Rivera has been president of the Seattle-based Washington Biotechnology & Biomedical Association (WBBA) since January 2009. Prior to joining the WBBA, he was the founder and CEO of Hyperion Therapeutics, a specialty biopharmaceutical company focused on the development and commercialization of therapies for gastroenterology and hepatology diseases.

Prior to starting Hyperion, Rivera was senior vice president of commercial operations at Tercica, where he was responsible for developing and overseeing Tercica's global commercialization strategies and was intimately involved in the development and consummation of an international cross-licensing collaboration with Ipsen.

As senior vice president of Genzyme Therapeutics, he was largely responsible for building the company's U.S. renal division and assisted in the launch of Renagel (sevelamer hydrochloride) globally. Earlier in his career, he helped build the initial commercial organizations at Centocor and Cephalon.

BB&T: Washington long has been a center of development on both the biotechnology and biomedical sides of the life sciences. How is the med-tech sector in your state doing these days?

Rivera: The overall state of the life sciences in Washington is extremely healthy. We conduct an annual life sciences economic impact study and present that at our annual meeting, which was last October. From 2007 to 2009, the biotech and med-tech sectors grew at an average of about 5% during that two-year timeframe, which was the heart of the recession, while other private-sector jobs in Washington state declined by 4%. We're now one of the five largest industries in our state, and the fastest-growing.

BB&T: Are there particular segments that stand out to you and your membership as areas for growth?

Rivera: Where Washington is not only a national leader but a global leader is, on the drug side at least, specialty areas like oncology, immunology and infectious disease; we are leaders in those areas. On the medical-device side, we're extremely strong in ultrasound imaging, which was invented at the University of Washington and spun out. A company called ATL was formed and then acquired by Philips, which manufactures the vast majority of its ultrasound equipment here in Bothell, just north of Seattle. Defibrillators were invented here, and Physio-Control is still based here. The University of Washington's department of bioengineering is one of the more productive as far as intellectual property and company spin-outs, so we see a lot of device companies coming out of there.

Another area that's growing very quickly is our global health community. Seattle has the largest concentration of global health organizations outside of Geneva, Switzerland. Obviously the Gates Foundation is the most notable, but organizations like PATH and Seattle Biomed have been around for more than 30 years. PATH in particular develops low-cost medical devices that are used in developing nations.

Some other sectors that are doing well, with a lot of the research coming out of eastern Washington, are the bioagriculture, biofuels and veterinary medicine areas. There are a number of companies that have been started and are doing well in those spaces.

Another area that I'm tremendously excited about, because I think that's where healthcare is going in the next decade or two, is digital biology – where high-tech is meeting life sciences. Companies like Microsoft and Amazon are making significant investments in informatics and personalized medicine and electronic medical records and things like that. The researchers at the University of Washington and other local institutions are world leaders in this area, and we have a number of companies that have been emerging in the digital biology space over the last several years.

BB&T: It seems to me from what I know of your area that personalized medicine is an area that is a strength for you going forward.

Rivera: In fact, we just had an event last night at which Dr. Leroy Hood on the Institute for Systems Biology keynoted on personalized medicine, and it really is a core area of strength. Nationally, we have healthcare reform and comparative effectiveness that are looking for ways to make sure that our healthcare dollars are being spent more efficiently. Internationally, with global health, the question is how do we care for 7 billion people worldwide, many of them aging and having the same challenges that developed nations have. The projections are that over the next decade or so, everyone is going to have his or her genome, and it's going to be part of your medical record. In many cases, you're going to have on a PDA what you're predisposed to have, what the potential action item could be to make sure you do everything you can to be preventive and participatory in your own healthcare outcomes.

BB&T: What are the key issues in the minds of your member companies as we move forward in 2011 under what many are referring to as “the new normal“?

Rivera: Access to capital is still in the forefront of many companies' and organizations' minds. The other big thing is the FDA and the regulatory challenges that we have faced and are facing. Actually, that has a direct impact on access to capital, because if the FDA process is unpredictable, it makes the raising of money that much more challenging. Talent is another big issue. We're one of the states that utilizes stem-educated graduates – one of the highest employers of those students – yet we're probably 36th or 37th in the country in producing them, so we have to import a lot of our talent, and obviously that's costly, especially for young companies that don't have the ability to recruit nationally or internationally. So they have to depend on the larger companies to do such recruiting, or we need to produce more of that type of graduate.

BB&T: Do you benefit from the economic troubles in states like California, or Illinois, which just recently enacted a huge increase in both corporate and personal income tax?

Rivera: We're actually going down to San Francisco next month. There are 1,000 to 1,500 people who are being laid off in the Bay Area, and my counterpart who runs BayBIO is telling me that they can't absorb those employees, so we're coordinating a career fair down there with their assistance to help those folks there with job openings that our companies may have here.

BB&T: Is the crystal ball for healthcare clouded once again by the renewed political uncertainty over healthcare reform?

Rivera: Right now it's on the back burner because I think our members are thinking about it or worrying about it like we did last year when we knew it was imminent. We as an organization spent a lot of time in DC, as well as talking with our Washington delegation about the various provisions within the healthcare reform legislation, making sure we were doing our best to educate them on the pros and cons of how it would affect our members and their constituents. Right now, it's noise in the background but it's not something we're spending a lot of time thinking about or doing things about. There are a lot of other pressing issues that are more immediate that are getting our attention.

BB&T: The so-called “device tax,“ scheduled to take effect in 2013, is one element of healthcare reform that sticks in the collective craw of the med-tech industry. Is your organization still involved in the push to either repeal the tax or limit its impact on smaller companies?

Rivera: We're assuming it's probably going to be in the form it is, at least in terms of the total dollars. We're working with AdvaMed and the Medical Device Manufacturers Association to have it structured so that it doesn't impact our younger, start-up companies that are yet to be profitable, so we're recommending a tiering approach to it. We would of course be very supportive if they were to repeal it altogether, but I'm not going to hold my breath over that being the outcome.

BB&T: How does the emphasis by the Gates Foundation on global health issues impact the region's life sciences companies?

Rivera: That's a growing sector in our life sciences community, and there are a number of initiatives to help increase the public/private partnering that's going on between the global health organizations and the private sector, and we're behind many of those initiatives. Everyone is looking to figure how to make the cost of healthcare more efficient, and we're very well-positioned here. We have many of those global thought leaders right here in our own backyard. So we're doing our best to make sure that we integrate those in the private sector that would benefit from contact with the world health community. We're making those introductions and bringing those people together, and vice versa. I've heard a couple of global health leaders say, “You know, the Gates Foundation is not going to last forever,“ and if we want to have a sustainable sector, they really need to partner with industry to come up with a business model that makes sense for both the business sector and the global health community.

BB&T: I like the phrase “connected health,“ and your region seems like it would be a leader in that effort. It seems to be thought of in the U.S. in domestic terms rather than globally, but I really think connected health is a global issue.

Rivera: Diseases in developing nations also affect people in developed nations and vice versa. Look at H1N1 as an example, or at cancer becoming more of an issue in developing nations because people are now living longer due to the work of the world health community. So they're becoming more susceptible to the chronic diseases that have been experienced in developed nations.

BB&T: Given your geographic location, is the Asian market the primary focus of those companies' efforts internationally? Does your organization have specific programs directed toward helping them in those efforts?

Rivera: I'm not sure it's the focus, but it's definitely an opportunity. Our proximity to China, Japan, even India, is a strategic advantage. We went with the governor on a trade mission to China last September, and we made a lot of great contacts. Last year was the first time we made a concerted effort to attract Chinese delegations to our life science innovation conference, and we had about a dozen come. This year we have expanded that, and now the state of Washington and other organizations are trying to recruit them as well. It is definitely a strategic advantage. There have already been a number of companies that are realizing that their growth in the coming decades is not going to come from the U.S. and Europe; it's going to come from emerging markets like China, India, Brazil, Russia, etc., so that's definitely in the forefront of our minds. India, for instance, was focused on generic drugs, but we had a delegation come through here about a month ago and they talked about now being focused on research, development and establishing collaborations.

BB&T: Nationally, venture capital investment in the healthcare sector has shrunk substantially. What has the experience been for such funding in your part of the country?

Rivera: It's challenging. When you read the data, obviously venture investments have dropped significantly starting in 2008 and were down in 2009, and came back a little bit last year. So it's a challenge, no doubt about that. Putting things on a relative scale, Washington State has done very well relatively speaking on the amount of venture capital that has come into our state – it's down, but if you look at it on a percentage basis, we're still holding our own and our companies are doing relatively well when the monies do come in. I did have one of our CEOs mention to me last week when we were coming back from the J.P. Morgan [healthcare] conference that he had talked to a number of VCs who had had some exits recently and they are actually out looking to raise a new fund. He said that's the first time he's heard anyone in 2-1/2 or 3 years talk about getting more active again in raising new money and looking to invest in new opportunities.

BB&T: Are angel investors playing a proportionately larger role in the sector than in years past?

Rivera: I think so. Last year we formed a med-tech angel group called Wings that we incorporated about this time a year ago. We had three investor meetings, with three companies presenting at each of those meetings. Out of the nine companies that presented last year, five of them received funding – some from the angel investors in Wings directly and a couple who raised venture money. So we are seeing more angel activity, in many cases stepping in where VCs used to be.

Going back to your mention of the “new normal,“ the new normal is that companies realize they have to be more virtual, they have to be more milestone-driven, they have to realize that they're only going to get to phase I, maybe phase II, and then they're going to be needing a partner or find an acquirer. So that's kind of the new mindset as well. We have to do things with significantly less capital, in a shorter period of time, and be more virtual and agile and really focused on one, maybe two programs and know when to pull the plug on it.

BB&T: Investors and entrepreneurs alike are decrying the threats to medical innovation posed by a combination of less availability of funding and more stringent regulation. What topics are most likely to capture the attention of those attending your annual Life Science Innovation Northwest Conference in March?

Rivera: The conference used to be called Invest Northwest, but we rebranded it last year to Life Science Innovation Northwest because what the Pacific Northwest is really good at is innovation. Where you used to have to have an anchor tenant – a big biotech company, say – before you could really build a successful cluster, and Seattle has had some, under the new norm being agile and nimble is more important. One of the reasons why our state is doing so well in this new norm is that we have a very good core scientific foundation – we have not-for-profit research organizations, many of them being world leaders in their areas of expertise.

One of our panels for the March meeting is called “Partnering to Drive Innovation,“ and we have representatives from the Fred Hutchinson Research Center, from Merck and other companies. We have another panel called “Why Establish a Life Science Center in the Northwest?“ with reps from Novo Nordisk, Philips, Seattle Genetics, Amgen and others. Another one is called “Global Solutions, Local Benefits,“ where they'll talk about the global health community's efforts to develop technologies and interventions for developing nations that also may have applications domestically in our own backyard, and maybe disruptive technology.

There's a group called GAPPS – the Global Alliance to Prevent Prematurity and Stillbirth, an initiative spearheaded by Seattle Children's Hospital – that is an international global health organization focused on premature and stillbirth. They have developed a very low-cost respirator that costs about $100 to make that they can use in developing countries. Current respirators used for premature babies cost $20,000, $25,000, $30,000, and obviously developing nations a) can't afford very many of them, and b) if they break, who's going to service them? This respirator only costs around $100, only has one moving part, and if it breaks hopefully they can repair it, but even if they can't it's not a significant investment. So if you think about it, the incidence of premature birth in Washington State is about 13% of all births and the state spends about $800 million a year on care for these babies, so being able to have this kind of disruptive technology that is developed for global health available in this state and in inner city settings, that has the potential to be transformational.

BB&T: Speaking of regulation, what is your first take on the 510(k) changes just announced by the FDA yesterday?

Rivera: The unpredictability and the regulatory challenges of the FDA have a number of device companies in particular going to Europe for their initial regulatory filing because it's more predictable, less time-consuming and you know what you're going to get as long as you have met your milestones. We have a concern that the 510(k) changes are going to continue to drive our companies away. They're going to go to Europe and other countries where they can get regulatory approval; the concern is that once you say, “Europe or Asia are the first markets we're going to go to,“ eventually they may say that instead of being based here in the U.S. or Washington State in particular, “We're going to set up shop in those countries where we know we're going to have to file first.“ So FDA regulation really has some long-term implications that may be very negative if not really thought through strategically.

BB&T: Is there a question I haven't asked that you wish I had?

Rivera: Not so much a question as a comment in closing. One of the things we're trying to work on and hopefully can get out is that the citizens of Washington that aren't a part of this industry hopefully can see the value and benefit that it brings and has the potential to bring. This is potentially like having a Boeing emerge in the 1940s and 1950s, or having Microsoft in the 1970s and 1980s. We're at that stage where we can as an industry become the next Boeing or Microsoft or Weyerhaeuser and really be an economic engine.

We already are one of the top five industries in the state and fastest-growing, but we really have an opportunity here in Washington, especially with where things are going with global health and personalized medicine, we really do have an opportunity to become the next huge industry and job-creator for the citizens of the state. It's an exciting time to be here, but it's also a time where decisions that are made in Washington, DC, and Olympia are going to have a long-term impact one way or the other.

The challenge with life sciences is that we usually are not manufacturing consumer products that people are going to see on the shelves of a store, so you don't know us and what we do unless you're taking Enbrel or unless you're having an ultrasound treatment. That's a matter of education – we're working to increase that kind of awareness across the board.