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Biotechnology: Innovations, Applications and U.S. Competitiveness

Speakers: James C. Greenwood, President and CEO, Biotechnology Industry Organization, and Robert Langer, David H. Koch Institute Professor, Massachusetts Institute of Technology
Presider: Josh Wolfe, Founding Partner and Managing Director, Lux Capital Management
May 23, 2013
Council on Foreign Relations

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JOSH WOLFE: With that, I'm going to introduce first, to my right, Bob Langer. Bob is the David Koch Institute professor at MIT. Bob has more patents in the field of medicine in history in the U.S., certainly, than anybody, and we believe he's a close second after Thomas Edison -- (laughter) -- for total patents. This is actually true. Over 30 companies have been directly spawned, and I know at least one of the principal investigators from his lab who we've invested with is seated here as well. Over 270 companies have licensed work from his lab. So to say he's prolific would be an understatement, and we're proud to be invested in many of these.

Jim Greenwood, to his right, is the presidency (sic) of the Biotech Industry Organization, which is really the hallmark industry organization for biotechnology. I'm going to ask Jim to set the stage, both define biotech broadly, to make sure we're all on the same page, and give a sense of what some of the policy issues are that are at the top of the agenda for his constituents.

JAMES GREENWOOD: OK, so good morning. Thank you all for being here. You can define biotechnology in a lot of ways, but the way I tend to define it is it's the -- it's the use of the increasingly profound and accumulating knowledge that we are developing about how biology works, how life works, at the cellular level, at the genetic level, at the molecular level, and then applying that knowledge and that -- and the technology derived around it to solve human problems, be it deriving new therapeutics and diagnostics in human health, animal health, applying it in the cultural sector to genetically modified organisms to enhance productivity and food supply, and on the energy -- the material side, using biotechnology to manipulate, for instance, enzymes that can break down cellulosic material in corn stover and wood chips and switchgrass and make sugar and turn it into ethanol. So it's the application of that knowledge to a variety -- and the potential applications continue to grow. So --

WOLFE: And the constituents for bio -- who are they?

GREENWOOD: So we're the trade association, the Biotechnology Industry Organization. We have 1,150 members. About 900 of those are core members. That means they are for-profit companies, as opposed to our state affiliates and research institutions and so forth. About 80 percent of those are in the health side and the drug development side. All of the big pharmas essentially belong to our organization, the big biotechs, Amgen, Biogen Idec, Gilead, et cetera, belong. But overwhelmingly, probably 80 percent of the -- of the health companies are precommercial. They're startup companies that are still in the R&D or clinical trial phase of their development. And then we have, as I said, on the ag side, the Monsantos and the DuPonts and the Dows, companies that clone cows and pigs, and you have transgenic salmon company. And then on the -- on the materials side, even companies that -- some of the petroleum companies have joined because they want to get into the biofuels business. And most recently Coca-Cola joined because they're interested in having biodegradable bottles.

WOLFE: OK, great. Now, just also to give some context, I'm going to turn it back to you in a minute, Jim, to describe some of the policy issues, particularly in the context of budget, but the budget is one of the things that certainly ties you guys together. So Bob, can you give a snapshot of your lab and, in a sense, the business of the Langer lab?

ROBERT LANGER: Sure. Well, our lab's actually a fairly large academic lab, and it's also very interdisciplinary. We're in a building that's actually -- and that's kind of unique for academics. Academics -- most buildings, it's just, like, all biologists or all chemical engineers. Our building actually is half engineers and half biologists, and our lab -- we probably have people from about 10 different disciplines, you know, including about eight medical doctors who are, you know, spending part of their postresidency doing research.

And -- but basically, what we do is all kinds of work, and at the interface of materials and biotechnology and medicine. And you know, being engineers, we like to understand things but also create things. And one of the things that we've done in particular, because I don't want to just write papers -- we write a lot of papers, but I want to see those things that we do get out to the public and out to the world. So creating small biotech companies -- that's been a -- to me, a wonderful vehicle for our students to take what they've done in the lab and then create products that can help improve people's lives. And so we've done that a number of times.

WOLFE: Where does the funding from your lab come from?

LANGER: Well, we -- so I'm a big believer in having as many grants -- different places as possible because if you're in academics, you're always on soft money. So we probably have about 20 grants, I'd say at least half if not more from the government, like NIH, NSF, the Army. We also have a -- quite a bit of money from different foundations that have come to see us, like the Juvenile Diabetes Foundation, Prostate Cancer Foundation, Gates Foundation and Helmsley Foundation, and then we get -- also have gotten funding from different companies, like Senofi (ph) and others, you know, on specific projects.

WOLFE: OK. So Jim ,give me now, please, the overview of what is going on in the industry, some of the key policy hot-button issues and how the economics of all this tie together and ultimately flow down to somebody like Bob.

GREENWOOD: This is -- we usually -- (inaudible) --

WOLFE: Yes -- (inaudible).

GREENWOOD: So my sort of general thesis for this morning is as follows: The United States really initiated the biotechnology industry, and we have led it by every single measure for the last at least three decades, and we continue to lead it by essentially every measure. But that leadership and predominant position in the world is at risk.

And what we -- what we see out when we look globally is not only the United States but just about all of its states, and certainly Western European nations and, for that matter, most countries in the world are faced with crushing debt. And that debt is in large measure driven by health care costs, and those health care costs are in large measure driven by the aging population, the number of people. Percentage of people in the planet over 65 has gone from about 6 percent in 1980 to about 8 percent. Some call it the silver tsunami. The baby boom generation is dumping 10,000 people a day into the Medicare system. And so -- in Western -- in developed nations, you're seeing declining -- you've seen for a long time declining birth rates, so you have fewer people to pay for all that. So a huge economic burden for governments.

So what governments tend to do is say we've got to figure out how to reduce expenditures there. And they tend to disproportionately go after drugs. Hospitals have administrators and boards of trustees and -- who schmooze politicians, doctors or real people in the neighborhood and who tend to politicians. Drug companies tend to be a -- faceless and not evenly distributed across the political horizon. And so we become easy targets. So if you look at President Obama's current budget, 30 percent of his Medicare savings come from drug -- reductions in drug reimbursements, despite the fact that we're less than 10 percent of the cost of health care.

So the problem with that, of course, is that as you continue to reduce reimbursement, not only do you undermine quality in the health care system, but in the case of drugs, you can cripple innovation. I'll try to wrap up quickly, but the drug enterprise is different than most free enterprises in that, number one, drugs are not consumed; they're paid for, for the most part, by third parties so consumers are not going out and saying, gee, I think I like this cancer product better than that one. And secondly, if you -- if you invent and patent a mousetrap, you can start selling it the next day; if you invent and patent a molecule that might cure brain cancer, you have 10 to 12 years and $1.2 billion to raise before you can make your first nickel. And so that requires extraordinarily patient investors. And those investors are not trying to cure brain cancer, they're trying to make money. And so if we as a nation want to maintain our leadership in this field and if we want to take the $30 billion a year we put into NIH and, as Dr. Langer just said, convert it into real products for patients, then our policy has to be supportive of that -- of moving that -- the investment into this field.

WOLFE: And the policy right now is affected by these budget cuts. A group like NIH, as that money will flow into industry as well as into academic labs, what is happening --

GREENWOOD: So NIH, obviously -- I mean, NIH is a long story. We doubled it when I was in Congress. And we thought --

WOLFE: (Inaudible) -- order of magnitude?

GREENWOOD: It's $30 billion a year roughly is what's being spent at NIH, but it's been level. And now, because of sequester, it's gone down.

We think that's awful. We lobby against it. But I always follow those words by saying NIH doesn't make drugs. All that -- all the drugs -- all of the brilliant learning that we get through NIH-funded academic research has to be converted into products for patients by the private sector. And so we have lots of friends in Congress who love the NIH, but they don't like the business so much. And so we really have to constantly -- we're sort of constantly on the defense against those who sort of find the drug industry an easy target.

WOLFE: Now, before I have Bob share some of the technology trends that are emerging out of his lab at MIT, I want -- I want you to weigh in. Industry always has some cyclicality in it. And in the biotech industry is there a period in the '70s, '80s, 90s that you saw where similar budget constraints would affect the pace of innovation, U.S. competitiveness, from your vantage point within your lab?

LANGER: I think -- yeah. I would say the one time -- you know, when there was a time, I'd say probably 1992 to 1994, you know, when there was a talk of, I guess, some types of health care reform and, I think, price caps on drugs. That had a -- that had a negative affect in terms of what I'll call, you know, companies starting.

To amplify Jim's point a little bit, which I agree with, you know, if somebody's an investor, they have a choice of investing in biotech or something like Facebook. And so if somebody has a choice of making an investment to -- you know, with the huge timelines and risks on the one hand and then on the other, you know, very little, relatively speaking, capital and making a lot of money soon -- I mean, if you skew, as was done then, the opportunity for somebody to make money and so they could invest in what's called IT -- you know, things like computers, like Facebook or Google -- they're certainly going to do that.

And so when there was the concern about those price -- you know, that there be certain limits on that, then -- yeah, that -- you know, those companies did very poorly. There was very little investment for those couple years. That would be one time in my recollection when that happened.

GREENWOOD: And I will say from our own venture partnership, which about a third of it goes into biotech, the numbers that Jim was just laying out -- if it takes, you know, a billion dollars and 10 years for a company to be able to get through FDA approval, we've seen that on average most of these companies take 60 (million dollars) to $100 million of venture money to get through Phase II B, a point where a big pharma company might want to acquire them.

And in large part, big pharma has looked and said, look, there's not a lot of capital that's going into this. The leverage is ours to wait and let the biotech companies do the R&D on their own dime or their venture capitalist's dime, and then we can select accordingly. And most of that power has accrued to the pharma companies.

We look at it and say, OK, if we're going to put $100 million into a company over a five or six year period, the average exit outcomes for most of these companies has been between 200 (million dollars), $400 million. So your relative returns, to Bob's point, not only as an entrepreneur seeking to start a business, but as a venture investor looking to take the risk capital and put it into one, the odds right now have skewed unfavorably.

WOLFE: Let me turn to some of the things that are coming out of your lab, just to give a more optimistic note. I know Jennifer Aniston -- (laughter) -- is involved in one of your companies, but why is she coming to the Langer Lab and what else is coming out of it?

LANGER: Well, yeah. I'd say the -- most of what we do is health related, but I'll go -- maybe I'll start with that and end with Jennifer Aniston. But -- so what we've done, as I've mentioned, is try to do things that will be at the interface of, say, materials and medicine, for the most part.

So some of the things that we're doing -- well, some of the things we've already done is create new -- like, see, if you have a protein drug, as Jim was talking about, and you try to inject it in the body -- first you can't swallow those drugs because they don't get into the bloodstream. And even if you inject them, a lot of them don't last very long, so you might have to keep injecting yourself over and over again.

So we've worked out ways where you can have little microspheres that you can inject underneath the skin that can deliver these drugs for a long time, so it really make a number of therapies possible. The next generation of those things is what I call nanotechnology. Could you take little nanoparticles and inject them into the blood stream -- and let's say you had a cancer drug -- have it find the cancer cell so that you could actually inject something, have it go through this labyrinth which is your body, and just go to the tumor and no other place.

I mean, that -- and so we're actually in clinical trials on that now. Also, nanotechnology, along those lines, offers the opportunity to sometime deliver genetic medicines, which to me is a huge future. In other words, so you could actually shut specific genes off which might cause cancer or other disease, or actually turn genes on to make certain molecules.

Another big area that we do a lot of work on is what I call -- which we actually started, is an area we call tissue engineering. Someday -- you know, you see people dying of heart failure, liver failure, things like that. So what we've worked on are ways, starting actually 30 years ago, but now it's in clinical trials and there's some products where you can take things like plastic combined cells -- including cells like stem cells -- put them together and make new skin.

We're working on making new spinal cords. We're working on new intestines, new livers, all kinds of things like that with different clinicians. And if -- to the extent that that happens, I mean that's revolutionary because there are no drugs that are going to treat -- you know, if somebody is dying of liver failure, the only way they can get treated now is a transplant. There's a big waiting list, and so forth. And if somebody's paralyzed, I mean, there's no treatment. So those are some of the things that are coming out of our lab that I think will hopefully someday transform health care.

The Jennifer Aniston thing was actually a little bit different. What happened is some of the venture capitalists at Polaris, which was one of the venture companies that's funded a lot of the spin-offs from our lab, they came to see me and they said, you know, you've done all these things inventing in medicine, can you help us on hair care? So we actually invented some -- again, using materials -- new -- just to pick one example, right now, when everybody -- there's about 50 companies that make what I'll call anti-frizz products, and every single one uses exactly the same ingredient: silicone. So we just took a much more fundamental look and said, you know, there's things -- the way it works is to keep water out and it's also quite heavy. So we just did a sort of fundamental analysis and came up with materials that are much lighter and keep water out much better and actually work much better.

The thing is, even though we did it, nobody -- very few people knew about it, so they said, well, we want to get somebody involved who, if people know about it, then they'll buy it. So they -- some people knew Jennifer Aniston and she actually got involved in -- as a stockholder in the company and, I guess, now lots of people know about it, obviously. (Laughter.)

WOLFE: So those are some of the applications that are coming out of your lab now.

Now, Jim, you mentioned before transgenic salmon. And you hear some of the things that Bob is developing. I recently saw on one of the crowd funding sites, whether it was a Kickstarter or something, that people were funding -- they were seeking -- scientists were seeking to raise about $65,000 for a transgenic plant that would glow in the dark. And they were worried they weren't going to hit their target. A week or two goes by, and they raised more than $500,000 from random public citizens that wanted to fund this. Talk to me about the public funding of biotech, both from government, these things like crowd sourcing, venture capitalists. Where's the flow of financial capital coming from in the industry?

GREENWOOD: So it's a mixed bag. Publicly traded companies, biotech companies, have for a significant period of time done better than the market as a whole, and that's largely driven by a relatively small handful, maybe 15, 16 very large, very successful biotech companies. Most publicly traded biotech companies are still -- smaller ones are still struggling.

For the privately held companies or the emerging companies or startup companies, venture capital funds are exceedingly difficult to come by. And, you know, when we sequenced the human genome, there was an oversimplistic notion that we would find THE gene for each disease and then fix that gene and then cure that disease. And so there was a huge bubble, and if you put the word "gene" or something close to it in the name of your company, people would hurl money at you. And we had -- you know, I think 2002 was probably the peak of money invested into these startup companies.

Over time, we've learned that the science is a little more -- a lot more complicated than that, and we now have armies of analysts to look at these startup companies to see what's really unique and what's really going to be valuable. The market is going to pay for only really innovative stuff and really game-changing stuff that's going to meet unmet needs. So we're seeing that venture capital fund going in -- funds going into fewer companies, and usually companies for the most part that are further down the line and that are less risky. There are some funds that are still willing to take -- put a high-risk bet on a company that doesn't even have a product yet but has a great concepts.

WOLFE: Bob, the mix of people that are coming to your lab, are you seeing more big pharma companies coming, trying to license technology, more entrepreneurs trying to start companies? What is -- how has the mix changed over the years?

LANGER: Well, I think it's changed some. I mean, I'd say, you know, 30 years ago when we started doing this -- I mean, not very many people and academics, at least in the Boston area, were doing it. There were a few. In terms of companies now, I think there's, you know, a pretty good infrastructure, just like there is in San Francisco and a few other areas.

I do think over time it's been more common for large pharmaceutical companies to have collaborations with academics. I mean, I know at MIT we have collaborations with Sanofi, with Johnson & Johnson. And, you know, in the past we've had them with Amgen and Merck as well. So I think it -- I think it -- you do see, I think, some increase over time in terms of the type of thing you're asking about.

GREENWOOD: There's been a significant increase in large pharmaceutical companies creating their own venture firms to try to help out these smaller companies and actually get, you know, an advantage in acquiring them, should they become successful. And we've also seen an increase in philanthropic, so sort of disease-focused, you know, the -- oh, what's the Parkinson's television --

MR. : Michael J. Fox.

GREENWOOD: -- Michael J. Fox, for instance, those kinds of organizations that will collect money from families and loved ones of patients and then -- and invest in -- very specifically in companies that are working in that field.

WOLFE: And we talked a little bit about the flow of financial capital, but I also want to talk about the flow of human capital. And related to this point that you made about big pharma companies setting up their own VC funds, we've noticed that over the past, say, 10 years, you went from a centralized lab where all the research was done to maybe distributed labs where you realized maybe one particular city does not have a monopoly on brilliant people, and you would set up a lab in Zurich and a lab in Geneva and a lab in north Chicago and so on -- where there were pockets of innovation.

And then you started to see websites pop up like InnoCentive, where people would put a challenge on, and big pharma companies would say we need to solve for the chirality of a molecule, and we don't care if it comes from inside our organization or from a former Dow scientist who's now living in Afghanistan. And so the mantra went from not invented here to proudly found elsewhere.

And what we're now seeing is that the composition of the talent within the startups that we're investing with is heavily skewed to non-U.S. folks. So I want to hear from Bob, within your lab, the demographics, the nationalities of the folks -- as it relates to U.S. competitiveness and within the industry organization, what is the makeup looking like?

LANGER: Well, our lab -- and I think that's always been the case at a place like MIT -- it's very international. I think at any one time, we probably have people in the lab from 15 to 20 different countries, including the U.S. (Chuckles.) But I -- but I -- and I think the U.S. is still, from a personality standpoint, the most, if not one of the most entrepreneurial cultures, I mean, in terms of the people. People, I think, are very excited about doing (that ?).

But what you said is right. I think we see -- and I think other countries see that creating technology, creating companies can do a lot of good. So over the years we've seen enormous expansion in, say, places like Singapore and others. So I think you do see -- and they give big incentives for people to get trained at places like MIT. So I think you are seeing much more international flavor as the years go on.

WOLFE: I remember particularly a cohort from Singapore came to see our fund maybe six, seven years ago, and there was an MIT scientist, Jackie Ying, and they asked, you know, who are the top 10 people in nanotech, in nanobiotechnology, and I said, you know, I would talk to this one, this one and this one. And I think four of those people were then recruited to lead up the center in Singapore, away from MIT.

The postdocs that you're seeing that are starting companies, are they native-born U.S. folks or are they coming from India, Pakistan, China?

LANGER: Yeah, they're all -- they're all over. I mean, really -- I mean, we've had -- I've seen people start up companies from all over, but I think what you said is also right. I think we're not just -- you know, I think years ago, it would be more U.S. I think now, we see, you know, people from all countries doing it more and more.

GREENWOOD: I think we still have the most postdocs in the field than any country in the world, but I think we're seeing some pretty significant transformations.

It used to be that the best and brightest from China and India and Eastern Europe and the world would come to the U.S., become educated and then look for jobs here and stay. And now increasingly, you're seeing, for instance, in China -- China has made a commitment to biotechnology that makes us look like pikers. You know, billions of dollars -- they picked seven industries for their five-year plan. Biotechnology is one of them, and they are serious about it. And one of the things they're doing is creating incentives for what they call the "sea turtles," the Chinese students who came here, got educated and now go back and start up their own businesses there.

And so when I talked earlier about the -- American pre-eminence, we need to be acutely aware of the fact that the Chinese and the -- and many other Asian countries specifically, and Europe, are intent on closing the gap.

We do an international convention every year, and we get somewhere between 13(,000), 22,000 people show up. And one of the parts of that is an exhibit -- exhibition hall, and there are pavilions -- we may have 300,000 square feet of pavilion space and probably 60 countries set up pavilions there, and they're all saying come to Korea, come to whatever their nation is, because they recognize this is a great source of economic growth; these are high-quality, low-polluting jobs and also benefit the nation's health care system internally.

WOLFE: There was a very smart, young scientist -- Ge Li -- who went and was an early employer at Caliper and Illumina, and he was a staff scientist, you know, made a fair salary but learned a lot and then went on and started a company based in China -- WuXi Pharma, which is now one of the leading -- (inaudible) -- research organizations for most U.S. pharma and went from a basic staff scientist, you know, to a billionaire in about six years. We are seeing that flow to Asia particularly, and it is an outsourced research and development model as well.

GREENWOOD: Trying to correct some of that in this immigration bill, this sort of notion of stapling a green card to a Ph.D.

WOLFE: The FDA approval process here, as you noted, is 10 years. Are there policy mechanisms that can shorten that? Are there things that society can do, capital markets can do to reduce that, and are we at risk for other countries having a better process?

GREENWOOD: The answer to the last question is yes, and the answer to the first question is yes. The -- part of -- the investors, particularly the venture capitalists, cite two reasons for their declining interest in the field. One is reimbursement, the other is the uncertainty and the lengthiness of the -- of the approval process. There's a thing called the Pharmaceutical Drug User Fee Act, which Congress created in the '80s. Every time a company finishes its clinical trials and takes its data to the FDA for review, they've got to write a check for a million dollars plus, and that helps the FDA have a sufficient number of people to review those applications.

We have a problem in this country in that we expect our drugs to be risk-free. And so, if you -- if you do a trial and you test your drug in 50,000 people and you don't see any significant safety signals, and then you sell it to 50 million people, a signal that -- a negative effect that occurs once every 100,000, 200,000 people suddenly shows up, and the next thing you know, a senator is having a hearing, you know, blasting the FDA and the company.

And because of this risk averseness that I think our media conjures, our -- certain consumer groups conjure and certain politicians conjure, the FDA becomes very risk averse, and it's easier to not approve a drug, in many instances, than it is to approve it, or at least constantly demand more and more data. So we're -- we have a whole series of legislative proposals that we work on to improve the efficiency of -- (inaudible.)

WOLFE: Bob, would you add anything on the FDA process?

LANGER: Well, I think what Jim said is right. I think -- I mean, I don't -- in terms of approving it -- getting faster approval is hard to know. I do think -- I was chair of the FDA's science board for a number of years, and one of the things that's difficult, you know, is, is if somebody's at the FDA and, you know, they want to get -- you know, go to a conference and get the most up-to-date information, I remember them saying, well, gee, you know, if they -- if, say, some company gave, like, Merck, $500 to the conference, that it was difficult for them to go the conference, because they would get criticized for some type of conflict of interest.

And I think that, you know, really, when companies give money for conferences, it's not to, I think, influence the FDA in terms of, you know, faster approvals. I think what you want with the FDA is the most-informed, best scientific people possible, and you want to do whatever you can to ensure that they get those opportunities. So going to conferences, knowing the most-up-to-date science, I think, is critically important.

So I think what you want to just do is to create an environment where what FDA does is as science-based as possible -- ideally, totally science-based. You know, when it's not science-based, I think then you run into more difficulties.

So to me it's, if you can do something purely on a science basis for the FDA, that, to me, is sort of the direction you want to go.

WOLFE: OK. So I think what we're going to do now is open it up for some discussion and Q and A. What I'd like you to do is put your placard vertically, and I'll try to get the sequence to call you in order.

And when I do call on you, just please speak directly into the mic, state your name and affiliation, and let's keep the questions as concise as possible so we can hear from as many people. Let's start with Cameron.

QUESTIONER: Good morning. I'm Cam Kerry; I'm the general counsel at the U.S. Department of Commerce, which includes the Patent and Trademark Office. I'm going to be going over later today to speak to all of the legal staff over there.

So my question is just what would you like to communicate to them?

LANGER: I'll let you go first, and then I'll be happy to add.

GREENWOOD: Well, first, we passed -- I think it's called the America Invents Act in the -- a couple of Congress -- last Congress, I guess it was, maybe two. We thought that was a very good outcome. You know, we -- that was -- involved a war between the information technology companies and the -- and the biopharmaceutical companies.

And that's because the IT companies tend to be aggregators, so in your iPad are, you know, thousands of parts, potentially thousands of patents. And we -- they worry about the patent trolls who will get a patent and never tend to use it, wait till somebody else they claim infringes it and then go after them. And so the IT industry likes intellectual property to be less -- more easily infringed, less costly to infringe, because -- that's their worry. And frankly, things become so obsolete so fast in that industry, your IP becomes obsolete as well. So it's not as precious.

We, on the other hand, have this IP that I referred earlier to -- you -- when you patent a molecule, for instance, you're going to try to raise money on nothing but the quality of your -- of your IP. And so for our industry, it's very important that it becomes not easily infringed and it becomes pretty costly if you do infringe our intellectual property.

I think the biggest problem the patent office has right now -- and I'm sure you're acutely aware of it -- is that before the act, we had a backlog of 700-and-some thousand patent applications sitting there. You know, how can you be an innovative nation with that going on? The act, where we changed how the fees were used, got that down to, I think, about 3(00,000) or 400,000 -- 300-some thousand.

LANGER: It's more than that, but it's under 6(00,000).

GREENWOOD: OK -- right, but sequestration has now caused it to go up to around 6(00,000). And so that's -- the biggest problem we have is -- the biggest problem everybody in the country has right now is sequestration and its impact on, in this case, getting our patents approved.

LANGER: Yeah, I was going to say something similar. I guess the way I look at it is, you know, especially in medicine, you know, you get 20 years, 21 years, depending how you look at it, but sometimes, it takes 10 years to get the patent allowed. I've actually had that experience myself. So anything that gets faster turnaround times is going to be a good thing.

And I think the other thing I'd add to that -- you know, is you also want to get -- somehow provide incentives for getting the best-trained people in the patent office. And there's people that really understand the science, because what will happen for sure and happens all the time is, you know, if a patent leads to something, you know, there's going to be lawsuits and then there's going to be, like, you know, these huge court cases.

And so you really want to make sure that the patent examiners are as well-trained as possible so they can make judgments on -- you know, on basically issues like obviousness and anticipation. So I think that those would be -- you know, that would be key in -- so both the speed and the quality would be the two issues. To me, that would be important.

WOLFE: Let's go to Shanker.

QUESTIONER: Shanker Singham with Squire Sanders.

And this is a follow up to Cam Kerry's question. One of the big challenges to U.S. leadership in the industry is -- you talked about patent protection, the erosion of patent protection in foreign countries, in terms of things like compulsory licensing and this type of thing, but also price controls, which is another area which affects the industry in this country, but certainly, in foreign markets, is particularly pernicious.

So in light of that, how do you see U.S. policymakers addressing those international issues? How successful do you think they have been?

GREENWOOD: Somewhat successful. So I mentioned China; China is notoriously not -- has not been good about patent protection. It's almost a cultural issue. But they have become significantly better. And we do -- at a conference in China every year, one of the things we do is we tell them, if you're -- if you -- if you're serious about all these billions of dollars you're investing in biotechnology, you have to have a patent, because you not only -- that it -- you know, it's one thing in infringe our patents, but your own people are going to need intellectual property protection. And so we're seeing gradual movement among the Chinese.

The Indian situation, in my view, is very different. It is -- it is -- they purport to be wanting to infringe on patents. I think nine out of the 20 patent-protected products have been infringed -- not just infringed, but compulsory-licensed and so forth. But they do it in -- they argue that this is a way -- an important way for the poor people in India to get access to these drugs. It really isn't. It's not health policy; it's industrial policy. The Indian drug industry is basically generic. And these decisions are making a certain small handful of people in that country very wealthy by just being able to use this information. If India -- if the Indian government, in my view, was serious about helping its low-income people, of which there are, obviously, hundreds of millions, access to health care, they would be spending more than 2 percent of GDP on health.

WOLFE: Let's go to Rob.

QUESTIONER: Let me turn this to politics for a minute. There are two issues that in the public's mind characterize the whole --

WOLFE: (Inaudible) -- Rob?

QUESTIONER: Oh, I head a company -- I head a technology company in Northern Virginia which is not biotechnology, although I'm invested in biotechnology. And I also sit on the Northern Virginia board of -- the Northern Virginia Technology Council, which is where this question comes from. And we spend a lot of time with the Virginia legislature.

So there are two things that in the public's mind characterizes industry. One is genetically modified organisms, which tend to be an international political issue. I think it's a trade issue, actually, an excuse. And the other is stem cells.

So my question is, it seems to me every time we go to legislature somebody appends a stem cell prohibition on a -- biotech bills. And it's not just Virginia. It's, you know, across the South and other parts, in the Midwest and everything else. But there doesn't seem to be much of a dialogue. It's always a defensive position from the standpoint of the industry.

How are you thinking about those issues today? You know, they -- the stem cell prohibitors will say there's an alternative; you can use adult stem cells. But the industry pushes back and say, no way, you know. It's a strange situation.

So how do we deal with it internationally? How do we deal with it domestically.

GREENWOOD: So two things, stem cells and GMO. And I'll let Bob get in here as well.

But the reason that stem cell research is so important is because every injury and every disease is ultimately a matter of damaged cells one way or another. So the ability to take a somatic cell, a skin cell, for instance, from our bodies and convert it into a pluripotent stem cell and then convert that into any of the variety of cells that we have in our bodies and recreate tissue and body parts and products without fear of rejection -- because they're our own DNA -- is, I think, potentially the most transformational promise of biotechnology.

This is an ideological battle, and it is about the abortion battle Jim Kolbe and I served in Congress, and I used to say that if a gigantic meteorite was heading towards planet Earth and Congress had to vote as to whether or not to launch our nuclear arsenal at it, somebody would attach an abortion rider. It's just the way it is.

And it is -- in most cases you're not going to change people any more than you're going to change your position on abortion. But in some instances you have. And so Orrin Hatch, for instance, is in my view heroic in this regard. He's pro-life, hundred percent voting that way, but has supported the use of embryonic stem cells.

And for legislatures to tell scientists, you don't need human embryonic stem cells, you can use adult stem cells, is ridiculous. They don't know what they're talking about. Both have vast potential, but it would be criminal not to pursue both. There was just a breakthrough on somatic cell nuclear transfer recently, which is very exciting. So that's that.

On the GMO thing, it is as you suggest. There are a host of people who -- most of whom are scientifically illiterate but are convinced that anything that says "genetically modified" must be evil and dangerous, when in fact the World Health Organization and the American Medical Association and every scientific body that's ever looked at genetically modified organisms say you don't have an environmental problem here as long as you have a good regulatory system, and you don't have a health problem.

It is in part protective because Europeans don't want to compete with -- farmers compete with our products. But the fact of the matter is that if you look at what is -- 95 percent of the feed corn grown in the USA, 95 percent of the soy, 95 percent of the cotton is all genetically modified.

I'll give you a quick example. If you're a corn farmer, you have a sworn enemy, and it's the rootworm. It lives in the soil, regenerates, bores into the root of the corn, up the stem, and destroys the ability of the -- of the corn to intake nutrients and water, and eventually it loses its structural strength. Organic farmers learn that there's this bacteria called bacterium (sic; bacillus) thuringiensis that, when -- it secretes a -- I'm going to get in trouble with the science here, but it secretes a protein --

LANGER: Doing fine. (Chuckles.)

GREENWOOD: -- that, when consumed by this worm, causes its gut to perforate, and it does. What the Monsantos and Dows and DuPonts of the world have figured out how to do is to take the genomic sequence of that bacteria that causes that to happen and insert it into the genome of the corn, actually with a gun. They shoot the -- into the embryonic corn, and so they implant it.

And now what happens when you plant that -- farmers plant that corn, as soon as the worm bites the corn, it does, OK? And so they don't have to use insecticide in vast quantities. There are no -- there are no health consequences to consuming that corn, and yet we have legions of people who oppose it.

I -- the transgenic salmon -- salmon is loved and consumed in vast quantities all over the world. Salmon evolved in a way to only eat and grow when its food source was there, which is about half the time. And so even if you're an Atlantic salmon farmer, you can't -- you can't just feed your salmon all day long and it grows. So AquaBounty figured out how to take a gene from a Chinook salmon, insert it into the genome of the Atlantic salmon and then have a -- basically a turn-on switch so it basically turns on its growth system, and the -- and it grows twice as fast. That's been dubbed "Frankenfish," and it's been 17 years we've been trying to get approval for this product -- all politics in opposition to it. And cell for cell, molecule for molecule, it's no different than eating any other kind of salmon.

I was -- there was a member of Congress who was fighting us on this, and I went into her office, and I said, I'm not going to change your mind, but I just want to talk to you about this. And she said, but you know -- after I knocked down every argument she posed, I -- she said, but don't you think Mother Nature just makes everything perfect and man should just leave it alone? And I said, let's go into Whole Foods, and let's find something in there, if you can, that has not been genetically altered by man, since -- for hundreds of years. And there are only a few items, wild fish and a few other items, that we haven't hybridized.

LANGER: I -- just to expand, I think that's -- excellent answer. Just on the stem cell thing, to go over the science point, I mean, what Jim said is absolutely right. I mean, adult stem cells don't behave the same way as embryonic stem cells. I mean, you can -- so -- and with embryonic stem cells, you have the opportunity to cause them to convert into cell types and do things that you cannot do with adult stem cells. So to shut that off means you're shutting off -- researchwise, it means you're shutting off the potential for -- various potential cures and treatments for all kinds of diseases, paralysis, Alzheimer's. I mean, you could go down the line.

I think then you further look at it and say, well, where are those cells coming from anyhow that they're going to, you know, use for embryonic stem cells -- they're usually coming from in vitro fertilization, I mean, which is not illegal. So what's going to happen to those cells anyway? I mean, they're going to -- you know, so if you're murdering them, they're already going to be murdered, I mean, so to speak. So I just don't see that there's anything other than politics involved in a situation like that.

WOLFE: Let's go to Mitzi.

QUESTIONER: I'm Mitzi Wertheim with the Naval Postgraduate School. And I didn't study enough science to understand all of the nuances here, but I have sort of three quick questions.

One is seems to me that now that we have so many opportunities, I don't understand what happens when we get conflicts in drugs. I mean, we hear about -- you know, they'll say, if you're going to take this, don't take these other things. At what point in the research does that get done so we don't have to worry about that?

Second, and I guess the one that's even more important to me, my perception is that academics write for academics. And you're dealing with some very interesting stuff that would be wonderful if you could get it written so the general public could understand it. And when Jevy Peale (ph) took over Scientific American, he only hired English majors, so they could take the gobbledegook, as it was -- and translate it so the public could understand it. I don't understand why you don't hire people who could do that and educate the rest of us, particularly since we put pressure on Congress. And if gets down to these political issues, if we don't understand more the technology, it's very hard for us to know which side to sign up with.

WOLFE: So let's deal with the second question first because is think it's almost an extension of your answer, which is with better education to the public, maybe it eases some of the policy debates if people actually understand what's going on and people don't fearmonger. I know Steven Pinker at Harvard is making a big push now for more clear communication and less gobbledygook, so to speak, to the layman. But communication and science.

LANGER: Yeah. I mean, I think it's a great point. I just would say a couple things. I mean, the thought -- I mean, I -- so I would love to see that happen. On the other hand, the thought of hiring somebody -- you know, right now everybody in academics has a hard enough time hiring somebody to do the science because of the budget cuts, so it's not so easy to -- and I think it would probably be hard to justify to the government, NIH or anyplace, that we're not hiring, you know, scientists, you know, we're hiring writers. So I think it would be a tough sell. I think I'd probably get criticized, probably (turned on the ground ?).

But that being said, I think what you're saying is very important. I mean, so we do write, I mean, you know, things for Scientific American. And they had -- as you were pointing out, sometimes they rephrase what we write. I think that that's great. And there's other places that do it too.

I think to me, the biggest issue, though, is ultimately, you know, we write things, but really, the media outlets, particularly in the U.S. -- I would say this is also a big issue, you know -- you know, around the world and one place where the United States doesn't do as well. In the United States, what usually gets glorified by the media isn't science, isn't medicine. Usually, it's, you know, entertainment, sports, things like that, so -- which, to me, is a -- is very different in other countries.

I'll just give you a personal example. So I remember a few years ago I got the National Medal of Science. That's supposed to be the highest United States scientific honor. So I knew I was getting it. But the first time I heard about it from the public, one of the my students' parents were in Tibet, and they said, oh, it was just on the news here. (Laughter.) Next time I heard about it, another one of my students' parents was Italy -- in Italy, and said, oh, it was just on the news here. Well, in the United States, I think it made, like, no place other than the Boston Globe on Page 5 of the second section. (Laughter.)

But the United States -- you know, and I remember talking to this -- you know, and I've talked to people in other countries, and they said, well, the media in India, in China, I mean, they really, you know, glorify science and things like that a lot more than we do in the United States. And there's a saying that people talk about, which is that you get what you celebrate. So I think really, the -- you know, whatever I can do as a scientist in terms of writing to us in a scientific journal, you do the best you can, and you do write for Scientific American. But the fact is, is that to really reach the public, you're going to have to get the television stations, the media, the movies, the newspapers to write about it.

QUESTIONER: But you see, the reporters need to understand it --

LANGER: They do.

QUESTIONER: -- well enough.

LANGER: They do. I'd say you take reporters at places like The New York Times and Boston Globe, I mean, I think -- Wall Street Journal; I mean, some of those places, I mean, there are very, very smart reporters. At MIT, they have a program called Knights fellows, which, you know, has people get educated. But I think you have a lot of -- the reporters are smart, but they're lucky to get something in a -- in a good place. And usually, what the media wants, sadly, is they're much more interested in writing about a scandal -- even in science, a scandal or a conflict of interest or something like that rather than glorifying science.

And then when they do try to glorify science -- and this is also a challenging thing -- you know, they need a good headline. So I don't know how many times I've seen "cancer cured" in the headlines -- (laughter) -- but it's not cured in the lab. And so you -- so the challenge that they have is reporting something accurately and not having their headline writer, you know, make it sound, you know, real and still having it on a reasonable page. So I think -- so I think your point's a great one, but I think it really is a broader issue than just -- (inaudible) -- this is my two cents.

WOLFE (?): When do you want the drug interaction thing?

LANGER: Oh, yeah. Drug interaction thing. Well, that comes -- I mean, basically, like a lot of pharmaceutical companies, I mean, that'll be part of what somebody's going to need to write to the FDA. I mean, they're going to have to deal with those things, and so you would do studies in animals and ultimately people to look at drug interactions.

GREENWOOD: So on the communication thing, it's a big part of our challenge. We are constantly -- because we are -- we have -- there are so many people who wake up every morning trying to defeat what we're doing, and, you know, the old saying, a lie can get around the world before the truth can tie its shoes. But so it's a very challenging thing for us to do because we don't have a Budweiser budget in order to, you know, go out and advertise and try to educate people that way. We do things like biotech boot camps, where we'll go into a city, invite all of the local press and say, let us walk you through what biotechnology is, let's answer your questions; we actually do a little -- couple of little experiments with them to try to create literacy among the working press.

WOLFE: Now we've got about nine minutes left, so I'm going to Laura, and then I may consolidate some questions. We'll keep our questions short and our answers short as well.

Laura.

QUESTIONER: Hi. Laura Efros with PaxVax, which is a small privately held vaccine company. First, I'm gratified to hear that some of the greatest scientific minds are finally taking on the problem of frizzy hair. (Laughter.)

LANGER: (Chuckling.) We'll see what we could do. (Laughter.)

QUESTIONER: Right. My question -- you haven't commented at all around the issue of the lack of investment and limited pipeline for drugs and vaccines for diseases that primarily affect low-income countries. And recently there have been some incentives like priority review vouchers and significant funding from Gates Foundation, but that clearly is not addressing the issue. Can you comment a little bit on what more is needed in terms of incentives, funding, maybe even purchase guarantees, what sort of things are happening?

GREENWOOD: Sure. So it's absolutely true that if you look at diseases of the developing world, whether it's malaria, tuberculosis, dengue fever, et cetera, whole -- there's a whole list of those -- the market doesn't work very well. They don't have the resources to buy the drugs, pay for the drugs, and so you can't spend a billion dollars in -- you know, 80 percent of the drugs that are sold in the U.S. that are approved by the FDA never make a profit. So we rely on 20 percent of the drugs to make a profit, so you certainly can't do it in a market-based system. So there are programs like PEPFAR and so forth, where we inject dollars into that.

But we formed a thing called Bioventures for Global Health, and the point of that -- and Gates funded us for a long time and then stopped, but the point of that is to say what -- my vision of this is to say, here are a group of noble people trying to solve -- meet unmet needs in the developing world, and they run into science challenges -- how do you keep -- how do you make a vaccine that doesn't have to be refrigerated, something like that -- and meanwhile over here in the developed world there are thousands of biotechnology companies who maybe aren't working on -- they're not working on that, but they may be -- they may have technology and knowledge and expertise that could be applied to that program, to that need.

And so we try to be a clearinghouse so we can create fora where those who need the technology can alert the biotechnology world so that the biotechnology world set can say, you know what? We could help you with that. We can't invest a billion dollars in it, but if Gates or somebody else wants to help subsidize, you know, we'll let some of our scientists work on that to try to meet that need. It's -- that program has not been as successful as I want it to be, but we recently had another meeting with Gates and we're trying to figure out how to -- how to make it. So --

WOLFE: Let me hear the questions and maybe we can consolidate some themes.

Let's start with Nancy.

QUESTIONER: Hi. I'm Nancy Bearg, George Washington University. I teach a course on leadership, and so what I'm very interested in, Dr. Langer, is your creative process and how you decide how to apply your -- how you make the choices of how to apply your intellect and energy.

WOLFE: All right. Let's hold that for one second. That's a great question.

Julia (sp).

QUESTIONER: One, congratulations to the council for holding this session on this topic. And two, I just want to make a pitch for women with straight hair. (Laughter.) They ought to get equal time in terms of your --

LANGER: We have that too.

QUESTIONER: Do you? Then I'm -- then I leave here happy.

And I just want to make a comment to Jim. As a strong supporter of biotechnology, I have for now since the mid-'90s been very concerned about a public relations strategy that starts with telling people that they're too stupid to understand the technology. The problem with ag biotech, as I tried to point out in a small letter in The Washington Post yesterday about it, is -- has nothing to do with people's understanding or lack of understanding of science; it's about trust.

But my real question to Jim is that I've been in the business of science policy long enough to remember when it was an issue where you could get Republicans and Democrats to come together, because all of the problems that you've laid out here tonight -- today are not new. They all involve what Nancy teaches, which is leadership. And what I'm -- I see leadership coming out of the White House on science. You may not agree with all of it, but it is an attempt at leadership. I've never, in the 20 or more years I've been involved in this business, seen less leadership coming from the Republican Party for all the very genuine, serious problems that the two of you have laid out today. And I don't know what's going to solve that.

WOLFE: OK. Let me hold that for one second on politics.

Dana.

QUESTIONER: Thank you. Dana Marshall with Transnational Strategy Group. Some of us have a bad hair day every day, so not much sympathy there. (Laughter.) The question is one on bringing this back a bit to competitiveness. I keep rolling around in my mind as we've been discussing these things what's happened, for example, in the electronic sector here, those kinds of sectors where we've turned a high-tech trade surplus into an enormous and growing deficit.

Why did that happen? We don't have the time to go into that, but the question is whether some of the things which cause those problems in that sector could be in the future for the sector we're talking about here.

WOLFE: OK. Jean Francois (sp).

QUESTIONER: One -- (inaudible) -- question here. I'm the head of the -- (inaudible) -- department at the French embassy. I've been following biotech for years and years. I disagree totally with the statement of Jim about the reason why Europeans don't like GMOs is that they want to protect their farmers. That's not true. Farmers in Europe -- farmers in my country, at least, would be delighted to use GMOs if it increases their margins and their profits.

The problem in Europe is a problem with consumers and greens. I happen to be in favor of GMOs, so. And to convince consumers --

GREENWOOD: In that case, I agree with you. (Laughter.)

QUESTIONER: -- and to convince the greens, you would have to have a much better PR policy than the one which is implemented currently by the big guys in this -- in this field.

WOLFE: OK. And I'm sorry. I can't read your placard.

QUESTIONER: That's not a question. (Laughter.)

WOLFE: Rick, yeah.

QUESTIONER: Rick Gilmore, GIC Group. For full disclosure, I'm also trustee for Syngenta, Bayer CropSciences and formerly on the advisory board of the Rockefeller Foundation. My question, again focusing on competitiveness, is we used to have a very hospitable environment here in the United States for ag-biotech.

And I wonder if that has continued when you look at the length of time it's taken to get the trials completed for industrial-use corn and our failure really to make much progress where there's a huge seed potential market in Africa, developing countries, for biotech seed. It seems that if the United States wants to have a mark in the biotech area and recognizes that as a value for competitiveness, we could do a better job at that.

WOLFE: OK. And then Sanford, very quickly.

QUESTIONER: Sanford Wu, Johns Hopkins Medicine. My question is about commercial or academic collaborations internationally. Oftentimes, people talk about worries about IP, worries about research ethics, research integrity and so forth. If you could maybe talk to us about some of your risks, but also some of the strategies or tactics that you think are successful to kind of create conditions or environments for collaborators to really partner together in a very transparent fashion?

WOLFE: OK, so the way I'm going to do this --

MR. : For the second hour.

WOLFE: Right. (Laughter.) So the way I'm going to do this -- because we -- we'll go two minutes here, so a minute each. You can select for either Bob, your creative process -- if you have some short comments there -- the trade deficit, how we might avoid that, notion on biotech seed, political dysfunction. (Laughter.) Start with Bob.

MR. : We'll see how creative he is.

LANGER: So I would say the answer to how I pick projects is what I think will have the greatest impact. You know, in other words, we look at all the things we do and then with the tools we have, the kinds of people we have, you know, what can we do which will have the greatest impact? I mean, that basically is the guide.

And the other question I'd pick is, you know, in terms of patents with different countries, I'm not sure that's any different than patents with different institutions in the United States. I think you just need the two groups to get together. And you know, MIT's done a pretty good job of that. And I really have not seen that be a terrible problem. Sometimes there's a -- you know, a certain amount of negotiation that goes on, but it gets worked out. And I think the same thing could happen anywhere.

QUESTIONER: And that's different from Kansas to China?

WOLFE: We'll hold that one second.

LANGER: China might be different, but I don't -- but, I mean, we haven't had that experience. But I think a lot would depend on the institution. In other words, if there were jerks at Kansas, you know, or jerks in China, then we'd have a hard time. But it depends whether the people in their patent office are going to be difficult or not.

WOLFE: Jim.

GREENWOOD: I would actually say, Julia (sp), that we find for the most part a bipartisan approach to our issues. We don't see a lot of partisanship. So for instance, the biggest battle that we've had in the recent years was data exclusivity for bio-similars -- huge battle. On one hand, we had the biotechnology industry. On the other hand we had the president of the United States, we had the AARP, we got some big employers.

And we won that in the -- in Henry Waxman's committee, 47-11 -- very, very bipartisan outcome. The White House -- the disconnect that we feel with the White House is that the president -- well, he's said some wonderful things. He's been right on stem cells. He's been right on expanding access to health care. The administration is good on -- Secretary Vilsack is good on ag-biotech products.

But there has been this disconnect with regard to understanding the impacts I talked about earlier of reimbursement on investment in the technology. We're going over. We're talking about 10 CEOs to the White House in a couple of weeks and we're going to spend two-and-a-half hours with the top White House biotech staff -- policy staff, to have a very frank discussion about how we can better align ourselves.

WOLFE: Well, the good news is we could spend another two-and-a-half hours here, but our time is up today. I appreciate everyone. And you guys did a great job. Thank you. (Applause.)

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