You can license a medical advancement to a drug company, but you can't make it sell it.
That belief led executives for Baylor Health Care System, Dallas, to fund and launch its own private biotech company, ODC Therapy, which will try to introduce an unusual cancer therapy to both the broad market and Baylor's own patients.
Rather than licensing its cancer vaccine therapy to a pharmaceutical company-a typical route for a medical research institute-Baylor will oversee testing and development of the therapy, giving the treatment its best shot at success, Baylor executives said. "I don't think that it would happen" if the therapy were licensed to a pharmaceutical company, said Tom Turpen, president of ODC. Turpen also works for a consulting firm that worked on the project, Technology Innovation Group, Austin, Texas.
Moreover, the launch of ODC is designed to benefit multiple parties: Baylor patients, who can continue to participate in trials for the therapy; Baylor's researchers and scientists, who can potentially get a cash windfall from their discoveries; and the Baylor system, which also stands to earn a profit if ODC is a success.
Baylor joins a growing list of healthcare organizations taking development of their discoveries in-house, in part to take advantage of financial opportunities. "We see this as a growing trend," said John Thomas, senior vice president and general counsel for Baylor Health Care System.
Baylor seeded the startup of Dallas-based ODC with $4 million in June as part of its regular investment program and the new company already is estimated to be worth $17 million, said Michael Ramsay, president of Baylor Research Institute.
But Baylor will need additional outside financing to keep the process moving, Ramsay said. It would take about $100 million-and about three or four years-to get the vaccines to market, he said. Private equity financing or a public offering are the two likely routes they'll take, he said.
Having Baylor on board as an investor also is likely to make it easier to get additional financing, according to Baylor executives. Like other biotech startups, stock incentives were awarded to key players in the development of the therapy, Turpen said.
The therapy entails removing what are called dendritic cells from a patient, culturing and loading the cells with antigens, and then reintroducing them into the patient, according to Baylor. The goal is to stimulate the immune system to destroy tumor cells, and the treatment is designed for patients for whom conventional methods did not work.
The customized approach of the dendritic cell therapy makes it an ideal candidate to keep its development in house, Turpen said. The therapy is unique and pharmaceutical companies don't have the infrastructure in place to develop something like this, he said. Even a biotech company developing a therapy in the same ballpark as Baylor-CancerVax-wouldn't be in a strong position to develop it given how unusual Baylor's approach is, Turpen said.
Among other established players that have ventured into similar entrepreneurial territory is Wake Forest University Health Sciences, Winston-Salem, N.C., a division of Wake Forest University Baptist Medical Center. Wake Forest's roster of private companies includes: PointDX, a radiology technology company, and Kucera Pharmaceutical Co., a drug biotech firm.
St. Jude Children's Research Hospital, Memphis, Tenn., in 2003 launched a production facility for drugs, vaccines, proteins, gene-based molecules and other biological products. The facility is designed to produce vaccines and medicines that most pharmaceutical companies wouldn't pursue, according to the hospital.