Google's plan to restructure is raising questions about what will happen to a promising Google-backed startup that aims to advance research and drug development for neuro-degenerative disorders caused by aging.
Calico, an independent company for which Google is the main investor, was formally announced in 2013, and is run by Arthur Levinson the former CEO of Genentech. Last year, it announced that it had entered into a partnership with AbbVie, under which each company would invest $250 million with an option for each to add an additional $500 million. It also said it had entered into a drug development and research partnership with the University of Texas Southwestern Medical Center.
On Monday, Google announced plans to reorganize under a new public holding company called Alphabet Inc. and it will begin reporting under this structure with its Q4 earnings which will be announced in mid-Jan 2016. As part of this change, the company will be run under a new operating & reporting structure in which the main Google businesses (including search, ads, maps, apps, YouTube & Android) will be distinct from projects that analysts say have yet to prove profitable, and that list includes Calico.
The restructuring will give investors the ability to isolate core Google profitability and emerging business investments, according to JPMorgan analyst Doug Anmuth.
“We view the new structure as an elegant way for Google to continue to pursue long-term, life-changing initiatives while simultaneously increasing transparency and management focus in the core business,” Anmuth said in an investors note.
But it will also make it more apparent how much money Google sinks into ventures like Calico with little or no return.
Experts within the geroscience industry, a field that aims to understand the relationship between aging and age-related diseases, are curious about the restructuring and what it may mean from the longevity of Calico. After announcing it partnership agreements last year, the company has been relatively quiet on what its doing.
When the Google-based company was announced “it was validation of what we've been talking about a long time which is improving public health by going after aging and not just the diseases associated with it,” said S. Jay Olshansky, a professor of public health at the University of Illinois at Chicago that focusing on aging issues. “But Calico hasn't really revealed what they are doing in any detail.”
The company appears to lack a concrete business plan, according to Alex Zhavoronkov, CEO of bioinformatics company Insilico Medicine Inc. which specializes in drug discovery and drug repurposing for aging and age-related diseases. Despite this, given the company's financial backing, it's crucial that it survives.
“The future industry is riding on them,” Zhavoronkov said. “We hope they don't fail, and they make a profit. If they were not to survive it could discourage investors from investing in companies like ours.”
Others agreed, noting that there are rumors that Calico's funding could be the equivalent National Institute on Aging's, which was around $1.2 billion in 2014.
“Certainly an enterprise of that size disappearing from the map would be noticeable,” said Thomas Johnson, a leading expert in aging research and genetics and professor of integrative physiology at the University of Colorado at Boulder. “They would be sorely missed.”
A Google spokesperson declined to comment and a direct request to Calico for comment was not immediately returned.