Regulators almost killed biotech before it began

A short post on a good book

Most people identify the founding of Genentech to commercialize recombinant DNA technology in 1976 as the founding of biotech as a field separate from pharmaceuticals or the health industry. Genentech brought together so many of the elements of biotechnology we now take for granted:

1. An exciting new technology that unlocked an entirely new way of treating diseases

2. Rapid advancement of the technology from the laboratory to the real world

3. Licensing of the technology from the universities where it was discovered

4. Close involvement of the professors who invented the technology with a for-profit company

5. Battles for patent rights

6. Huge sums of money invested by venture capitalists with the promise of huge returns shortly thereafter

7. Strategic partnerships with existing pharmaceutical companies

Before Genentech, none of those elements had ever been in play all at the same time. After Genentech, they happened again and again, with RNAi, CRISPR, and mRNAs. All of this is pretty well-known for people who are into biotech history (i.e. nerds).

What’s less well known is how big a factor regulation played in the founding of Genentech. At least, I personally was unaware of this until reading Sally Smith Hughes’s excellent book Genentech: The Beginnings of Biotech. Put simply, not only did regulations almost destroy Genentech before it began (and therefore biotech as an industry), but Genentech’s success as a company was in large part due to their success at dodging regulations.

It’s difficult, looking back now, to understand what exactly everyone was so afraid of. Genentech’s stated purpose was to figure out how to make recombinant human insulin, or, to use everyone’s metaphor at the time, to make bacteria into factories for human insulin. This was a big deal, because the only sources of insulin prior to this were the pancreases of pigs and cows.

Pig and cow insulin wasn’t nearly as good as human insulin, was more likely to cause an allergic reaction, and presented huge amounts of supply chain complexity. Recombinant human insulin was almost certainly going to be an improvement on every front, and, when it came on the market, it instantly was. Within a decade of synthetic human insulin’s approval, most patients switched to synthetic human insulin. Now, well over 99% of patients use synthetic human insulin, and diabetics are much better off for it.

All of these advantages were foreseen from the very beginning. And yet, from the very first announcement of successes in cloning DNA (the foundational technology of recombinant insulin) in 1973, the first reaction of the National Academy of Sciences and the National Institute of Medicine was to try to stop research into it and, simultaneously, to prevent any patenting of it. The National Institute of Health followed shortly thereafter with their own restrictions, as did a number of cities, including Cambridge and Berkeley, the towns where the universities most likely to do the research were located. Fears of superbugs, genetic chimeras, and companies owning life itself abounded (and still do, to be fair).

This was the environment that Genentech started in as a tiny company with only a few hundred thousand in funding. Their only real asset was their scientific co-founder, Herb Boyer, a professor who was one of the two pioneers of the field, although that advantage was mitigated by the fact that he had a full-time job as a research professor.

This is Herb Boyer at around the time Genentech was founded. I don’t know what you think of when you hear “full-time research professor and co-founder of first biotech company ever”, but probably not this guy. And yes, his personality is supposedly exactly what you’d expect from this picture. He was/is a friendly, boisterous hippie.

Ironically, these modest beginnings proved to be to their advantage. The regulatory fervor around recombinant DNA scared large companies off from pursuing recombinant human insulin, as they could be easily targeted by federal-level, state-level, or city-level regulators. The restrictions that came alongside federal funding hamstrung university labs while pursuing it, as they were forced to do their experiments in ultra-high security bio labs with limited resources and availability.

But Genentech, who privately funded their experiments and did them in a warehouse in South San Francisco, were largely immune to these pressures. The only exposure they had was via universities that they licensed the technology from, which had to be handled by careful contract negotiation.

This gave Genentech the freedom to actually prove that they could make human insulin. Once they got to that point, they partnered with Eli Lilly, a much larger pharmaceutical company who had the regulatory expertise to actually get insulin onto the market. But this could only happen once the existential threat of regulation had passed over Genentech’s factory.

Some short musings on the parallels of Genentech’s story to today follows.