NewLink Genetics Has Attracted Big Dollars for its Cancer, Ebola Research; But Can It Keep attracting Talent?
But one small firm here is drawing notice for its cutting-edge research on Ebola and cancer, despite being far removed from the drug industry’s usual hubs.
NewLink Genetics Corp. has recruited scientists from around the world to work in laboratories nestled between Iowa State University and crop fields. The company’s biggest shareholder is a large soybean company owned by Iowa’s sole billionaire.
NewLink stands out at a time when the drug industry increasingly is congregating around hubs such as Boston and San Francisco. The company’s success so far, including the signing of lucrative research partnerships last year with Roche Holding AG and Merck & Co., suggests drug R&D can still thrive outside of these urban clusters.
“The Midwest has spawned many great, innovative companies,” says NewLink’s co-founder and CEO, Charles Link, pointing to Minnesota’s medical-device makers and Indianapolis drug company Eli Lilly & Co. “I think sometimes my friends and colleagues from the coasts underestimate the potential of the Midwest.”
But as NewLink grows, it may face a crossroads: Can the company hang onto its Midwestern roots while still attracting talent, or will it ultimately need to make a change? Already, the 130-employee company is investing in locations far away from its core.
Last year it leased space in Austin, Texas, because that city has better flight connections and is more appealing to sales workers. NewLink also opened a small satellite office near Boston for Ebola research. Dr. Link acknowledges the Ames headquarters may not appeal to every job prospect, and says the newer locations could serve as alternatives for new hires if the firm continues to grow.
“Building an early-stage biotech company is a really hard thing,” says Peter Barrett, a partner with venture-capital firm Atlas Ventures in Cambridge, Mass. “Trying to get very specialized people in a remote area may be very difficult.”
Dr. Link, 55 years old, says he wanted a Midwestern upbringing for his children when he moved to Iowa in the 1990s. A former National Cancer Institute oncologist in Bethesda, Md., he relocated to work for Iowa Methodist Medical Center in Des Moines, where he led research into cancer treatment, including a cutting-edge approach called immunotherapy, which harnesses the immune system to fight cancer.
In 1999, he started NewLink by spinning out some of the immunotherapy technology from the hospital, which will receive royalties on sales of any resulting products.
For help with the startup, Dr. Link called an old colleague from the National Cancer Institute’s Maryland campus, Nicholas Vahanian,who initially rejected the idea of moving to Iowa. A native of Turkey, Dr. Vahanian says he didn’t think Iowa was “where the action was.” But he changed his mind after visiting, and agreed to cofound the company and serve as its president and chief medical officer.
NewLink recruited other scientists from NCI and elsewhere in the U.S., and from as far away as China and Russia. It also tapped a local institution for chemistry graduates: Iowa State, which dominates Ames.
NewLink was and remains one of few biotechs in town, though Iowa State’s strong veterinary program makes Ames a hub for animal research. The town is home to an animal-health division of Germany’s Boehringer Ingelheim and the U.S. Department of Agriculture’s National Animal Disease Center. The Ames Laboratory is part of the Department of Energy and is on the ISU campus; it specializes in materials science, among other things.
During a tour of NewLink’s labs, Gary Potter, vice president of manufacturing and supply chain, pointed out the window to a new Boehringer Ingelheim animal-health R&D site under construction. “Up until a couple of months ago, that was a cornfield,” said Mr. Potter, who used to work for the biotech Abgenix in California.
Dr. Link raised cash for NewLink from investors including soybean billionaire Harry Stine, whose Stine Seed Farm Inc. owns about 25% of NewLink shares.
Based in Adel, about 50 miles southwest of Ames, Mr. Stine’s seed empire was built partly by licensing proprietary seed genetics to other companies. He sent scientists to Ames so that they could vet NewLink, and then agreed to invest because he wanted to support anticancer efforts, says Dr. Link. Forbes has estimated Mr. Stine’s net worth at more than $3 billion. A spokesman for Stine Seeddeclined to comment on New Link.
NewLink’s focus on one of the hottest areas of cancer treatment—immunotherapy—has attracted interest from one of the industry’s most respected R&D shops: Roche Holding AG’s Genentech unit.
A team of Genentech scouts flew to Ames from their bayside headquarters near San Francisco last year to visit NewLink. The Genentech group included Bruce Roth, one of the company’s heads of drug discovery. Dr. Roth is known for inventing the blockbuster cholesterol drug Lipitor at a predecessor company to Pfizer Inc.
Dr. Roth says he was eager to visit Ames because he earned his Ph.D. in organic chemistry from Iowa State more than three decades ago. In October Genentech agreed to pay $150 million to co-develop and potentially market an experimental NewLink cancer immunotherapy in early-stage testing for breast cancer and other tumors. Genentech may make additional payments of more than $1 billion if drugs from the collaboration reach the market.
What started as a side project at NewLink drew more big-pharma attention last year: Ebola vaccine research. In 2010, NewLink licensed an experimental Ebola vaccine from the Public Health Agency of Canada.
As last year’s Ebola outbreak in West Africa worsened, NewLink contacted Merck for assistance in putting the vaccine in vials. This led to Merck’s agreement in November to pay $30 million to license the vaccine, one of two the U.S. government is now testing in a large clinical trial in West Africa. The study’s start in February triggered an additional $20 million Merck payment to NewLink, which will also receive sales royalties if the vaccine makes it to market.
NewLink went public in 2011. Income from the deals with Merck and Genentech helped the firm turn its first profit last year, though it still has no products on the market. Its lead drug in development—which isn’t part of the Merck or Genentech partnerships—is an immunotherapy for pancreatic cancer that is in late-stage testing. The company plans to double its workforce in the next year, including adding jobs in Austin.
The company has a market capitalization of about $1.57 billion. The stock had a big drop last year after a clinical trial of the company’s experimental pancreatic-cancer drug didn’t meet the threshold for an early halt, but the stock has since regained its losses and the trial continues.
Dr. Link says he’s heard the skepticism about NewLink’s location. A lawyer representing Bay Area venture-capital firms once likened the firm to the solitary cliff-side branch that Wile E. Coyote clung to in the old Road Runner cartoons. “That little branch is your company,” Dr. Link recalls the lawyer saying. “You’re out in the middle of nowhere.”