11
Dec
2017

Biotech’s Test: Root for a Tax Windfall Or Support the Next Generation of Scientists?

Grad students are underpaid and underappreciated. Many barely scrape by. Stagnant grant funding for science and uncertain career prospects are the norm.

Yet we all know grad students are the mitochrondria of the scientific enterprise. Without them, PIs wouldn’t be looking like geniuses in Nature and Science. Biotech companies wouldn’t have enough of the worker bees they need.

Now we have a tax bill moving through Congress at breakneck speed that would slash corporate income taxes, the estate tax, and allow for a sweet deal on repatriating overseas cash. Surely, there’s a lot here that corporate boards like.

To achieve those objectives, the bill under consideration bashes graduate students over the head.

Dumb ideas flow like a river through my news feed every day. But this provision in the tax bill, to eliminate the tuition waiver on taxes for grad students, would kneecap one of the great competitive advantages of American industry. The way it works now, graduate students’ tuition waivers — which they get for doing the real work of teaching or conducting research — are deductible. Under the bill that passed the House last month, tuition waivers would be eliminated. That would subject students to higher taxes.

Biotech leaders concerned with long-term industry self-preservation ought to stop and think.

Check out this side-by-side analysis that I came across from a grad student at MIT. This spreadsheet was developed by Kathy Shield and Vetri Velan, a second-year nuclear engineering PhD student, and a third-year physics PhD student, respectively, at UC Berkeley. This spells it out for lowly grad students in the trenches at UC Berkeley and MIT – a couple of our best public and private research institutions.

Ask yourself, do you think you could live on $35,000 or $40,000 in a high-rent district like the San Francisco Bay Area or Greater Boston, as things are today? How about if someone raised your tax bill by $1,385, or maybe $9,584?

Students around the country are scrambling to run the numbers for themselves, and thinking about their Plan B. Many are protesting around the country, no surprise. The bill is in conference committee now, where differences get hashed out between the House and Senate versions.

The rubber hits the road here.

Why should you, a biotech leader, care? I spoke last week with leading faculty, staff, and grad students at MIT, UC Berkeley and Harvard. None of these people were left-wing bomb-throwers, but all were concerned about the financial hardship about to be imposed on grad students.

Here’s Phil Sharp, the Institute Professor at MIT and Nobel laureate:

Phil Sharp, Institute Professor, MIT.

MIT like other universities is at the forefront of job creation and training the next generation of leaders and workers. Taxing the tuition provided by MIT to graduate students is total nonsense and mis-directed. This will, even at MIT, reduce the number of students being trained, no matter what the leaders say. At many other universities, in addition, it will shift the demographics of graduate students to those with more family resources. There are several good aspects of what I understand are part of the tax bill, but this is certainly negative for the country and society.

Ashvin Bashyam, the president of the MIT Biotech Group and a fourth-year PhD candidate in Electrical Engineering & Computer Science at MIT advised by professor Michael Cima, said a lot of students are worried, but he has confidence that the MIT administration will find a way to soften the blow.

Ashvin Bashyam, fourth-year PhD student, MIT

Bashyam said:

In the short-term, it may cause us to pay higher taxes. But long-term, MIT administration is 100 percent on our side. They’ll do what they can to mitigate the effect…We at MIT are fortunate. We’re a private institution, very well-funded, and our administration is awesome. They’ll do what they have to do to make sure it’s not overly burdensome on us. But I don’t think that’s the case everywhere around the country…If you look at UT Austin, where I’m from, it’s a state institution where tuition is set by the state. I think [the tax change] could have a pretty big effect.

One Harvard graduate student in biology sounded nervous, but somewhat sanguine that things will work out in the end, much like Bashyam. “If it does come to it, universities could change administrative things on their ends,” this student wrote. “Right now, graduate students have a large ‘tuition’ each year but they don’t actually pay it as it is waived. So universities could theoretically just stop charging graduate students this tuition.”

Maybe some universities, especially the well-endowed ones, could shuffle some paper around to soften the blow on grad students. But ultimately, someone needs to pay to keep the enterprise healthy and vibrant. And if universities can’t or won’t cut tuition, how will this affect students that come from less-privileged family backgrounds?

Kathy Shield of UC Berkeley said she’s hearing about students having vastly different reactions to the tax bill, largely depending on their family situation.

Shield said:

We’ve heard from graduate students who say they’d go back to industry to pay for grad school, who wouldn’t have even started if they’d known this was going to happen, and who intend to move out of the US as soon as they graduate because of cheaper costs of living for them and their families. I’ve also heard from students who don’t expect this will change their living situation at all.

Science isn’t supposed to be just a playground for children of the wealthy. We like to think it’s supposed to function more like a meritocracy.

This tax bill represents a test of biotech industry values. How does the industry balance short-term objectives with long-term goals? Is it OK to pocket windfall tax benefits in the short-term, if that means forcing thousands of budding scientists into some other line of work?

If anything, we should be investing more in grad students. If institutions were willing to chip in a pittance — maybe $15,000 to $20,000 a year — for real support of graduate student associations, they’d get much more connectivity among students, and between students and their future employers. That’s one low-cost/high-benefit way that any great research institution could foster more entrepreneurship, and save companies money in on-the-job training.

Formal representatives of the biotech industry, as usual, have little to say about the plight of the human capital pipeline. BIO’s official statement from Nov. 2 applauded the work of House Republicans, saying “This reform is vital to maintaining American leadership in biotechnology innovation.” (Full statement here).

BIO president Jim Greenwood didn’t respond when I asked him Friday about BIO’s position on the tax increase for grad students.

Standing with students is the right thing to do. Decades of federal investment in basic science are bearing fruit. All you need to do is read the biotech headlines of the past week. Who are the people who will keep the wheels turning, the ones who will execute on the great ideas and come up with new ones? Why would anyone want to poison this wellspring of productivity, in exchange for a quick payday?

The paydays for everyone, for decades to come, could be so much larger.

You can contact your member of Congress by clicking here.

6
Dec
2017

The Long Run Podcast: Steve Graham on Racism in Corporate America

Steve Graham is today’s guest on The Long Run podcast.

Chances are you don’t know his name, but Graham is a major behind-the-scenes player in biotech. Graham is the co-chair of the life sciences practice at the law firm Fenwick & West, and managing partner of the firm’s Seattle office. He has been working with biotech boards, handling corporate law, securities offerings, and mergers and acquisitions all the way back to the industry’s founding in the early 1980s. Immunex, the company that created one of the world’s best-selling drugs, Enbrel, was the client that compelled him to specialize in biotech.

Steve Graham, co-chair, Fenwick & West Life Science Practice

Six years ago, Graham was appointed co-chair of the Securities and Exchange Commission’s Advisory Committee on Small and Emerging Companies. He continues to hold that position. He’s been on a bunch of ‘Best Lawyers’ lists. In 2015, he was named “one of the 19 most influential people in D.C. who can affect your small business” by The Washington Post, specifically for his role with the SEC.

Graham also happens to be black.

Last spring, Graham wrote a revealing memoir, chronicling his rise to the top of corporate law. It’s called “Invisible Ink: Navigating Racism in Corporate America”.

I’ve known Graham for 15 years, going all the way back to when I profiled him for The Seattle Times. Looking back, I’m proud of the article. But I realize after reading his book that I only knew the barest outlines of the challenges he faced.

How did he make it? What advice does he have for young people of color? How can all of us create a more inclusive biotech industry? This is a hard conversation to have. This issue goes way beyond biotech, to every part of our society. But it’s an important conversation we need to have.

Thanks to the sponsors of The Long Run: EBD Group, co-organizer of the Biotech Showcase in San Francisco, and to Presage Biosciences.

Now, join me and Steve Graham for The Long Run.

29
Nov
2017

The Long Run Podcast: Steve Holtzman on Becoming a Biotech Political Activist

Steve Holtzman is the latest guest on The Long Run podcast.

He’s the president and CEO of Boston-based Decibel Therapeutics, a venture-backed startup developing treatments for hearing loss.

Steve Holtzman, CEO, Decibel Therapeutics

Holtzman has been a familiar figure around biotech for more than 30 years. He has had leadership roles at Millennium Pharmaceuticals, Infinity Pharmaceuticals, and Biogen.

Little known fact: He was a founder and president of a startup called DNX Corp in the mid-80s. That company attempted to become the first transgenic animal company to make organs for transplant into humans. Since that experience, Holtzman has been steeped in many of the big bioethical debates.

Over the past year, Holtzman has become more outspoken about a wide range of political issues. We’re talking women’s health, racism, immigration, and the need for government funding of basic science. He has mobilized other biotech CEOs to speak out on these issues they have historically avoided.

I asked him why he’s felt compelled to step up his activism. This is a fascinating conversation.

Before you stick in those earbuds or turn up your car speaker volume, listen to this deal! The Biotech Showcase, co-organized by EBD Group, is coming up Jan. 8-10 in San Francisco. Listeners of The Long Run podcast can get a $200 discount if you type in “longrun” – all one word – as the registration code when you register for Biotech Showcase.

Click on the banner below to register, and take advantage of your $200 discount. Please also feel free to share this super-duper promo code with your friends on social media. By sharing this discount, you’ll give other people a great deal and help sustain the podcast.

Now, join me and Steve Holtzman for the next episode of The Long Run.

27
Nov
2017

Female Contraception, Health and Liberty

[Note: This article was first published on the Leadership and Biotechnology Blog.]

Against the backdrop of tax reform, ongoing dialogue around sexual harassment, deepening investigations into the role of Russia in our elections, the crisis in Korea, attempts to dismantle the Affordable Care Act, and continued attempts to restrict immigration and remove Dreamers from the USA, President Trump’s assault on women’s reproductive rights may be seen as a minor sideshow.

Steve Holtzman, CEO, Decibel Therapeutics

But it isn’t.

Indeed, it is an assault on women through an attempt to control fundamental matters that affect their health and the exercise of their liberty.

The matter first drew attention during the campaign when he said that, were abortion to be made illegal, women receiving one “should be subject to some form of punishment.” His appointment of Tom Price as the (now departed) Secretary of Health and Human Services was the harbinger of the relentless attack, via executive rule and agency regulation, on women’s health rights that has characterized his first 10 months in office.

We hope with the appointment of Alex Azar as the new Secretary of HHS will be a sign of more thoughtful, human and rational policies. However, the President’s latest salvo against women’s rights is in place and his executive order rescinding the provision of the Affordable Care Act that requires health insurance plans to provide coverage of female contraception is unjust, ill conceived, unwise, and uneconomic.

Jeremy Levin, CEO, Ovid Therapeutics

Why should this latest action draw the attention and active opposition of we as biotechnology executives?  After all, aren’t views of sexual activity and, hence, contraception exclusively the purview of one’s personal moral perspective, not mandated by one’s professional position?

We humbly put forth a contrary perspective.

The US biotechnology industry leads the world in the discovery and development of innovative, transformative medicines to address major unmet medical and human needs. We are, therefore, dedicated to creating a country, and world, of healthier people. This is the raison d’etre of our industry and why we do what we do. The people for whom we to seek to provide better, healthier lives are not defined by economic class, ethnicity, nationality, sexual orientation, or gender.

While human health is a good in and of itself, it is also a primary precondition of enjoying our broader liberties; and, a healthy populace is key to the prosperity of a nation. National policies that promote health embody our nation’s commitment to a democracy in which liberty is maximized for all while also making plain good economic sense.

Unwanted pregnancies often create significant health risks. They also limit the ability of a woman to exercise her liberty to make choices that are best for her health, her work, and her family. Increases in the number of unwanted pregnancies directly result in an increased number of abortions, which no one—regardless of political or moral beliefs—desires.

The availability of contraception for all women who wish to use it is, therefore, essential to women’s health and the rights and liberty interests of women, as well as to decreasing the number of abortions and providing the basic conditions necessary to enable our country to grow and economically prosper. To achieve these interrelated goals, health insurance must include the provision of contraception as a mandatory component of coverage. This coverage enables women to choose the method that meets their needs and have consistent, uninterrupted access to it.

No matter where they work, regardless of economic status, women need and deserve access to birth control through health insurance. An employer’s beliefs have no place in a woman’s private decision to obtain birth control, just as they have no place in any other conversation about a patient’s healthcare or exercise of her rights and liberty.

Furthermore, the executive order reflects a profound bias against women and an inequality in the rights of men and women to engage in sexual activity without procreative intent, and of living with the potential consequences thereof. While, under the new rule, mandatory coverage of female birth control will cease, coverage of male erectile dysfunction drugs will continue.

Millions of women have gained access to birth control through the Affordable Care Act. The executive order puts all of them at risk of losing this vital aspect of their healthcare and basis of exercising a broad array of their rights. We believe that leaders of the biotechnology industry have an obligation to raise their voices in opposition to social policies that contravene the foundational bases of the existence of our industry as well as those that are inimical to the rights and interests of our employees.

As leaders of an industry committed to better health as critical to the prosperity of our nation and our liberty as a people, and of an industry whose world-leading position is completely attributable to our committed employees—over 60% of whom are women—we urge other biotechnology executives to raise their voices in opposition to the executive order rescinding the categorization of female contraception as a mandatory component of health insurance coverage.

8
Nov
2017

The Long Run Podcast: Elias Zerhouni on the Role of Immigrants In Science

Today’s guest on The Long Run podcast is Elias Zerhouni.

He’s the president of global R&D at Sanofi, one of the world’s biggest makers of drugs and vaccines.

Elias Zerhouni, president of global R&D, Sanofi

Zerhouni, for those unfamiliar, started out as an academic researcher in radiology at Johns Hopkins. He then became an entrepreneur, and worked his way up at Hopkins as an academic administrator. He then moved into science politics on the national stage, as director of the National Institutes of Health under President George W. Bush.

He took his current job at Sanofi in 2011.

Zerhouni also happens to be an immigrant. He’s a native of Algeria, a Muslim-majority country in North Africa. I wanted to ask him about that life experience, and how he got to where he is today.

In this episode of The Long Run, we spoke about the crucial role of immigrants in the scientific enterprise. We also talked about the threats to government budgets for scientific research, and what would happen if budgets get slashed at a time of so much possibility in biology.

The next episode of The Long Run will feature Steve Holtzman. He’s a veteran biotech executive. Holtzman is currently the CEO of Boston-based Decibel Therapeutics, a startup working to treat hearing loss. Holtzman has mobilized other biotech CEOs to speak out this year on political issues they have historically avoided. Watch for that episode in your iTunes or Stitcher feed.

Special thanks to EBD Group for sponsoring The Long Run podcast. EBD Group is the co-producer of the Biotech Showcase coming up Jan. 8-10 at the Hilton Union Square in San Francisco. I’ll be there on a media panel, plus doing a lot of networking with interesting people and picking up story ideas for the year ahead. I look forward to seeing some Long Run podcast listeners there.

When registering here or by clicking the banner at the bottom, please add a brief comment to say you heard The Long Run podcast and you appreciate EBD Group’s support for quality biotech journalism. You’ll get to go to a great conference and support quality journalism in one fell swoop.

Now, join me and Elias Zerhouni for The Long Run.

 

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