Green Earth. Kim Stanley Robinson
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make, nor anyone else in the lending world. The risks were too great, the returns too distant. Only venture capitalists would do it.
So naturally these guys’ help was much in demand from small biotech companies. There were something like three hundred biotechs in the San Diego area alone, and many of them were hanging by the skin of their teeth, hoping for that first successful cash cow to keep them going or get them bought. Venture capitalists would therefore get to pick and choose what they wanted to invest in; and many of them were pursuing particular interests, or even passions. Naturally in these areas they were very well-informed, expert in combining scientific and financial analysis into what they called “doing due diligence.” They spoke of being “value-added investors,” of bringing much more than money to the table—expertise, networking, advice.
This guy Bannet looked to Leo to be one of the passionate ones. He was friendly but intent. A man at work. There was very little chance Derek was going to be able to impress him with smoke and mirrors.
“Thanks for seeing us,” Derek said.
Bannet waved a hand. “Always interested to talk to you guys. I’ve been reading some of your papers, and I went to that symposium in L.A. last year. You’re doing some great stuff.”
“It’s true, and now we’re onto something really good, with real potential to revolutionize genetic engineering by getting tailored DNA into people who need it. It could be a method useful to a whole bunch of different therapies, which is one of the reasons we’re so excited about it—and trying to ramp up our efforts to speed the process along. So I remembered how much you helped us during the start-up, and how well that’s paid off for you, so I thought I’d bring by the current situation and see if you would be interested in doing a PIPE with us.”
This sounded weird to Leo, like Indians offering a peace pipe, or college students passing around a bong, but Bannet didn’t blink; a PIPE was one of their mechanisms for investment, as Leo quickly learned. “Private Investment in Public Equity.” And for once it was a pretty good acronym, because it meant creating a pipeline for money to run directly from their cash-flush fund to Derek’s penniless company.
But Bannet was a veteran of all this, alert to all the little strategic opacities that were built into Derek’s typical talk to stockholders or potential investors. Something like sixty percent of biotech start-ups failed, so the danger of losing some or all of an investment to bankruptcy was very real. No way Derek could finesse him. They would have to come clean and hope he liked what he saw.
Derek finished leading Bannet through a series of financial spreadsheets on his laptop, unable to disguise their tale of woe. Bad profit and loss; layoffs; sale of some subsidiary contracts, even some patents, their crown jewels; empty coffers.
“We’ve had to focus on the things that we think are really the most important,” Derek admitted. “It’s made us more efficient, that’s for sure. But it means there really isn’t any fat anywhere, no resources we can put to the task, even though it’s got such incredible potential. So, it seemed like it was time to ask for some outside funding help, with the idea that the financing now would be so crucial that the returns to the investor could and should be really significant.”
“Uh-huh,” Bannet said, though it wasn’t clear what he was agreeing with. He made thoughtful clucking sounds as he scanned the spreadsheets, murmuring, “Um hmmm, um hmmm,” in a sociable way, but now that he was thinking about the information in the spreadsheets, his face betrayed an almost burning intensity. This guy was definitely one of the passionate ones.
“Tell me about this algorithm,” he said finally.
Derek looked to Leo, who said, “Well, the mathematician developing it is a recent hire at Torrey Pines, and he’s been collaborating with our lab to test a set of operations he’s developed, to see how well they can predict the proteins associated with any given gene, and as you can see,” clicking his own laptop screen to the first of the project report slides, “it’s been really good at predicting them in certain situations,” pointing to them on the screen’s first slide.
“How would this affect the targeted delivery system you’re working on?”
“Well, right now it’s helping us to find proteins with ligands that bind better to their receptor ligands in target organ cells. It’s also helping us test for proteins that we can more successfully shove across cell walls, using the hydrodynamic methods we’ve been investigating for the past few months.” He clicked ahead to the slide that displayed this work’s results, trying to banish Brian’s and Marta’s names from his mind; he definitely did not want to call it the Popping Eyeball Method, the Exploding Mouse Method. “As you can see,” pointing to the relevant results, “saturation has been good in certain conditions.” This seemed a little weak, and so he added, “The algorithm is also proving to be very successful in guiding work we’ve been doing with botanists on campus, on algal designs.”
“How does that connect with this?”
“Well, it’s for plant engineering.”
Bannet looked at Derek.
Derek said, “We at TPG plan to use it to pursue the improvement of targeted delivery. Clearly the method is robust, and people can use it in a wide variety of applications.”
But there was no hiding it, really. Their best results so far were in an area that would not necessarily ever become useful to human medicine. And yet human medicine was what Torrey Pines Generique was organized to do.
“It looks really promising, eh?” Derek said. “It could be that it’s an algorithm that is like a law of nature. The grammar of how genes express themselves. It could mean a whole suite of patents.”
“Mm hmmm,” Bannet said, looking down again at Derek’s laptop, which was still at the financial page. Almost pathetic, really; except it must have been a fairly common story, so that Bannet would not necessarily be shocked or put off. He would simply be considering the investment on a risk-adjusted basis, which would take the present situation into account.
Finally he said, “It looks very interesting. Of course it’s always a bit of a sketchy feeling, when you’ve gotten to the point of having all your eggs in one basket like this. But sometimes one is all you need. The truth is, I don’t really know yet.”
Derek nodded in reluctant agreement. “Well, you know. We believe very strongly in the importance of therapies for the most serious diseases, and so we concentrated on that, and now we kind of have to, you know, go on from there with our best ideas. That’s why we’ve focused on the HDL upgrade. With this targeted delivery, it could be worth billions.”
“And the HDL upgrade …”
“We haven’t published those results yet. We’re still looking into the patent situation.”
Leo’s stomach tightened, but he kept his face blank.
Bannet was even blanker; still friendly and sympathetic enough, but with that piercing eye. “Send me the rest of your business plan, and all the scientific publications that relate to this. All the data. I’ll discuss it with some of my partners here. It seems like the kind of thing that I’d like to get my partners’ inputs on. That’s not unusual, it’s just that it’s bigger than what I usually do on my own. And some of my colleagues are into agropharmacy stuff.”
“Sure,” Derek said, handing over a glossy folder of material he had already prepared. “I understand. We can come back and talk to them too if you like, answer any questions.”
“That’s good, thanks.” Bannet put the folder on the table. With a few more pleasantries and a round of hand-shaking, Derek and Leo were ushered out.
Leo found he had no idea whether the meeting had gone well or poorly.