American biotech has long been a largely centralized sector, with most firms concentrated in a few cities and staffed by in-house scientists.
When biotech was getting established in the 1980s, centralization made sense, in part because companies needed to be near universities that provided talent and intellectual property. Yet newer shifts — including changes in funding, a more global workforce, the property market, and the appeal of decentralized approaches in other industries — have revealed the drawbacks of making centralization the default. These shifts, which started to emerge in the past five years, were intensified and made necessary by the pandemic.
Today, decentralization is taking shape across biotech in several forms: Startups are opening outside the biggest hubs, sharing lab facilities, hiring internationally, and teaming up on research. We’re even seeing new organizational forms beyond standard companies, such as decentralized autonomous organizations (DAOs), join the drug-development field — with financing, too.
Decentralized approaches are still in the trial stage. But they make it easier for smaller companies to get started and draw on a broader, more varied scientific talent pool, potentially speeding up the creation of new drugs and, hopefully, effective cures.
So, how are biotech firms using decentralization to launch? And how might new founders use it to their advantage in the future? Based on my own time at biotech startups and DAOs, along with discussions with biotech leaders testing decentralized models (some of which have helped uncover new cures), I’ve assembled a biotech decentralization guide that outlines what is happening in the field now and where it may head in the years ahead.
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Coworking and cloud labs
Although biotech companies can be defined in different ways, most are small startups developing biologic medicines. They generally perform research internally, which means they need a dedicated lab “home.” During the pandemic, though, lab space became especially hard to find in Boston and other biotech centers, according to a November 2021 report from CBRE, a Dallas-based commercial real estate services and investment firm. The report said this lab rush was “the natural result of a global push for new medicines begetting strong funding and hiring in the life sciences sector.”
Seeing biotech grow and available space shrink, several developers began creating flexible coworking environments for smaller teams. This “WeScience” setup lets biotech startups share offices, lab suites, and bench space, usually on a month-to-month arrangement. Two major names in this area are Biolabs and Alexandria LaunchLabs.
Other firms have abandoned physical labs entirely in favor of a “virtual biotech” approach that outsources research work. Companies that choose this path pay for one or more of these services:
- Contract research organizations (CROs), such as Charles River Labs, which can offer biotech companies a wide set of support services, including everything from preclinical development to clinical development and regulatory filing. This CRO directory lays out the full range of possible services. Sponsored research agreements (SRAs), under which biotech companies fund academic labs to carry out research for preclinical or clinical development. Cloud labs, such as Emerald Cloud Lab and Strateos, which are AI-driven platforms that automate tasks like small-molecule drug discovery and allow researchers to pause and resume experiments remotely.
The longevity company Loyal shows virtual biotech in practice. Loyal’s scientists supervise preclinical longevity research that is largely handled by CROs. In the name of “democratizing some of this hard-earned knowledge for current and future biotech founders,” Loyal CEO and founder Celine Halioua has written about the expenses and trade-offs of using CROs, and has also done a cost comparison of CRO versus in-house experiments.
Virtual biotech has several clear downsides. For one, the science is more constrained because it must be planned in advance. That can mean less raw innovation, since scientists lose some of the freedom to test ideas in their own labs. Another issue is that new founders can find CRO use difficult to manage. Different CROs are strong in different areas, and founders still often depend on word-of-mouth referrals when choosing which one to hire for, say, a dose-finding study. So having an established industry network can matter. On the cloud lab side, large pharmaceutical companies that can afford to run frequent experiments often consume the platforms’ capacity. In practice, that can make cloud lab access a hurdle for startups.
Fortunately, these problems are not impossible to overcome. Science Exchange, a platform started in 2011, has significantly expanded access to and use of CROs. Through its marketplace, companies can find, order, and pay for scientific services from more than 3,500 providers while also cutting down the contract work usually involved. LabDAO is another company trying to close the research-access gap; it is building a marketplace where smaller startups and academic researchers can locate microCROs (contract research at a smaller scale) to offer services such as bioinformatics analysis, automated cloning, and construct design. We are still far from having something like an AWS of biotech. But platforms such as Science Exchange and LabDAO are slowly making contract-based research more accessible.
Empowering the talent
Until lately, biotech startups had to team up with established pharmaceutical giants or raise money from biotech VC firms to secure early-stage investment. Relative to other founders, executives with many years of experience were strongly preferred. But over the last few years, the industry has seen a shift in how biotech resources are accessed through two rising movements: founder-led biotech and decentralized science. Both support the idea of broadening access to the knowledge needed to move early companies and their science forward.
Although venture capital still plays a major role, founders now have more funding choices outside established biotech companies. Tech VCs have increased biotech investments, especially in startups led by younger or more unconventional founders. To attract in-demand startups, more funds are not just writing checks, but also giving founders practical business support and access to strong founder networks.
Petri, a biotech accelerator founded and backed by Pillar VC, represents this model. Petri runs a startup program for scientist-entrepreneurs called Frequency, which brings participants into a community Slack channel so they can ask one another for help throughout their startup paths. Another example is Axial, whose founder, Joshua Elkington, runs a biotech Slack community for conversations on everything from gene therapy to hiring. It now has more than 10,000 members and still growing.
There are plenty of other examples of community-led funds. This points to a move away from biotech investors serving as financial and informational gatekeepers. It fits with decentralization by making it easier for more companies to form under a more diverse set of founders who share knowledge with one another.
Next-level collaboration
We’re also beginning to see scientists and entrepreneurs create new kinds of decentralized teams to reach shared objectives. In biotech, an important question is whether these networks produce workable cures. Two case studies indicate they can.
The first involves Perlara PBC, a first-of-its-kind biotech public benefit corporation headed by biologist Ethan Perlstein. Previously called Perlstein Lab, Perlara once operated as a typical centralized Bay Area biotech company, devoted to searching for cures to rare diseases in drug-repurposing work. Then, in 2020, it returned as what Perlstein calls “Perlara 2.0,” with a decentralized team of scientist-consultants who collaborate to draft roadmaps for patient families and foundations looking for cures.
The group describes the current state of drug development for a given rare disease, and also builds project management plans for studies aimed at finding therapies (often using CROs like Charles River Labs). It can handle everything from sourcing drugs to spinning out companies like Maggie’s Pearl, which can then own a drug asset and manage the clinical-testing process. Perlara’s first therapeutic success did not come quickly — it took years to move from an early drug-repurposing study to a small trial that showed efficacy in two patients, and then to a Phase 3 trial (set to start enrolling patients soon). But Perlstein hopes this model can be repeated for other patient groups across the Perlara program.
Phage Directory is another decentralized group of scientists working together to find cures. The idea for Phage Directory started with a tweet: UCSD epidemiologist Steffanie Strathdee had posted a call to phage researchers, asking for help locating a treatment for a 25-year-old patient with what appeared to be an antibiotic-resistant infection. (Strathdee had earlier coordinated a phage therapy for her husband, Tom, and described the experience in their book, The Perfect Predator.)
The tweet sparked an aha moment: Microbiologist Jessica Sacher and her partner realized there was a chance to improve community coordination for future “phage hunts,” and they went on to build a roster of researchers who could hold the answer (or phage cure) for other patients.
So far, Phage Directory lists 448 phage researchers and 100 phage organizations. The approach is straightforward: a distributed, worldwide web of scientists with possible cures, an alert mechanism, and a framework for moving treatments from the lab to the exam room. This network has led to three distinct “n-of-1” cures under compassionate use or experimental therapy rules. Put differently, they have created customized treatments for patients who had run out of every other option (such as antibiotics). Phage Directory is now developing an academic medical network supported by the Australian government.
DAO-funded projects
Also worth noting in decentralized biotech is Molecule, a company helping pave the path for biotech in web3. Tyler Golato, a biomedical researcher, and Paul Kohlhaas, an engineer, started Molecule in 2019 with the aim of creating a wholly new system to back early-stage drug development. The company has advanced considerably; its concept of marketing research assets on the blockchain as IP-NFTs opens a fresh way to invest in translational research. In addition, Molecule has started three biotech DAOs, which in this setting operate as new collectives or cooperatives designed to draw community members from many parts of the internet.
In VitaDAO, Molecule’s DAO centered on longevity, the community works much like a venture fund with a strong content and marketing machine bolted on. A deal flow working group, made up of scientists and investors among others, reviews projects for funding. Community choices are mostly made by voting with $VITA tokens, and much of the activity “happens in public,” meaning that nearly any internet-literate person can enter the DAO’s Discord server or its working groups, or just watch the community at work.
One of the biggest attractions of biotech DAOs such as VitaDAO is the speed at which they can accomplish work. In the 10 months since launch, VitaDAO has assessed more than 60 research proposals and funded almost two million dollars of research across 10 projects. That’s similar to taking an NIH Research Project Grant — which typically provides one lab $250,000 a year for five years — and dividing the funds among projects at 60 labs. (You can learn more about the organization’s progress in its Community and Treasury Report.) Another plus is that DAOs do not face the same hiring limits as conventional biotech companies. This allows people with varied backgrounds, and at different points in their careers, to participate in a DAO — or in several, if they choose, since there is no expectation of exclusivity. The perks of working differ from those of a standard day job: You may be compensated in tokens or Ethereum (or even gratitude), rather than earning a salary in U.S. dollars. But for those with the time, contributing to a biotech DAO provides a setting for scientific input, collaboration, and innovation, and even a place to pick up new skills such as content and marketing.
Welcoming critiques and looking ahead
Some experts question the concept of decentralized biotech. There are sound reasons to back centralized systems; there may be cases where it is less expensive for scientists to do research in-house or more efficient to work in separate teams. We should expect and talk through any good-faith criticism in order to strengthen the emerging decentralized system. In an ideal world, we could try hundreds of routes to get from “bench to bedside,” combining and recombining the pieces of each new venture for peak efficiency. We are not there yet, but I expect to see more experimentation in the years ahead.
There is a compelling, nontechnical reason to look at the decentralized approaches emerging: Biotech companies exist to discover new therapies, which hopefully become cures for patients who need them. Why not improve each step of the drug-development pipeline in the name of moving faster and sharing findings around the world more easily? If the only thing we stand to lose are the gated, centralized systems we have known for years, that is all the more reason to try new ones.