Nov
15
2013

What makes an Investment a Good Investment

It is strongly recommended that Todd Foley does not invest in Centagenetix. The company is very ambitious, however, it rests on top of an unstable foundation. When you see such a company that has ambitions in a commercialized setting, you must produce results fast and have deliverables on time. When the research obtains funding from an external source, then the work the company puts out must meet deadlines and expectations. Science done in a commercialized setting differs greatly from science done in an academic setting. However, in order for the research in both venues to continue, it requires funding. In an academic setting, for example, scientists can look at a pint of Guinness beer and begin to examine its foam for its properties. However, if that science were to be commercialized, then the scientists in a biotech setting must find a way to apply the technology and apply to a commercial setting to benefit society. Although there is always a room for scientific discovery in my book, I advise strongly against science that has too high of a risk compared to its benefits.

The scientific basis behind Centagenetix is not hokum, but it is really difficult to gain acceptance by the scientific community. By general consensus, in order for science to be valid, it must contain an experiment that can be replicated by others. This ensures that any supports for the hypothesis can be strengthened and also disproved if there is overwhelming evidence against it. As mentioned by the company statement, the work done at Centagenetix is difficult to replicate due to the sheer nature of their complex traits (Chesbrough). Of course, you can think about it in two ways: One way to think about it would be that their science is so advanced at this point that it is extremely difficult to follow by others. Granted, no argument about that. However, another valid point is that there is just too much enigma and ambiguity in the experimental method in order for the data to be considered sound science. No matter how great Centagenetix’s data from their retrospective study appears on paper, it cannot be considered to have strong support if the scientific community cannot replicate it to ensure its precision and accuracy. Thus, funding such a research cannot be promising and the risks outweigh the potential benefits.

On a related note, the science that Centagenetix is trying to obtain support for is not promising. I am not saying that the company is trying to sell consumers snake oil, but regardless, the actual benefits from this science are rather unclear. It is really difficult to distinguish this company from an overly ambitious money pit or a surprising slam-dunk game-changer. Time has the answer, but no matter what the outcome may be, it would then be too late to consider the other decision. However, based on what the company has to show now, the amount of money required to support the company is not worth the investment and putting Foley’s reputation on the line. Again, I commend such ambition and drive in a novel biotech company. However, I believe that Healthcare Ventures hit the nail right on the head when they stated that Centagenetix was a company that is “hunting for a longevity gene” (Chesbrough).  Again, such a claim seems too risky at this point for Foley to invest.

The field that Foley is trying to invest in does not come without controversy. When you are making the claim that you will help make people live to be older (borderline immortal), that raises many red flags from individuals. Such research brings up many other issues as who deserves to live older and what makes life worth living at that level. Once this technology is marketed, what else can Centagenetix do with it? Let us assume for now that they were able to obtain a patent on a technique to first identify the gene on chromosome 4, and then somehow use science to make a person live longer. Who deserves that right? On a different note, the actual research that must be done is a retrospective study where the data of many centenarians must be obtained. Such issues were problems that caused a similar effort by DeCODE to fail previously. In addition, another ethical issue came when, as mentioned in the case study, there was a conflict on who got the right to commercialize the genes of Framingham (Chesbrough). If a VC supports such an endeavor, not only is their money at risk, but also their reputation. A tarnished reputation is permanent in this situation.

In order for the company to take off, it needed Tom Perls. However, there is a conflict of interests with Perls and Harvard. Such mess is dangerous, especially when money is involved. The collaboration with Harvard Medical School would be valuable to Centagenetix but if there were any problems that arise from the conflict of interest, a valuable partner would be lost. Perls is a talented scientist, but could Centagenetix possible make it worthwhile for him? To be quite honest, I do not believe that Centagenetix would be able to do such a task. Centagenetix is in a dangerous position, and even had troubled sealing the deal with the finding from MPM. We should keep in mind that MPM needed to make a deal with Centagenetix before Whitehead even had second thoughts trying to deal with Centagenetix. Whitehead is a powerhouse for genomics research and a partnership/deal with them would have put Centagenetix straight to the top. It is not that the deal failed, but as stated in the study, Whitehead offered 110 samples for $640,000 a hefty sum. This made doing the deal even more difficult and futility began to settle in. Such disappointments are hard to recover from and from this viewpoint, it makes no sense for Foley to invest into the company which is already lacking support from the people who matter.

One great flaw in character that I saw from the company was when they submitted their journal for peer review in Nature Genetics and then got denied. This denial is not necessarily bad, however it may be possible to question why it got denied after it looked so promising. What made it even worse is what they said after the journal got denied. “ …delays may be related to professional jealousies or an attempt to buy time to repeat the research themselves.” To me, it did not seem as though this company accepts criticism well and nor does it look like that they have a professional attitude when going about such obstacles. To say that others were jealous of their work seems pretty childish and entering a partnership or supporting such a company can prove to be very dangerous. Based on these premises alone, I advise Foley to not support Centagenetix. The character of a business partner matters greatly when it comes to such deals but a group that fails to appreciate their mistakes and learn from them means that they are prone to make the same mistakes in the near future.

Overall, investing in Centagenetix is a risky endeavor and is equivalent to putting money into a money pit. Although their ambition and passion to learn more about the unknown science should be commended, the risks involved puts Foley’s reputation on the line. Although science and superstition should not mingle with each other, there is a bad feeling when the company you want to invest in fails to formally exist and all existing agreements are only in the draft stage (Chesbrough). To make matters worse, the company no longer has a lab because it was being turned into a Cross Town Center. Such uncertainty should make the VC wonder if they will ever get their money back. Unfortunately for Centagenetix, the investor will not likely see their money back. Thus, among many reasons, it is strongly advised that Foley stay away from investing into Centagenetix and look to invest in a company that has more promise.

About the Author: Mohamad Kazah

I am a fourth year premed student at University of California, Riverside. Writing is not my forte but I like to write what is on my mind. I hope you enjoy it! Please comment!

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