The Rise of Backyard Biotech

Powered by social networking, file sharing, and e-mail, a new cottage industry is bringing niche drugs to market.

If FerroKin BioSciences has a headquarters, it’s the attic of the farmhouse-style home of Dr. Hugh Young Rienhoff Jr., in San Carlos, California. Clearing papers off chairs, Rienhoff seems an unlikely pharma CEO. “Sorry,” he says, “I work in piles.” The attic is decorated with maps, medical-science posters, vacation pictures, and mementos of his three children. He gestures to a computer desk, where monitors sit atop stacks of thick binders that lift them to eye level. “Those are my FDA filings,” says Rienhoff with a grin. “That’s one of the best uses I’ve found for them.”

FerroKin is seven employees who work from home, and a collection of about 60 vendors and contractors who supply all the disparate pieces of the drug-development process. Rienhoff, a physician and former venture capitalist, founded it in 2007 as a start-up, a virtual biotech company. Since then, his team has picked up talent and resources as needed, raising $27 million and seeing a drug from development into Phase 2 clinical trials.

“Some people have said, ‘How can you really accomplish this? You should have a lab, how can you not have a lab?’” says Laura Eichorn, Rienhoff’s first hire, who does the finance, HR, PR, IT— “everything but the science”—from her midwestern home.

The low cost structure of companies such as FerroKin—old-fashioned drug development can eat up hundreds of millions of dollars—translates into more variety in the market, and more niche drugs targeting neglected or rare diseases. Being small allowed Tioga Pharmaceuticals of San Diego, for example, to keep developing a drug for irritable bowel syndrome that the pharmaceutical giant Merck had cut from its long-term strategy.

The drug that FerroKin plans to bring to market in 2015 will help people who have congenital anemias and thus may depend on regular blood transfusions. Diseases like sickle-cell anemia and thalassemia are caused by a genetic mutation that confers malaria resistance on single-gene carriers in Africa, the Middle East, and Asia. In people who carry two copies of that same gene, the blood lacks the ability to deliver enough oxygen. Infants become sick as their organs slowly suffocate. The only way for them to survive is to get new blood from transfusions. Unfortunately, “the extra iron that comes with the transfusion poisons people,” says Dr. Ellis Neufeld, the associate chief of hematology at Children’s Hospital, Boston, who conducts some of FerroKin’s trials. We animals scramble so hard to get enough iron for our bloodstream that we’ve never evolved a way to get rid of it—hence the need for “chelation” agents, which extract excess metals from the blood. “Anyplace you can get enough transfusions, chelation becomes the issue,” says Neufeld. The main chelation drug in the U.S., Exjade, is itself potentially damaging to a patient’s kidneys, liver, and intestines.

Neufeld estimates that about 20 percent of anemia patients aren’t well served by the current chelation options. That’s only a few hundred patients in the United States, but tens of thousands elsewhere; a number that will grow as poorer countries improve their medical infrastructure enough to help anemic patients survive childhood. Big Pharma has little incentive to make another drug to serve the rare and often poor victims of congenital anemias. But because FerroKin has replaced the big lab building with a global community of vendors and freelancers linked by e-mail, social networks, and file sharing, the company is nimble and fast.

“Each of us [in the company] has a broader set of responsibilities,” Rienhoff says. “For example, we all provide input on the size of the capsules patients might take.” Will the dose be four small capsules, or three bigger ones? What color will they be? FerroKin’s community weighs in over e-mail, then forwards its decisions to doctors and nurses in the field, who in turn reply about what those decisions mean for patients. “Any kind of news about what happens with any patient gets back to the leadership of the company promptly,” Neufeld says.

The small industries and biotech freelancers springing up are, in some ways, like the divisions of the old behemoth drug company, but connected only by the tendrils of the Internet, and the relationships that grow so easily there. Rienhoff is contemporary biotech’s answer to the lost Renaissance man. He pulls the renaissance effect out of the network around him, using the terrible complexity of the global community to fight the terrible complexity of disease. It’s the way science ought to work.