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- [00:01]
A
You're listening to Is Business Broken, a podcast from the Mehrotra Institute for Business, Markets and Society at Boston University Questrom School of Business. I'm Kurt Nickish. What transforms a scientific idea into a technology? New companies with jobs, or even a new economy? 150 years after Boston University professor Alexander Graham Bell patented the telephone, that question is more urgent than ever. Where does innovation begin? How does the full chain of innovation link up? And what happens now when federal funding stalls, the IPO market freezes up, and political uncertainty rattles an entire industry? We explored these questions at a live show at the WBUR Festival in Boston. I sat down with three leaders shaping the future of American innovation. Dr. Melissa Gilliam, president of Boston University Kendall Berlin O', Connell, CEO and president of the life sciences nonprofit MassBio, and Elizabeth Urinka, operating director of healthcare policy at the Vistria Group, a private investment firm. Here's our conversation. Now. When we talk about invention, we tend to picture the lone genius. And the famous one here at BU was Alexander Graham Bell in a lab making the first phone call right here in Massachusetts 150 years ago. But breakthroughs rarely happen alone anymore. There's no eureka moment per se, like back then. They emerge from ecosystems, universities, government funding, venture capital, industry regulation, even how insurance reimburses payments for healthcare, for instance. So let me start with a deceptively simple question for all of you. In one sentence. Where does innovation actually begin?
- [02:06]
B
I will start, at least in biotechnology. I think that innovation begins when there is a patient with a need, with an unmet medical need. So many of the men and women who work in biotech have dedicated their career to helping to bring hope and solutions to patients. And there's still so much work to do there. So I think it comes out of curiosity and the compellingness of helping somebody who is putting their hope in this industry.
- [02:37]
C
Liz I think innovation or invention starts with an idea. It's not about the ecosystem yet. It's this idea that maybe you see the world a certain way or you see a problem, whether it's a widget or a concept or a structure, and there is an interest or an idea to do that differently. I don't think we see the ecosystem until maybe further up on the channel.
- [03:03]
A
Okay. It starts with an imperfect world. Dr. Gilliam.
- [03:07]
D
I'll paraphrase Zig Ziglar to say it's preparation, opportunity. But I'll also say resources, okay?
- [03:14]
A
Very important. Money kind of brings oxygen to the conversation right away. So, Dr. Gilliam, when we hear the word Inventor. We think of that certain archetype, maybe Bell. Right. Could the next Bell then be in a BU classroom? Maybe not right now after commencement, but at BU right now. What does an inventor or an invention fundamentally look like today?
- [03:39]
D
There is a tendency to think about the lone scientist. I think about it a little bit like music. Sure, there are soloists and then there's also chamber music and then there's orchestras. But rarely is an individual, especially at this moment in time, in the complexity of the types of questions that we're solving, the. The inspiration, the ideas, the complementarity comes from in a university setting, a group of faculty, staff and students whose ideas are bouncing off of one another. So it might be an individual who has the training and the preparation to push an idea forward or to be the PI on a grant. But I think of it as a really collaborative process.
- [04:19]
A
Yeah, Kendall, you're nodding there.
- [04:22]
B
Yeah, I'd love to take that. I think an inflection point on that is obviously incredible science coming out of our academic instit. But our government really bet on this industry here in Massachusetts in 2008 with the Life Science Initiative, which was a billion dollar, ten year investment. You can directly correlate the growth of this industry to that strategic investment. It's grown by 114% from an employment perspective since that time. It's been reauthorized twice in 2018 for about 640 million and then most recently under the Healey administration in 2024. So it really is this concentrated coll. Collaborative effort of all stakeholders that bridge that gap from an idea to a successful company at scale and then to a solution for patients.
- [05:12]
A
I love this image of a symphony because you do have a director, but you also have staff behind. You have people paying to go to the symphony. It's a complex market as well as an artistic product. So let's talk a little bit about the money and the direction of that today. We can point to the telephone, we can point to mRNA, we can point to photonics and see inventions that are now having payoffs. But a lot of the research doesn't start out that way.
- [05:41]
B
Right.
- [05:42]
A
It starts out as foundational, general knowledge of that we're trying to improve human understanding. Bell was working on a hearing aid. His mother was deaf. And these lead to other things. So there's this general foundational research. There's also applied research where you see a commercial application and just take it from there. You need both. What's the right mix? What balance should we be thinking about today?
- [06:08]
D
So in universities, we Run the gamut. We go from cells to society and our types of research that sets us up for entrepreneurship, innovation, company formation. It's very tempting to say what's the return on investment? I want to see these translate quickly to society. But what you have to remember is that there's often a very long lead time to getting to those discover and there's a lot of serendipity. So in universities we focus on something called curiosity driven research. It's a place where we allow people to pursue things that matter, even if you cannot figure out what the application is. What we're now doing at our institution is we're focusing on something called convergent research. So you use the example of photonics, bu created something called neurophotonics, the combination of the study of light, but also thinking about how the study of light contributes to brain health. We created something called synthetic biology. How the insights of engineering can be used to advance biological processes. So convergence is this idea of bringing lots of fields together. So one of the reasons we're excited about that is that we're using the starting point of societal problems. And so I think this is where an additional opportunity is. So yes, you absolutely need curiosity driven research. You can think about the AI and how many different things came together to get us to this point and how much of that was serendipity. But when you start to think about the purpose of this will be to solve big societal problems, that helps universities get much more translational to think about how to communicate what they're doing, to think about the possible applications of what they're doing. And so there are still opportunities, even as we're doing the fundamental theoretical to start to think, be a little more forward thinking in better and maybe quicker execution and faster application and then not missing the opportunities to use multiple modalities, not only research but also company formation to scale the impact of what we're doing.
- [08:24]
A
That's amazing. Kendyl, where are the pain points today then?
- [08:27]
B
Yeah, the pain points are sort of unique in this the time period. So some of them haven't changed. Right. At least in biotechnology, it is a incredibly risky business. 90% of companies fail. It costs about 2 to 3 billion dollars and takes about 10 to 15 years to get an idea to a patient. And navigating the complexity of the system is really hard too. Right. You've got an idea out of academia. And fortunately NIH historically has been great at betting on that early stage risky science because we don't know where it goes, but it's shots on goal and it has to happen early stage and then it's okay. Now I've got an idea, I'm taking it out of academia. I'm going to start a company. But now I need money to do that. How do I do that? And you need to get to proof of concept for investors to have interest in investing in you and know that there's an ROI on that. But you're in this kind of valley of death, period. So that's always been the unique challenge for what a biotech looks like. So now take the last couple years, right? So Covid happened and then there was all of this incredible interest in biotechnology and we saw this huge influx of investment come into the industry with what you would call non traditional investors because investing in biotech is really risky and you're probably going to lose your money. But when you win, one, patients win and two, you get a great return on that. So a lot of those investors got burned. And so then the market got stagnant. Right. And in order for the fluidity of the industry to work, every stakeholder at every stage has to be operating properly. So it was a tight market and it was harder for those early stage biotechs to get that funding. And then the IPO market essentially closed. So there was no exit for those companies that were looking to go commercial. And then we had the most convoluted, chaotic, complex policy environment that I'd seen in almost two decades of being in the industry and hit the industry at every stage. So we had these challenges with NIH funding, which was like a couple years ago would have been a nuclear scenario. Then sbir, which is an early stage funding mechanism for once you have a company was set to sunset. And by the way, it did sunset for nine months. Then you had major uncertainty with the fda, Right. Leadership changes, challenges in getting communication, and timing, even your meetings were upended. Then you had downstream threats of tariffs and what did that mean for the industry? And then most favored nations, which is essentially price setting. So it created this stalled environment here in Massachusetts. Our bread and butter are those early stage innovations, that earliest biotech, that risky research that's coming out of our companies. And I'll say right now I've seen the softest pipeline of those pre seed to seed stage companies that I've seen in two decades, which should be of great concern to all of us.
- [11:29]
A
So let's talk about that political climate a little bit more. I mean, we're in it right now. Besides the cuts that you mentioned, besides just the change in the treatment from the federal government. We're also just seeing generally broad skepticism toward elite institutions. Are we entering a period where America is just generally less inclined to invest in long horizon innovation?
- [11:56]
D
I always remind people that we came out of a pandemic and it was an incredibly complicated time for this country and the effects will continue to shake out. We're also at the same time at one of the most amazing moments in medical and health and other areas of innovation. If you think about everything from cancer therapy and other diseases in drug development that are being addressed by gene editing, immunotherapy, the advent of AI, this is an amazingly complex and interesting and important moment. Rather than over getting overly pessimistic about what we're seeing at this exact moment, understand that this is a moment of disruption. And it's disruption because of technology. It's disruption because we are able to think and practice science in very new ways and we're being forced to ask questions about the efficiency and the ways in which we conduct science. So yes, it is challenging to work in disruptive moments, but it's giving us an opportunity also to ask these foundational questions. And it is an important question, are we going to invest in early stage research, the long game, and if so, how much? And we did one project here, which is called the URY campaign, because what we realized is that as researchers, as universities, we actually haven't done a terrific job of explaining why we do what we do. And I think so many people, whether it's going to a doctor's office or going to a mechanic, and you don't understand what the person just said to you versus really feeling like your ideas, your concerns were listened to and that the solutions are actually about you and your well being. People walk away saying, I guess I got a good outcome, but I had a terrible experience. So trying to think about how we as universities better relate to people, better create inventions that apply to people in their everyday lives. That's what we've been working on. It's not saying something as simplistic that it's a communication problem, but there is a communication problem in helping people understand why fundamental research, these theories, why taking 10 years to do research, why so much of it is actually going to fail, why those things matter. And that is part of the challenge for higher education, it's the challenge for science, it's a challenge for health care. And that's something that we've started to take on as well.
- [14:35]
A
Let me stick with you just for another moment, because photonics is like an amazing Example of this, right. It's pure research into this wild technology that now apparently has profound implications for AI infrastructure. Right. In data centers. If you can use photonics instead of electronics, like it could be a much more sustainable industry is we're just really ramping up compute. So it's one of these technologies with opportunities that you just didn't bank on when you started working on it. But if the federal government backs off somewhat on funding uncertainty, universities are under more pressure now than ever. Can universities shoulder that risk? You have to change the narrative. But how feasible is it for universities to fill in if the federal government backs off?
- [15:26]
D
Well, universities themselves can't fill in. Right. Because we are funded by tuition dollars and philanthropy, and it doesn't fill the gap. This is an incredible evolutionary moment for universities in the way that we do research. So part of it is making the case to say your taxpayers. When you think about advocating for what your taxpayers do, I encourage you to think about the value of fundamental science. It can feel like, for example, that a vaccine was created very quickly, but that Dr. Upon decades and decades of research so that we were able to take advantage of that opportunity when that question was needed. So there's the first piece. We have to advocate for people continuing to believe that science matters, research matters. I will tell you when I travel around the world, governments are continuing to invest in universities because they say we want to catch up and we want to compete with the US So that's the first piece. But then the second is, as I said, there is an evolutionary moment for universities where we typically lose about 40 cents on the dollar every time we conduct research. Something has to pay for the buildings, the infrastructure, the people, the staff, all of the equipment that we use to conduct research. Can we close that? Right? Can we do research that is more efficient? Those are questions then. Often we say the end product is writing a paper, but maybe the end product is also thinking about forming a company or thinking about the I or thinking about the tech transfer and what's the time that it takes for technology to transfer. We absolutely need federal support. We need private support. We need the states to support us. But part of that is us continuing to make the case, but also making the shifts that are necessary. I don't think this is just a conversation with the federal government. I think it is a conversation with the American people about, do you believe in science? Are we serving your health? Is the pace of breakthrough? Is that actually meeting the needs of people?
- [17:35]
A
Yeah, the demand is still there, right? For solutions. Liz, on the commercial side, how should private investment change then? In this moment? What new opportunities or problems are you thinking about?
- [17:47]
C
Well, it's a great question, but also I'm nodding my head because what I hear Dr. Gilliam talk about is so similar. It doesn't just apply to universities. I think in general, this not of the value proposition is essential. Whether you are a.org, a.edu a.com, a.gov, the idea of where is it that we choose to spend our money? What are the metrics or the outcomes that we are holding ourselves accountable to and what does that end goal look like? When I work with my colleagues on the investment side, when we are looking at a new thesis, the idea of what value is and what we bring to it is incredibly important. You wouldn't want as someone investing in an investment shop to say we just throw our money at something that sounds good. No, you would want to go to an expert in the field, someone that understands what a particular market looks like or a service, because they have a track record of understanding how to grow, develop, shape, what have you into something that is then more valuable over time. And what does that mean? Well, value can mean, yes, dollars and cents, but it also can mean a takeaway for a patient, a consumer, a student, whatever it is that is bigger than when they first started. So we continue to do that. I think this other, the other point though, that's incredibly important is when something looks like it's not going well, maybe there are opportunities there to do something a little bit differently. You know, necessity is the mother of invention. Who else is doing something that is challenging the status quo that actually might do it better than what we thought? Right? Those are the types of things that we cannot get lazy on that because at the end of the day, again, that value is twofold, right? We want to bring value to the investors, but that value only happens when the thing that we are working on, the thing that we think we can do better, actually does get better.
- [19:48]
A
Yeah, I want to stick with that. It's interesting how you're talking about private industry adapting to kind of new realities. We have a question from the audience. Can private investments fund the same type of innovation you get through government funded university research?
- [20:04]
C
I think oftentimes what I hear is the inverse, which is why can't government create something that private investment does? Right? The idea of saying, why do we need private capital when if we just gave all of this money. I used to hear this all the time to the nih. Why couldn't they produce all of our drugs. And I think that also speaks to a fundamental. I don't even think it's a disagreement. I just think it's a, maybe a, a wherewithal on what the various stakeholders do. I think depending on the investor, maybe there are some folks that invest in very seed, very brand new niche things. But I think that the idea that foundational research is all of a sudden going to be taken up by private capital, especially when we're looking at, what is it, 90% of the time there's a failure rate, people don't. That is not the type of investment that state pensions, that teachers. The folks that invest in us, they're not looking for a 90% failure rate.
- [20:58]
A
Kendall, Dr. Gilliam brought this up talking about other countries investing more in universities. There's a global market for your industry, for therapy production. How are other places treating this problem today?
- [21:12]
B
I just won't accept the concept that government won't fund early stage funding. It just, just is illogical. And we now know that biotechnology is a national security priority, so government has to continue to fund this earliest innovation. But I also think that every stakeholder has to think a little bit differently because there is so much global competition. Five years ago, if I was on this stage, I would have been like, welcome to the best place in the world for life sciences. We are still a leader, but the fact is that we're being outpaced right now. And China is a great example of that. And they're outpacing us in places as they hadn't. So during COVID we were concerned that China was producing APIs, so the ingredients in pharmaceuticals, and we didn't independently have that here, but now they're creating assets, and not just generic assets, advanced modalities. That's what we are known for doing here in Massachusetts that should be of utmost concern to us. In 2025, they outpaced our drug development pipeline, the United States, fourfold. And not just with drug development. Now also with clinical trials. Massachusetts has been the leader. In any given day, there's 6,000 clinical trials happening here in our hospitals. The leader in the United States, particularly for phase one. Now China is leading for phase one. I had a roundtable session with 10 different biotech companies and all of which were located here in Massachusetts. Every single one of them was doing their first in human clinical trial outside of the United States. And not because they wanted to, because it made sense from a financial perspective. And also clinical trials run outside of the United States are 12 to 18 months faster. Time is Money for biotech companies and time is life to a patient.
- [22:59]
D
Can I also just add to that, when you have a phase 1 and phase 2 clinical trial done here, that requires people, those are people going to lunch. That is the economy. That's what keeps all of this going. So I think we think about these as these, in these downstream ways or these abstract terms. But this is a full economy of life sciences, of research, of students coming here, graduate students, all of those things. That's what fuels a society and affects all of our jobs, our well being, our industries. So that's what we miss when we think that, oh, we're going to lose.
- [23:40]
B
Yeah, it's not going to impact everything. All of the preamble and just focus
- [23:43]
D
on this inn and it's going to be a flywheel. No, it is a whole ecosystem that supports all of us.
- [23:49]
B
Also for patients here in the United States, the reason why we want to innovate in the United States is because we as patients get first access to that therapy. When it's done somewhere else, it doesn't guarantee us first access. So that is why, from a patient perspective, it is of paramount importance we continue to lead in innovating in the United States.
- [24:10]
A
We accept that as granted. Almost. Yeah. We have a audience question. So populist sentiment is skeptical that innovation is furthering equality. How might we engage those politics with a vision for innovation that benefits all?
- [24:26]
C
I think what I hear in that question is that the American people or people in general do not feel like the things that are happening are benefiting them.
- [24:35]
D
Right.
- [24:35]
C
How do we make sure that the investment, the actual return on that investment, the time is accessible to people? What's also interesting though is that there was a recent report about kind of consumer confidence and I think that Eli Lilly is one of the top favored brands, if you will. My guess is part of that is because they've done the GLP1s and so that brand is seen as super positive. Right. It's also one of the highest revenue, best performing pharma companies, generally speaking. The consumer confidence in our government is very low. Maybe my congressman I really love, but Congress in general is terrible. We're all imperfect, right? We have these imperfect ideas. But I think the question is still relevant. Why is it that people feel that the benefits are not more distributed?
- [25:28]
A
Dr. Gilliam.
- [25:30]
D
So we have a faculty member here, an economist, Trey Hassan, who talks about this idea that at times of rapid innovation, and you can see it by the number of patents that you actually, and you can even look at the complexity and the new words and patent statements to see that you have these times of rapid innovation, they require much more advanced education and you get growing income inequality. So it's actually not surprising that at times of rapid innovation, like one that we're in right now and growing income inequality, that people are saying, I see these many things happening and I feel left behind. I feel as if my life isn't improving. And I think that is one of the fundamental challenges. But I don't think the answer is that the problem is that there is innovation. I think the issue is that, that when we have innovation, for example, at our institution, we use the term the critical embrace of AI. Yes, there is AI, but there is so much that we have to critique about it and to be thoughtful about it and think about the implications with the implementation. I think that ethical component to this is a particularly important role that universities that think tanks, that many people can play. As we look at these times of rapid innovation, we think we are pushing back a lot on the role of the humanities. But I think this is one of the most important times to ask what does it mean to be human? So these are complex questions, but these are exactly the types of questions we should be asking.
- [27:15]
A
All right, so let's be small, nimble and fast now as we kind of ended with a Forward looking question 20 years from now, what does the healthy American innovation ecosystem look like? What has to change to get there?
- [27:30]
D
So I think it's a combination of it has to be much more inclusive of a wide swath of people, partly because the problems and challenges are going to come from people and people's everyday experience. So it's much more inclusive of a wide range of people, a wide range of experience. There has to be a lot more efficiency, operational efficiency, policy efficiency, but in a way that doesn't run over the needs of everyday people.
- [28:04]
A
I like that curiosity and execution, that
- [28:07]
C
notion of what the country or the system looks like 20 years from now. I will say it actually is a question that we think about all the time. If I could say one brief thing about investing. When you invest in an asset, a lot of folks like to talk about what that hold rate or that hold number of hold years held years are. And some folks like to say it's three to seven. And I disagree with that. The idea is that you're holding something, you're growing it and then you're exiting. If you're doing that responsibly, you have to think about what the next buyer is going to want, right? And if they are being responsible, they need to be thinking who's going to buy that asset? So every time we think about something that is going to be durable, sustaining, increasing in value, societal, consumer, payer, what have you, you have to be thinking at least 15 years ahead. So to Dr. Gilliam's point, it's right, what are the technology disruptions that are happening today? What is a payer going to look like in that number of years?
- [29:08]
D
Right?
- [29:08]
C
Who is the buyer? Who is the consumer? And so that, that question is now the one thing I think on drugs we didn't get to talk about. Maybe someone's going to ask this question is what does our infrastructure look like to finance not the innovation, but the delivery and the actual acceptance or the utilization of the new innovation? So in order, it's not necessarily what is the thing that's going to happen in 20 years, it's what is the infrastructure. Again, going back to, back to my light switch, what needs to happen today to get us ready for that tomorrow?
- [29:39]
B
From my perspective, I would love to see us as a holistic system incentivizing innovation. I'd love the government to have a comprehensive competitiveness package where we are continuing to invest and incentivize the earliest stages of innovation. We didn't even talk about this, but particularly for things like the rare disease community where there's 10,000 rare diseases and only 500 have an FDA approved therapy. So really think of it wholesale too. So not just at the research perspective, but also from the biomanufacturing and the entire infrastructure.
- [30:15]
A
Well, we've heard how American innovation is a rich story and we've heard from three people who are writing the story today. Can we please give this amazing panel a big hand? Thank you. That's Dr. Melissa Gilliam, Kendall Berlin O' Connell and Elizabeth Urinka. Recorded live at the WBUR Festival at City Space in Boston. We'll be back with a new season after a summer break. In the meantime, we would love it if you would follow Is Business Broken? Wherever you get your podcasts. And that's where you can please rate the show and listen to any episodes you may have missed. Thanks for listening to Is Business Broken? I'm Kurt Nickish.