Dietrich Stephan, CEO and Founder of LifeX™

On Monday, serial entrepreneur and Pitt's professor and chairman of the Department of Human Genetics, Dietrich Stephan, PhD, unveiled his latest project:  a life sciences accelerator located in the Strip District. His goal?  Curing as many diseases as possible, "that’s what keeps me moving forward" he says.

What first sparked your interest in the field of genetics?

[Dietrich Stephan, PhD] Like many of us, my immediate family was struck by a disease when I was young, and that had a significant impact on me growing up in two ways. Number one, that medicine was not omniscient.  Doctors don’t know everything (despite some of the posturing that exists in the clinical field). Number two, the human body is just a machine – albeit the most complex machine we’ll probably ever encounter.  And given that, we should be able to figure out how it works, and prevent, intervene, and replace parts to optimize its function.  So I come at my work with an emotional core that fuels what I do, and that manifests itself in using genetics as a tool to sift through the bodies of people (with and without diseases) to figure out what’s wrong. And once we really understand what’s wrong in the machine, then we really have a chance to intervene effectively.  And that emotion helps that process and that passion, by fueling creativity, and force of will, and a lack of an acceptance of bureaucracy, and some of the typical administrative overhang that slows down things.  So that’s what got me into the field, and what drives me further.  

After finding success as a biotech entrepreneur and being a part of Silicon Valley’s startup culture, what drew you back to Pittsburgh?

So, I was born and raised here, trained here, and then slowly migrated to the West Coast, to Silicon Valley, where I was happily ensconced in building healthcare solutions as a biotechnology entrepreneur; and I was honored to win the Legacy Laureate award from the University of Pittsburgh.  So I came back and gave a talk to the University (as part of the acceptance of that award); and the theme of the talk was how world-class innovation engines, like the University of Pittsburgh, can export their solutions into the marketplace to have a substantial and measurable impact on human health, and, in exchange, capture new sources of revenue back to fuel the innovation engine – creating a virtuous cycle. That did not exist at the University of Pittsburgh five years ago when I gave that talk.  At the time I gave this acceptance speech, the NIH budget was in decline, the federal government wasn’t funding its commitment, and the state budget was (and it still is) unreliable to fund research.  And so my speech resonated with the leadership of the University; and they asked me if I would be willing to move back to Pittsburgh, to create the infrastructure and expertise to allow the University to have broader impact and capture revenue in exchange. At the time, the University’s revenue base was only one percent from industrial sources of revenue, in contrast to grant funding and philanthropy and other sources.  In comparison to leading universities like Duke and Ohio State – which have around 20% of their revenue from industrial sources – we were at the very bottom of the list.

So it wasn’t really for family reasons.  It was because the University of Pittsburgh really does have spectacular innovation – world-class.  It is fifth in NIH funding (as you know), and right next door is Carnegie Mellon University, which is number one in computer science, number one in design, number one in a number of other things.  And those two innovation assets together, are on par with what you find in Boston and San Francisco, but were completely untapped. It was a green field.  So I moved back to Pittsburgh to create that infrastructure and expertise, which has now become LifeX™, to unlock the billion dollar plus research investments that are happening here, and flood the global marketplace with healthcare solutions, to have really a global public good impact.  So that’s how LifeX™ was born. 

We will start with about 12 to 15 companies that we have hand selected that we believe can truly be world-class.
— Dietrich Stephan., CEO and Founder of LifeX™

Tell us about Life X, what inspired you to create LifeX and how long have you been working on this project?

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It was supposed to take one year to launch this, and I agreed to imbed it within the University and then launch it from that position.  We’ve now precisely reached the four-year anniversary.  So it took longer than expected, because the University required a culture change: change in policies and procedures, change in leadership at the highest levels, and required a change-management process to understand the benefits and the investments required to launch this.  So it took longer than expected, but we are now at that point where we are launching the external infrastructure to be able to unlock the innovation and form new companies around it that can be born and grow here in Pittsburgh; as well as, secondly, to practically partner with large companies to co-develop solutions in healthcare.

So the process in designing this customized solution for our unique asset base was as follows:

Part A was learning what was present here in Pittsburgh. Therefore, I scheduled a 100 days of listening and learning when I first got here, to deeply understand some of the innovation base: to understand what nascent infrastructure existed, to translate what types of capital were present here, what types of companies had been born here, what types of corporate strategies were here.  So basically, to deeply understand our ecosystem.

Part B was to study the solutions that had been built for other geographies (for example: in San Francisco, Boston, San Diego, Atlanta, Houston) and understand how universities catalyze those solutions.  So why do they do it, how much do they invest in building those, and how much did they benefit from those solutions?

Part C was crafting that customized solution, and we’ll talk about the moving parts in a second, but that was really done in collaboration with thought-leaders around the country.  It wasn’t just me.  It was getting together with, for example, Doug Crawford who leads QB3 in San Francisco, which (in my humble opinion) is the premier incubator and associated fund with Mission Bay Capital.

And then Part D was socializing that solution with regional stakeholders, including the University.  And launching the Brookings study, catalyzed by Rebecca Bagley (Vice Chancellor for Economic Partnerships) at the University of Pittsburgh, was the final phase of that fourth step in socializing, where we really (at the announcement of that) brought everyone together and got everyone aligned on what we needed here in Pittsburgh in biotech.

What is LifeX?

LifeX™ is a set of infrastructure, expertise and capital to bridge the gap between academia and solutions in the marketplace.  And those three things are absent at scale in Pittsburgh, and need to be filled. 

Infrastructure:  In January we’ll be opening up the first of our buildings.  It’s a 20,000 square foot facility with wet lab and dry lab space.  It will have equipment in it that biotech companies can use, so they can build in a capital efficient way.  So they can pay for a sequencing run or a mass-spectrometer run, instead of buying a million-dollar sequencer.  And that kind of infrastructure doesn’t exist in Pittsburgh. Why is it important to have a center of biotech activities to anchor the region?  It’s important because those companies can share knowhow; they can share networks.  We can create a world-class culture as to how you build biotech companies, which is non-trivial.  And it’s a place where external stakeholders and funders can plug in.  This (combined with the weekly Bio Breakfast) suddenly anchors all of the biotech activities in Pittsburgh in one location.  And they’ll be located in the Strip District for the first building. 

Expertise:  That’s the second moving piece.  In contrast to Boston or San Francisco, we don’t have scores of experienced biotechnologies executives here: board members, investors, management.  And so within this LifeX™ Labs facility will be a team of a dozen people that will have deep experience in all of the operational areas, to help these companies be successful.

And the third is capital.  So we’re raising our first venture fund – first of two.  The first is LifeX™ Seed: a seed-stage fund.  And that we hope to close in 2018 and that money will be deployed into the portfolio companies that we invite.  And that’s an important term – invite into LifeX™ Labs.

So those are the three things that we’ll be doing.  And we will start with about 12 to 15 companies that we have hand selected that we believe can truly be world-class.

In terms of biotech, I think that what we’re building is the most highly evolved model in the world.
— Dietrich Stephan, CEO and Founder of LifeX™

You seem to be involved in a lot of different projects, what keeps you going?

At the highest level, there are people suffering and dying of horrific causes that are unnecessary and preventable.  And in everyday life, most of us take it as a given that if you get Alzheimer’s, you are going to become demented and die; or if you get cancer, you’ve got a 50% chance of dying.  And that’s just the way it is.  That’s how we look at the world.

I don’t believe that that’s the way the world is.  I believe that all of those diseases are caused by mechanical dysfunction in the machine, and that we should be able to fix all of them.  So what I see, is a scale of suffering and death that eclipses all of the wars in history, all of the genocide, all of the murders, all of the terrorist attacks combined that happen on an annual basis – and yet we don’t look at that suffering and death with the same lens as we do the other manmade causes of suffering and death (let’s say).  But if you look at the world that way, it’s an immensely powerful motivating force – and that’s what keeps me moving forward.

Considering your background, we would be interested in what you have seen being done abroad. How do you see the life sciences industry in the States vs Europe or the world? Any good ideas, best practices you borrowed from abroad, etc.?

There’s no doubt that the United States is the world leader in creating healthcare solutions; and that’s objective, that’s not relative.  You know, San Francisco is the birthplace of biotechnology, with Genentech being the first biotechnology company using recombinant DNA to engineer new drugs (new protein based drugs), and the vast majority of pharmaceutical innovation coming from the United States in terms of big pharma.  Similarly, the venture capital phenomena in biotech was birthed here; and since then, venture capital in the biotech space in the US has dominated global venture investments in biotech.  And that has given rise to sort of a natural evolution of how you invest, and how you source innovation, and how you build these companies.  So the models that exist in the United States are more highly evolved, because they’ve been operating for longer, they’ve evolved for longer, and there is more of them.  So LifeX™ is the next step in the evolution of those models, in terms of studying, and customizing, and studying what works, listening, customizing.  

And so in terms of biotech, I think that what we’re building is the most highly evolved model in the world.  And its focus is very large on health needs that effect the global population.  In my travels, I really see what we’re building as comparable to what exists in Boston and San Francisco, but have not seen anything in this sector in other countries that’s comparable.

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