Alan Marty
Lynn
So far we have heard three biotech cases: cells, tissues, and plants.
Together these are a $100B market. Next we will address aging. Aging is
an area we haven't explored but recently we've decided to possibly look
at this with The National Council on Aging. Then we want to see how this
can work? You can only do work on ISS if it requires long durations. We
needed a permanent facility and the ability to go up and down frequently.
One of the most limiting features is throughput and that's a major thing
we must overcome. Alan Marty is with JP Morgan he works in venture capitalism.
He has a long history in business and science.
Alan Marty
Thanks Lynn. I will share the customer perspective. I want to talk about
the investors and the customer's perspective. The customer would actually
buy the services to go up and come down from ISS. The customer would have
the six figures to invest. The investor would be the decision-maker who
decides which kinds of companies to invest in. This is from the context
of people investing money to get a better return on all the money they
placed than all the people they're competing with. We will touch on the
current paradigm and why it's not working and the new paradigm and what
it will take to achieve the new paradigm. It's not a static thing. Investing
is complicated, we want to interest the early adopters.
Scott showed this triangle model. The commercial customer-centric space station is at the base of the triangle. Today it's nothing like that. The ability to predict when your experiment is going up is difficult. As is the ability to get your samples back in a timely manner. Approvals are not customer-centric either. Scott used the term of a friendly front-door and that's a good term. We want a lower risk and a higher return.
The Entrepreneurial Space Industry is going to happen whether or not we do anything from this conference. Space is being commercialized today and it's going to happen. How fast is the question and whether ISS will be a participant in the commercialization.
The top of the triangle is Biotech. They're the customer and they're on top for a reason. Biotech is only one example, but in reality there will be many customers if we get this paradigm in place.
With the current paradigm ISS will be left out of the commercialization of space. But NASA can make ISS an attractive place for business people and ISS would love to be involved in that. From the investors viewpoint what will it take to change the paradigm and get customers to invest? It will take a homerun.
Homerun Opportunities
Homerun potentials are the Ebays of the world -- you put in a little bit
of money and you understand the scenarios and you get a runaway hit. You
have to explain the homerun opportunity to the investor.
There are three components of a homerun opportunity. 1) What's the homerun
opportunity? Is it worth it? 2) Is it real? 3) Can you win?
Is it worth it means is the market size big enough. Is there reasonable R&D investment? Is there large projected profits? I think that the potential market is big enough for doing biotech in space.
Is there reasonable R&D investment right now? No. But the cost is dropping. This is an industry in transition and you have to look at what the cost will be over time.
Is there large projected profit? Yes, the models in the pharma market are already in place.
Next is the question of, "is it real?" The science is pretty much proven but there's more to be done. Is it a manufacturable product? Yes. Is there low government uncertainty? That's a resounding no, so that has to get taken care of. We need to have much lower government uncertainty to attract business.
Can we win? This is the bottom line question and yes we can. We need the best management team in place. There are high competitive entry barriers.
Where should we focus?
I would focus on: 1) bring down the cost of ISS transport; 2) support
low gravity research and building the science; 3) distance the government
decision-making process from ISS operations; 4) ensure that the intellectual
property developed from ISS is protected.
ISS will not participate in space in the current paradigm. With the right customer-centric modifications ISS can participate by attracting early adopters. We need to make sure that homerun opportunities are available.
Questions
The basic question is are you proposing to throw away
NASA? No I am not proposing that at all. What I'm saying is that it will
take significant change to interest people who are interested in homerun
opportunities. We want to enable adoption at a higher level than it is
at today.
Today there was a Senate Authorization bill that was sunshined. A senator from Texas is calling for ISS as a federal lab. What's the right transition mechanism to enable the homerun to emerge?
My gut is that is not a good approach. It might be possible if the construct around it made it a friendly front-door. It's less about the government label and more about how the customer and investor will look at this.
We all agree that entrepreneurial use of space will grow and happen, but how do you think the US will be involved?
I'm a big believer in the United States. We have a strong university system and an entrepreneur system stronger than the rest of the world. But if we don't make the right moves then we could miss this opportunity. The incentives are in the right direction for change. It's incumbent upon us to come up with something that actually accelerates this process for our country.
ISS is expensive that's part of what slows things down. Is the customer prepared to pay the lion's share of the cost?
The customer won't. You can't ask them to solve the government's problem, that is not customer-centric. If ISS doesn't become the platform then there will be another platform, but we should take advantage of ISS because it's already there.
Is there an example of a model of government engaging industry?
There are lots of businesses that exist with government as
their customer and those are good businesses. But in the world that I
live in, that enables the homerun opportunities, I'm most comfortable
with the entrepreneurial model. Trying to figure out a way to balance
where we are today with the full entrepreneurial space is the key. In
the biotech world the government does a little bit of review and they
do a lot of early stage science to get things off the ground, but then
the commercial industry takes over. Government should be a regulator at
most then let commerce take over.
Government should help create financial incentives. The market is beginning to blossom a little bit.
Considering that the government will play a role in the initial development are there investors willing to put in money today. And what percentage over time will the government be involved?
In today's current paradigm we will get very minimal investment. We will need a significant paradigm change. The science isn't moving that fast and there is no friendly front-door. If you do fundamentally change the paradigm then you should see a tipping point occur when space will be driven by the commercial sector.