Miyata-san’s Johnson & Johnson Innovation – JLABS Report

Mitsuru Miyata, judge of World without Disease Pitch Contest, visited Johnson & Johnson Innovation - JLABS @ SSF.

Mitsuru Miyata CEO, Miyata Institute of Technologies, Inc.
Miyata-san is a renowned and influential journalist reporting on the biotechnology industry in Japan. He started his career as an editor of Nihon Keizai Shimbun Inc, Japan’s leading economic newspaper, after graduating from with a master’s degree from the Science Faculty, The University of Tokyo. In addition to journalism and his CEO role at Miyata Institute of Technologies, Inc, he is:
・The Visiting Professor of the Advanced Life Science Research Center, Keio University
・The Visiting Professor of Tottori University
・CEO, Healthcare Innovation Co., Ltd.

Thirty minutes by taxi from Union Square, in the heart of San Francisco, JLABS @ South San Francisco (SSF) is set in a beautiful spot framed by sparkling blue sea. This is the very place, under the world’s gaze, where life science potential innovations are delivered one after another.

Last year on September 27, the 2019 “World Without Disease" Pitch Contest was held in central Tokyo. A total of four graduate students from two teams, from the University of Tsukuba and Tokyo University of Science, won the award and were invited to visit Johnson & Johnson Innovation – JLABS on the east and west coasts of the United States. Janssen Japan supported and sponsored the trip. The global Johnson & Johnson family of companies operates broadly across pharmaceuticals, medical devices and consumer health divisions. I had the pleasure of visiting Johnson & Johnson - JLABS for the first time as part of this energetic student tour.

Johnson & Johnson - JLABS Energy
The building is a typical large US venture company building and, on entering the third floor JLABS @ SSF, I was surprised by what I found inside. The interior was extremely stylish and full of primary colors, like a trendy cafe. The space just inside the entrance has a common room and bar counter overlooking San Francisco Bay. The environment is bold and full of art. Casually placed on the table was a QuickFire Challenge (QFC) announcement, which I will describe later, and event information. In addition, information on resident companies and events was displayed on multiple TV screens. It gave the impression that everyone is involved in the life sciences innovation whirlpool. There was a general hubbub in the lobby as employees of a start-up were moving into JLABS @ SSF. I'm sure their chatter marked the beginning of something new.

JLABS @ SSF's Innovation Activation Manager, James Viola and Innovation Activation Specialist, Ro-Anne Rabanillo welcomed us in a glass conference room. A total of six people had been dispatched from Johnson & Johnson, including three staff members plus James and Ro-Anne, who are truly friendly and full of energy. Members from three different resident companies joined our group. This space hosts on average about 180 people who work across 30 resident companies.

The 30,000 square-foot space is packed to the rafters with start-ups, and many companies are on the waiting list to join. After a successful screening, the selection is based on the decision of a science-based evaluation committee of Johnson & Johnson executives and experts.

The JLABS Difference
Worldwide there are many standard bio-incubators nurturing facilities for venture companies in the early days of business. "Our mindset marks the difference here compared to other incubators," said Viola. Technology-based ventures such as Information and Communication Technology (ICT) and bio-ventures have completely different time and cost burdens for commercialization. ICT ventures can raise funds with just one idea, commercialize it in a few years, go public or sell the company.

This is not the case in life sciences as time frames are generally much longer. Johnson & Johnson - JLABS provides all kinds of support, including infrastructure and access to capital and expertise. “We aim to support the growth of early stage companies by providing a cost efficient environment to help them grow as quickly as possible," says Viola. The goal is to provide these small companies with big company benefits and an infrastructure to get them moving quickly. Residents can have access to cell culture facilities, chemical synthesis laboratories as well as shared and private office space enabling them to get to work immediately.

The State-of-the-art equipment is available via shared lab space supported by collaborating companies, and therefore resident companies have low cost access to these facilities. In other words, it is easy for a university researcher to test and validate their ideas.

Within JLABS @ SSF there is a shared concept lab to test ideas. "If you secure POC (proof of concept) there is a greater likelihood venture capitalists could be willing to help your raise the necessary funds to grow your company”, said Viola. In JLABS @ SSF, venture capital and tenant companies frequently hold meetings. Companies raising funds graduate from Johnson & Johnson - JLABS as they expand and grow.

JPALS Add Value
Part of the Johnson & Johnson - JLABS mission is to provide small companies with large company benefits. One example is the JPALS program which I was surprised to find provides access to J&J experts worldwide who have volunteered to mentor JLABS’ residents. Despite their science capability, researchers often have worries about managing a new company. Such concerns include strategic commercialization planning, partner negotiations and personnel management. JPAL’s mentors are available to consult and provide general advise at times like these.
In addition, residents have access to an educational program to help gain knowledge that cannot be learned at university, including safety and compliance requirements for the healthcare industry and commercialization. In this way scientists are transformed into entrepreneurs.

Collaboration and Engagement
Of course, JLABS also networks with a range of life science-related institutions such as the Gates Foundation and National Institutes of Health.

Although J&J maintains most JLABS facilities, some recently established JLABS are run with the support of local research institutes, local governments and/or partner institutions. Johnson & Johnson does not require ownership shares of the start-up companies which use the JLABS facilities, nor does it request preferential negotiation rights. If someone is interested in a JLABS resident technology or products, the companies are free to negotiate with them directly.

What is the purpose of Johnson & Johnson - JLABS? Viola responded without hesitation: "The goal is to nurture new scientific ideas and talent for medical and healthcare needs that currently have no solution."

With the rapid development of life sciences, about half of Johnson & Johnson's research investment is directed to external research. What kind of technological innovation is occurring outside the company in life science? The ability to quickly access cutting-edge ideas has become a key factor in the development of new drugs and medical devices. Indeed, open innovation is inevitable.

Ideation Driven Success: Open Innovation
But how can you keep up with the latest state-of-the-art ideas? One answer is Johnson & Johnson - JLABS. In fact, open innovation may be the key to successful ideation, a goal large pharmaceutical companies are pursuing globally to varying degrees of success.

The JLABS model was established in 2012 at the Janssen R&D facility in San Diego. This open lab was installed, within, but separate from the company's research institute, for external companies to occupy.
JLABS @ SSF was established in 2015 and was the first standalone JLABS facility.

JLABS has expanded to 13 locations worldwide in major US cities including San Francisco, San Diego, Boston, Houston, Washington D.C. and New York as well as internationally in Toronto, Beerse, and in 2019 one was established in Shanghai, China. In addition, there are two Johnson & Johnson - JLABS networking hubs, named JPODs in Boston and Philadelphia. This approach is attracting attention as a successful example of open innovation.

A complementary strategy proactively attracting ideas as well as talent on Johnson & Johnson’s radar is the QFC or QuickFire Challenge. Johnson & Johnson - JLABS runs the QFC as a themed competition to attract ideas that compete with the aim to deliver a solution. Successful ideas may secure a monetary award ranging from $100,000 to $250,000, plus JLABS’ residence. To date, about 84 companies have been QFC awardees. A recent challenge on overcoming drug-resistant Tuberculoses (“TB”) was recently launched. This is a research area that Janssen is keen to develop following its first commercialization of a drug for TB 40 years ago.

The 13 Johnson & Johnson - JLABS’ facilities match areas known for breakthroughs in life science and healthcare. Johnson & Johnson - JLABS also functions as a hub to access the regional innovation ecosystem. For example, in addition to biotechnology at JLABS @ Toronto, the hub is known for its strength in artificial intelligence research and JLABS @ TMC is in close proximity to the Center for Device Innovation at Texas Medical Center (CDI @ TMC), a collaboration among Johnson & Johnson Medical Devices Companies, Johnson & Johnson Innovation and Houston’s Texas Medical Center, the world’s largest medical complex.

"Each JLABS facility has its own characteristics, but you can access all Johnson & Johnson - JLABS events and information from SSF," says Viola. The larger the Johnson & Johnson - JLABS network, the higher the probability of successful innovation due to multiple technologies and talents colliding.

"The people who come to Johnson & Johnson - JLABS are enthusiastic, so there is no need to motivate them. In fact, some members founded companies after quitting jobs as tenured university professors," Viola said. For these driven entrepreneurs at Johnson & Johnson - JLABS, a chance exchange over a cup of coffee can lead to the creation of an innovative idea. "Each resident respects their invention and manages their own intellectual property. We have created a very collaborative environment where entrepreneurs are happy to support one another," said Viola.

The breakdown of tenant companies

JLABs’ Success By The Numbers
Let's look at Johnson & Johnson - JLABS’ overall results which underpin this innovation hub. To date, 654 companies have moved in and 295 have graduated. (for the latest numbers visit https://jlabs.jnjinnovation.com/JLABSNavigator#/) The breakdown of companies is:
・449 Pharma
・133 Medical device
・72 Consumer products
・79 Cross-Sector

According to Viola currently about 90% of companies graduating JLABS @ SSF are still active. This compares very favorably to numbers cited for startup success rates that can be as low as 10% Looking at company growth, 28 Johnson & Johnson - JLABS’ companies went public and 19 have been acquired. Johnson & Johnson - JLABS cultivated venture companies, including those funded via strategic alliances, have raised over $30B. From start-up support to financing, Johnson & Johnson - JLABS is forming a value chain for bio-venture support.

Spirit of Innovation
California has fostered a climate that helped create electronics and ICT legends such as Hewlett-Packard, Apple, and Google. Today, Johnson & Johnson - JLABS is bringing a new approach aimed to support life science start-ups. By drawing on the resources of a large company, Johnson & Johnson - JLABS aims to accelerate venture development to robustly answer unsolved health and medical care problems in today’s world. With the evolving COVID-19 pandemic, Johnson & Johnson - JLABS’ role in supporting these advances in global health could be more important than ever before for our future wellbeing.

At first, the students who accompanied me were initially reluctant to ask Mr. Viola questions, but I could see that after experiencing JLABS @ SSF in person, their eyes were alive with fascination. This just might be the place that ignites the hearts of young people.
(Mitsuru Miyata, Miyata Research Institute)