After receiving his B.S. in Mechanical Engineering from Purdue University, Michael Schrader worked as an automotive engineer at Toyota and Honda before getting his M.B.A. at Harvard Business School in 2012. There, he met a talented group of diverse individuals from across Harvard’s various schools to form a team that went on to found Vaxess Technologies, a company revolutionizing global health by creating heat-stable vaccines that’s now expanding into other applications of their patented silk-derived protein. Under Schrader’s leadership, the company has amassed an amazing array of awards including the 2012 Harvard President's Challenge Winner and the 2015 Verizon Powerful Answers $1M Award Winner. In the midst of Vaxess’ foray into an entirely new vaccine delivery pathway, Schrader was kind enough to share the lessons he’s learned while building Vaxess and gave Synapse a tour of the company’s lab space at LabCentral in Kendall Square.
“Coming to the market and saying, 'We can take good enough and make it better' is not a compelling argument. The true value is finding products that are failing or really struggling in the market for some technical reason and going after those technical challenges or hurdles.”
SYNAPSE: Tell us where Vaxess’ vaccine silk-stabilization technology began.
SCHRADER: Vaxess was founded in 2012 based on work primarily from Tufts, but also a couple of other academic institutions as well that had shown that silk had really unique stabilizing properties for sensitive compounds. We met those Tufts professors through a Harvard Business School class called ‘Commercializing Science’. It’s a remarkable class run by Vicki Sato. The aim is to bring together students, postdocs, and professors from all the different graduate schools at Harvard - Engineering and Applied Science, Business, Law, the Kennedy School of Government - who have interesting technologies but aren’t quite sure of the translational path to market. It’s an opportunity to self-assemble into diverse teams focused on technologies of common interest and spend a semester seeing if there’s something commercially viable. That’s where our team initially came together and where we met the professors, seeing a commercial need and eventually spinning off the company in Fall 2011.
We still work very closely with Tufts, and we’re also trying to find other applications of the protein that take advantage not only of the stabilization but also the novel formats enabled by silk. Interestingly for us, we are now one of the world’s foremost experts in commercializing this silk protein. It’s been fun to watch the landscape of silk’s potential applications evolve. For example, we recently started working with MIT professors Darrell Irvine and Paula Hammond on a silk microneedle design that came out of their labs.
SYNAPSE: Did you originally have the idea for vaccine stabilization when you met the professors, or was that one of the applications you later found when researching silk?
SCHRADER: We zeroed in on vaccines initially because we saw an overwhelming need: it was very clear from talking to partners this was an area of concern. The technology of silk biomaterials was fairly mature from an academic standpoint. Tufts has published a ton of papers on this protein and all the different things you can do with it. We didn’t go in with the mentality that, “This the problem we’re trying to solve”. Rather, we saw a technology that was pretty well-defined and fortunately there was a big problem that it did help solve, which helped launch the company.
SYNAPSE: What were some of the other applications you thought of at the time?
SCHRADER: What makes silk unique as a material are biocompability and its ability to self-assemble into mechanically robust constructs with a range of properties. We know how it acts in the human body, how it degrades, and we know its inflammatory and immunological profiles.
Secondly, self-assembly is an amazing property that you can advantage of. Think of the way this protein behaves in nature: it sits in solution inside the silkworm and when a silkworm is ready to create a solid structure such as cocoon, it self-assembles into a fiber. What if we tweak some of those input parameters, like the shear force or the pH? Changing these parameters can tease the silk material to self-assemble into everything from gels to very solid constructs. For example, orthopedic screws have even been made from this protein. There’s an incredible range of physical constructs that you can make from silk.
We also have the ability to vary solubility. You can make constructs that solubilize incredibly rapidly which we do with vaccine stabilization. We’re also creating dried constructs that can be turned into solutions instantly for injection. You can also create reasonably insoluble constructs for sustained drug release delivery.
The applications of interest to us are those in the broad space of drug delivery - this is one of MIT’s strengths and something that’s been done with other polymers for a number of years. One of the things that makes silk unique is that it does not have the same acidification when it degrades in the body as some other polymers, and there are some applications for which that’s very beneficial.
SYNAPSE: Are there particular vaccines that Vaxess is focused on?
SCHRADER: We’ve zeroed in primarily on vaccines that otherwise cannot be dried due to stability issues. Inherently a dried product is more stable than a liquid product, and thus distribution is far cheaper. Both vaccines themselves and adjuvants that stimulate the immune system can have issues with freeze-drying.
Regarding vaccines, one of our targets is the polio vaccine. This vaccine, made up of inactivated poliovirus, typically loses its effectiveness when freeze-dried. We have a process to create a dried polio vaccine that retains more than 95% activity after going through the drying process, which up until now had never been shown in the literature. Even more impressive is that the vaccine is stable for six months at 45⁰C temperatures while the existing liquid product is rendered useless after a few weeks or even days at similar temperatures.
We also work with vaccines that contain adjuvants, which are included in many vaccines to stimulate the immune response. The most common immune-stimulating adjuvant is alum, present in about half of vaccines today. Alum tends to aggregate when freeze-dried, and we have preliminary data that supports our ability to dry alum adjuvants in vaccines without aggregation.
SYNAPSE: What features of the technology did you look at to decide that vaccine stabilization was the best application of silk protein?
SCHRADER: I think this gets back to the concept of truly understanding what problem that the market has that you can help solve. When we first started working with this, there were publications about a range of different vaccines, most of which can be freeze-dried, that didn’t get good stability. In some cases we’ve been able to increase the stability, but in the eyes of many pharmaceutical companies, the existing freeze-drying process was good enough. Coming to the market and saying, “We can take good enough and make it better” is not a compelling argument. The true value is finding products that are failing or really struggling in the market for some technical reason and going after those technical challenges or hurdles. I think that’s another big lesson for us, the question has changed from, “What can silk do?” to, “What can silk do that is meaningful that no other material can do?” Zeroing in on that is has reframed our mindset more effectively.
SYNAPSE: What is the long-term vision for the company?
SCHRADER: As a company, we aim to have two powerful platforms for making next-generation vaccines. First, vaccines that can be stored basically anywhere through our stabilization technology. Second, delivery technologies to improve the efficacy of vaccines we’ve struggled with in the past for many years.
This second approach we’re exploring is using silk to do sustained dermal delivery of vaccines via microneedles. The platform builds upon newly emerging science that shows sustained vaccine delivery that “mimics” a prolonged infection can dramatically boost immune responses. The skin is also a great immune receptor, and in many cases you’re able to get much stronger and more potent immune responses through the skin. Basically we can take our novel drying/stabilization process, and rather than simply doing it in a vial or traditional film format, we can do something very similar in a microneedle shape. This may enable us to produce successful vaccines that have failed due to efficacy issues in the past.
We’re also excited that the world of vaccines is changing at the same time that we’re growing into it. We’ve always thought of vaccines as simply being preventative, but there’s a whole new world of understanding that we can actually stimulate the immune system to fight diseases after we’ve contracted them. Immuno-oncology is one field that you hear about and the fundamental challenge is the same - we need to generate a very strong immune response to particular antigens. There’s a need for technologies that help strengthen that immune response even further, so we’re in a unique place and time in the history of vaccines that enables us to help advance those amazing next-generation products.
Lessons from successful pitch competitions and external partnerships
“If you come in with a team of only business people, they can provide a great business case but the technical aspect is missing. On the flipside, many technical people won’t realize the challenges they’ll face in commercialization and fundraising. There’s a benefit and synergy to having at least two team members - one with a business background and one with a technical background.”
SYNAPSE: Vaxess has been very successful in winning awards and pitch competitions. What are the key elements for those pitches? Do you tailor pitches differently for competitions compared to those for VCs?
SCHRADER: If there’s one thing I’ve learned from this process it’s the value of being candid with the judges. You certainly need to do your homework and be sure you understand the problem first. A lot of companies with cool technologies fail to really articulate, “This is the problem that we’re solving that no one else can solve. Here’s our secret sauce, here’s why our product is valuable.” That’s one aspect of it, but it’s also important to talk candidly about the problems you face. Once you lose the judges’ trust and say something that’s factually untrue, they’re going to question everything else you say in your presentation.
Identifying the problem is a huge challenge for many technology startups. Even when you have a cool technology that can do a ton of things, you need to answer, “What can we do that no one else can do?” and, “Is there value in actually doing that?” I think too many platform technologies fail to address those questions properly. We had great advisors that hammered us on those questions early. They said, “You’ve got 100 patent families coming out Tufts for this work. Go out and find something meaningful that silk can do better than anything else.”
Having a diverse, capable team is the other important element of startups. I see many companies led by either business people who think they’ve got it all figured out or technical people who think they know everything and don’t need a business counterpart. The composition of the Vaxess team has made us unique from the start - I was a mechanical engineer turned business leader, we had a physicist turned lawyer, an economist, and a postdoc. The unique breadth of representation helped us identify our blind spots better. If you come in with a team of only business people, they can provide a great business case but the technical aspect is missing. On the flipside, many technical people won’t realize the challenges they’ll face in commercialization and fundraising. There’s a benefit and synergy to having at least two team members - one with a business background and one with a technical background - and in our case, we were spoiled to have four.
SYNAPSE: What lessons have you learned from negotiating Vaxess’ partnerships with pharma and vaccine companies?
SCHRADER: First and foremost I would reiterate the importance of candor, honesty, and openness. It’s naive for young company founders to go into hardcore sales mode with potential partners and not be realistic about the challenges that lie ahead. That candor, openness, and honesty is very important when building partnerships. Once a partner sees that there’s a willingness on your part to acknowledge those problems, they’ll be supportive and come to the table trying to help you solve them with their expertise and act as true partners.
Secondly, it’s crucial to listen to the problems that the company is presenting to you and making sure you can truly help them solve their problems. These pharma companies have strategic priorities and directions they set, if you’re not helping them achieve those, it’s simply not a match. Listen first, and then think, honestly and frankly with yourself, about whether or not you can help them. If the answer is no, you can walk away more quickly and move onto better partnerships, and if the answer is yes you can think about how to tailor your product to fit their needs. When pitching to a potential partner, rather than, “Here’s our product. Here’s why it’s great. Here’s why you should love it.”, it should be, “Here’s the problem you have. Here’s how we think we can help you solve it.”
Leveraging skills from other industries to advance a biotech startup
“I’m not afraid to ask stupid questions. I have no fear asking our advisors, technical team, investors, or pharma partners questions that may come across as naive.”
SYNAPSE: What skills and insights from your work in the auto industry have come in useful as the CEO of Vaxess?
SCHRADER: The auto industry background, quite frankly, has helped very, very little with the technical challenges we encounter in vaccine stabilization. It was just not a good fit - there’s very little overlap. The good thing that came from this lack of technical overlap is that I’m not afraid to ask stupid questions. I have no fear asking our advisors, technical team, investors, or pharma partners questions that may come across as naive. In many cases, that can be a useful thing whereas somebody who’s expected to be or perceived as an expert is often afraid to ask those questions. I can ask dumb questions, and often times it leads to stimulating conversations. This naiveté also makes me more willing to lean on those people who do have that deep technical expertise. Fortunately as we’ve moved into microneedles, my auto industry work has come in handy. My past work was designing glass and plastic parts, so now that Vaxess has a structural microneedle application I’ve actually gotten to do some CAD (computer-aided design) work and think about the manufacturing process that we’re cutting some new territory in. Being able to draw from understanding how auto parts are made at scale has been somewhat useful there, but it’s not a perfect overlap.
The other thing is that I've seen very different approaches to management between my time in the auto industry and my brief internship in the tech sector. So between working at Toyota, Honda, and Google, three organizations that have very different styles of human resource management, strategic planning, communicating with their employees, I’ve been able to draw upon the respective pluses and minuses of all of their different approaches. When we thought about building company culture, Honda, for all of its pluses, has a very closed-off culture. Their philosophy is that information is spread on a need-to-know basis. So if you’re working on a particular vehicle, or even one specific area of a vehicle, you’ll know everything you need to know about that particular area of that particular vehicle, but you have very little insight into what other teams and programs are doing. Of course, as you move up the management chain, that vision expands. But their vision is we’re not really going to tell you unless you need to know.
Google, on the other hand, is remarkable in that it tends to overshare every company detail with every employee, and their philosophy is that if we hire well and treat employees like adults, there will be a mutual respect between the organization and the employee and trust that things will be kept confidential. Under that approach a company will get insights from someone who is not working on a particular project team but has some other inspiration that they can draw on to make that program better. Two very different management philosophies, and at Vaxess we’ve gone with the Google approach - if anything we want to overshare and let the employees know everything that’s going on in the company, our financial status, what our fundraising plans are, what our business development plan is. At the same the technical sharing is very wide and because of that you’ve got people coming in who may not have business expertise but they’re not afraid to come and ask a question that could be perceived as naive but will actually lead to something really interesting. Having exposure to those different management philosophies - again, all great companies where the system works for them - has helped us think more about the culture and organizational behavior we want to develop at Vaxess.
SYNAPSE: What spurred your decision to apply to business school?
SCHRADER: I had an interesting progression through the automotive world: I started in the world of manufacturing, and if you ever have the chance to work at a manufacturing plant, every line worker and engineer in a manufacturing plant will complain about how crummy the designs they get are. The pieces don’t fit properly or don’t go together the way you’d expect, so you sit there and grumble about how incompetent the designers are. Then I left manufacturing and went into R&D. When you get into R&D you realize, ‘Wow! This is actually really hard. I’ve got to think about more than just the manufacturing folks. I’ve got to think about the maintenance technicians out in the field who are going to have to work on this, the cost pressures, and all these performance and styling aspects.’ All of these competing needs often lead to a design that’s not perfect for anybody. The stylists don’t love the final design relative to their initial beautiful concept cars and the salespeople on the dealership floors are typically not ecstatic about the final design, so everybody has to accept this final compromise product that works for everybody but is not perfect for anybody.
Then when I was in the world of design, Honda made some strategic vehicle decisions that were really hard for me to understand. They approved some vehicles that most people believed were going to be disasters, and I’m not going to name the vehicle because it’s something that I spent 3 years working on - I loved my parts on the vehicle but it was one of the worst commercial failures in Honda’s history. As I’m sitting there, I think like any 25 or 26 year-old would, ‘I could do this better. I could do corporate strategy and product planning way better than is currently done.’ So I wanted to go back to business school to focus on improving corporate strategy. One of the insights from business school is, just as I realized going from manufacturing to R&D, that corporate strategy is really hard and there are many other elements that influence approval or denial decisions that you don’t think about when you’re doing the engineering work on a day-to-day basis. I’ve had a unique opportunity to see the process of getting a product to market from the very early, conceptual strategic phases all the way through to the final manufacturing and rolling the products off to the final quality control that makes me appreciate the challenges at each level.
Tips for successfully navigating the biotech startup ecosystem
“If you see that rocket ship taking off, get on it, work your tail off, and learn from the people who are there and worry about title and role later.”
SYNAPSE: As a mentor and judge at MassChallenge, what are the pros and cons you’ve seen regarding founding a startup here in Boston vs. Silicon Valley or other locations?
SCHRADER: We were fantastically lucky to have a number of entrepreneurs who were two or three years ahead help us through the day-to-day logistics of getting a startup off the ground. Coming out of an academic institution, nobody teaches you these things. No one teaches you how to do sales, sell to partners, set up payroll, set up an accounting ledger and maintain your books, or how to sign leases for lab space. There are all of these operational day-to-day challenges that nobody really has insight into until they take the plunge of leading a company. MassChallenge connected us with people who generously helped us with those aspects of starting Vaxess.
Quite frankly, this entrepreneurial mantra of paying it forward and helping others in any way possible is overwhelmingly positive. I don’t have experience with Silicon Valley though obviously you hear that it’s great there, but here in Boston I have been blown away by the support of my fellow entrepreneurs in the startup community.
SYNAPSE: What challenges and opportunities are unique to biotechs compared to tech or other startup areas?
SCHRADER: I think the single biggest challenge right now is that the mantra of the VCs in this space has changed. At one point, there was a philosophy of entrepreneurs finding a technology, starting a company, and then investors coming in from the outside to back them. Many biotech VC firms have now flipped to venture creation: they find the technologies, bring it in house, hire associates to develop the technology to some extent and build the business plan, and then spin the company out. You’re in a tough place if you want to be an individual entrepreneur.
In tech & software startups, VCs invest in entrepreneurs. It’s not always the idea or a specific technology VCs are investing in - it’s the entrepreneurs who they think have a huge opportunity to create something great. In the biotech, the VCs are more interested in investing in a technology with huge upside and less interested in the individuals attached to the technology at that moment, because they can build the team around the technology.
SYNAPSE: Vaxess was originally at the Harvard Innovation lab for a few years and is now at LabCentral. What role have these shared lab/innovation centers played in Vaxess’ development?
SCHRADER: We’ve seen a couple of things: 1. Living in this ecosystem allows us to focus on the truly important tasks: our scientists and engineers can do great product development instead of thinking about lab management, waste disposal, permitting, regulations, facility management, and equipment upkeep. The management team can focus on fundraising, hiring, organizational and business development, and strategy as opposed to having to spend all of this time thinking about getting a lab up and running, hiring architects, and building it out.
2. Entrepreneurship can be lonely, and we’ve seen companies that have left these incubators lose the sense of community. There’s a social aspect to seeing other people here outside of those in your company and engaging with them. From a practical standpoint, any small company is going to have a limit to the skill sets they can bring in-house. If we need help with a particular piece of equipment or a new area we’re looking into, there’s somebody from another company here that knows that equipment well or knows that new area particularly well. For examples, we had some inquiries for an RNA drug delivery technology. We knew little about RNA - we had never worked with it. Fortunately, there are at least 2 companies here that are some of the world’s foremost experts on RNA, so we can just go sit down with them and have a 2 hour discussion to jump-start the process.
The companies that thrive in these ecosystems are the companies that take advantage of all that’s going on here, and they participate, engage in, and socialize in the ecosystem. I think you’re going to see a continual growing trend for these type of spaces.
SYNAPSE: As a final question, we always like to ask what advice you have for budding undergraduate, graduate student, or postdoc biotech entrepreneurs.
SCHRADER: I’m going to repeat the advice that Eric Schmidt, the CEO of Google, gave to Sheryl Sandberg when she was first considering Google but wasn’t certain that the role or title she was interviewing for at Google was the right fit. Eric Schmidt’s line was, ‘If you see a rocket ship taking off, your sole focus should be finding a seat on that rocket ship. Don’t worry about where that seat is located or any other details, make sure you are on the rocket ship because you’re going to get an opportunity to see the organization grow and understand what that looks like, you’re going to an organization with wonderful people throughout this journey, and you’re going to learn so much that you can worry about role and title and those types of things later on in your career.’ That has really stuck with me - if you see that rocket ship taking off, get on it, work your tail off, and learn from the people who are there and worry about title and role later.
My second piece of advice is that when you’re thinking about joining an organization, the single most important thing to understand is what they need from you. What are their biggest needs at the moment? When conducting job interviews, far too often I see the interviewees just ramble on about all of the things they can do, but in most cases, the most effective thing to start with is, ‘I’ve read the job description. I think I have a sense of what your company needs. Can you give me more detail about exactly what you’re looking for?’. And then try to help them solve the problems that they’re facing, particularly it’s a small organization. The company’s needs and challenges are changing on a daily basis. For us, the most remarkable employees are those who are willing to go and solve whatever problem comes up in any area, even if it’s not within their original job description. So be flexible, and if you’re helping an organization, whether it’s an academic organization, big pharma, or small pharma, if you solve meaningful problems you’re going to be an incredible asset to that company and you’ll have a positive trajectory.