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Innovation
The JLABS Story: How a Johnson & Johnson Incubator Is Helping Nurture the Next Great Healthcare Breakthroughs
It's every start-up's dream to score both the funding of a time-tested company and the agility of a Silicon Valley incubator. On its fifth birthday, we delve into how Johnson & Johnson Innovation, JLABS, can help make that dream a reality.

magine you’re on the beach right now. You know that wearing sunscreen is one of the most effective ways to protect yourself against skin cancer, but how much is really enough? How often should you reapply? And for that matter, how can you tell if your lotion isn't working anymore?

These are questions that piqued the curiosity of Andrew Martinko when he was a nanotechnology student at the University of Waterloo in 2013. So, while still in school, he and two co-founders devised SPOT—a sticker that would change colors when your sunscreen was no longer protecting you.

Because it was a concept that had the potential to save thousands of lives, Martinko and his team were anxious to further develop it and launch a start-up called Suncayr. But they needed to secure a laboratory to get going on the research, and that required money—money they didn’t have.

So they entered their invention into one of the QuickFire Challenges offered by Johnson & Johnson Innovation, JLABS. The goal of the challenges: find scientists, companies and entrepreneurs with cutting-edge healthcare innovations that Johnson & Johnson Innovation could help bring to the next level.

Of the 61 applicants who pitched their ideas, Suncayr was one of seven winners who received access to state-of-the-art lab space—rent-free—for an entire year at the JLABS facility in Toronto.

What’s more, JLABS would take care of all the important details that go into operating a biotech startup, like stocking the lab with the latest equipment and running safety inspections. They would even help set up informational meetings with industry experts and potential investors. All Suncayr had to worry about was the science.

I got to work figuring out how to get the life sciences industry running like start-ups in the tech industry. I wanted it to be just as productive, just as advanced and just as sexy as the tech industry so the best talent and the best investors would get into it.”

After spending nine months at JLABS @ Toronto, Suncayr is just about ready to launch SPOT. “We’ve probably saved six months [of development time] using the JLABS facilities, which in the start-up world is a lot of time,” Martinko says. “JLABS has definitely helped us accelerate the production and research needed for SPOT faster than we could have done on our own.”

Ever since JLABS debuted with its flagship location in San Diego in 2012, the incubator division of Johnson & Johnson has championed dozens of budding biotech companies just like Suncayr that are innovating across four strategic areas of interest: consumer products, pharmaceuticals, medical devices and digital health.

The overriding mission: give startups the operational tools, infrastructure and mentoring opportunities necessary to take their brilliant idea from the drawing board to the lab and out to the world, so they can reach patients and consumers as quickly as possible.

Today there are more than 140 startups working in seven JLABS facilities across the U.S. and in Canada—and a just-announced eighth will open in New York City in 2018. To mark JLABS' fifth anniversary this year, we're going back in time to trace how a lightbulb moment in one trailblazer’s head gave birth to an incubator that's now transforming the ideas—and lives—of many, many more.



The Genesis of JLABS
Melinda Richter Melinda RichterHead of JLABS, Johnson & Johnson Innovation, Head of JLABS, Johnson & Johnson Innovation, was just 26 and lying on what she thought might be her death bed when the concept for JLABS first began to take shape in her head.

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Melinda Richter, Head of JLABS

She was a rising star in the tech industry, but her upward trajectory screeched to a stop when she was bitten by a toxic insect in Beijing.

“You have these ‘Aha’ moments when you’re told you’re not going to make it,” Richter says. “Here I was, lying in a hospital with doctors unable to diagnose me and yet, ironically, just the day before this, my team was trying to figure out how to order soda from a vending machine with a cell phone. I thought, How can we, as a society, be OK with all the money, press and talent going toward something so frivolous when we have a pretty basic human healthcare gap?"

Richter vowed to herself that if she survived, she would dedicate herself to a more pressing cause. “Thankfully, I got better, and I knew I had a new mission: figuring out how to get the life sciences industry running like start-ups in the tech industry,” she says. “I wanted life science innovation to be just as productive, just as advanced and just as sexy as the tech industry, so the best talent and the best investors were incentivized to get into it.”

So through her Bay Area-based company, Prescience International, she developed a pilot of sorts for JLABS. There should be, Richter thought, a model where start-ups would get access to the same resources they would working for a large company—dry and wet labs, for instance, and an operations team that would take care of day-to-day administrative tasks.

The next step: teaming up with a strategic healthcare partner to launch the incubator in new geographic regions—namely, Johnson & Johnson, a company that has been at the forefront of innovation since it began manufacturing sterile sutures in 1887.

"Johnson & Johnson saw the opportunity to scale the model across their business and around the globe," Richter recalls. "They understood the potential impact of partnering with early stage innovators because many of them had either been doctors on the front lines of patient care or entrepreneurs themselves. They understood the urgency and the need."

Take Johnson & Johnson's Chief Scientific Officer Paul Stoffels Paul Stoffels, M.D.Executive Vice President, Chief Scientific Officer, M.D. "The biotech industry was facing a variety of challenges at the time," he says. “Through JLABS, we set out to foster innovation across the global life sciences community and help accelerate the development of breakthrough solutions for patients and consumers. Today, JLABS is an integral part of our innovation strategy because we know that a great idea can come from anywhere in the world."

After two years of fine-tuning, JLABS was born in January 2012, with Richter at the helm.


From Incubation to Investment: The Trajectory of Arcturus
A few key characteristics have helped JLABS stand out from other incubators of its ilk. When entrepreneurs apply to join, for instance, they don’t always have to have a product already mapped out and tested—sometimes all it takes to gain admission is a smart concept with a passionate team behind it.

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Arcturus CEO Joseph Payne working in a wet lab at JLABS @ San Diego

Take Arcturus. The company has developed a way to deliver RNA medicine to cells infected with the hepatitis B virus, knocking down their gene activity and essentially defeating the disease. When the co-founders—two RNA medicine experts who'd quit their jobs to pursue their idea—were first applying to the program, they had an inkling of what they wanted their innovation to do, but no hard data to prove it would work.

“When my business partner said he was going to try for JLABS, I wasn’t too sure we would make it. We had substantial experience in the field, but we didn’t have anything to show in terms of research,” says CEO Joseph Payne. “I didn’t know if they would take us seriously.”

But JLABS knew the men were onto something, based on their cutting-edge idea and strong track record in the field, and offered them the space and materials to get going, including an office, lab benches, freezer and refrigeration units and specialized equipment, not to mention experienced mentors from Johnson & Johnson.

It’s kind of like a chicken and the egg situation: You need the data to get the investment, but you need the investment to get the data. We help start-ups break that cycle.

In September 2013, the investment in Arcturus proved to be worthwhile. After just seven months of diligent lab work at JLABS @ San Diego, the Arcturus team produced exciting results confirming that their technology worked in animal studies. They also received a $13 million round of funding from outside angel investors.

Since then, Arcturus has signed nearly $2 billion in collaborations and license agreements with Janssen Pharmaceuticals, Inc., Ultragenyx Pharmaceutical and Takeda Pharmaceuticals. The next step, they say, is conducting a human trial.

“We get companies that already have critical data in hand, but we also have others who have a promising approach, and we see this as a test bed for new ideas,” says Kara Bortone Kara BartoneDirector, Venture Sourcing & Development, who leads the recruitment and selection process. “What JLABS does is allow them to generate that proof of concept data that can enable you to get an investment. It’s kind of like a chicken and the egg situation: You need the data to get the investment, but you need the investment to get the data. We help start-ups break that cycle.”



A Culture of Community and Collaboration
Another distinguishing feature of the JLABS approach to incubation is its firm no-strings-attached policy, which is well-known in the industry.

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All JLABS facilities, like this one in Houston, are designed to foster collaboration

“Start-ups pay us a monthly license fee to use the space, but we do not have first right of refusal or an equity stake in the company,” Bortone explains. “Obviously, that doesn’t preclude that we might develop a relationship with them.”

Partnerships that do form are the result of a truly hands-on approach: Members of the JLABS teams meet with companies early and often to help innovators refine their ideas and products.

“Experienced mentors in the consumer packaged-goods space helped us focus,” Martinko says. “We were able to discard bad ideas faster and home in on key channels for us to test SPOT.”

Thanks to JLABS connections, Suncayr was able to set up product testing in Australia, which was a major advantage. “Australia has some of the strongest sun in the world and they’re doing a lot of research about how to teach consumers sun awareness,” Martinko explains. “Because of JLABS, we were able to start the conversation and test the product to the highest grade.”

It’s not just about the ability to impress investors by being in a nice space. It’s about the community—there’s a lot of positive energy when you are around entrepreneurs and it pushes you to work harder.

With so many potentially groundbreaking ideas on the line at the facilities, you would think that entrepreneurs would be inclined to work in solidarity, but Bortone has observed much the opposite.

“What I am the proudest of—and something we didn’t foresee when we first envisioned JLABS—is that we have created a way for companies within JLABS to work together,” she says. “I offer to meet with the companies every quarter, so I really learn about some of the limitations they are having. I can then connect them with companies working in similar areas within JLABS.”

At the flagship San Diego JLABS alone, there are eight such start-ups that have signed agreements with each other to collaborate, like Primordial Genetics and Abilita Bio Inc., who are joining forces to produce a class of drug targets called G-protein-coupled receptors.

A non-competitive and friendly environment was something that Payne of Arcturus certainly noticed. “There were so many smart people at JLABS that would warmly provide pro bono thoughts and support,” he says. “It’s not just about the infrastructure and ability to easily impress investors by being in a nice space. It’s about the community—there’s a lot of positive energy when you are around entrepreneurs and it pushes you to work harder and work together.”

This can-do spirit has even permeated the culture of Johnson & Johnson's other divisions in an unexpected, yet very positive, way.

“The collaboration between JLABS and Johnson & Johnson employees hasn't just helped innovators feel grounded by the experience and wisdom of the company. Employees at Johnson & Johnson have also been inspired to think outside their box,” Richter says. “Across the board, it has given people permission to try new things and to aspire to something bigger—it’s a whole ripple effect.”

Case in point: To date, there have been 33 collaborations between employees at the parent company and JLABS offspring.

“A startup called Xycrobe is a perfect example of this synergy,” Bortone says. “They are working on a new consumer product that uses a probiotic treatment to restore the balance of microbiota on the skin, which could be extremely helpful for a condition like acne. We signed a research collaboration with them last August.”



Looking Forward to the Future of Innovation
Five years has passed quickly, and there’s still so much in store for JLABS. Just this year, 72 new companies will be coming on board as incubatees, including the three winners of the 2016 World Without Disease QuickFire Challenge.

Their forward-thinking inventions include a pill that could potentially help reverse type 2 diabetes and obesity, a test that could possibly detect Alzheimer’s before the onset of symptoms and an inhaler that holds promise for better treating lung cancer.

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The JLABS @ Toronto mission statement

And then there’s the newly-announced JLABS @ NYC—a 30,000-square foot facility that will be unveiled in 2018 at the New York Genome Center. Prior to its launch, JLABS will hold a QuickFire Challenge to recruit for new biotech, pharmaceutical, medical device and consumer health start-ups working on cross-sector solutions to prevent, intercept or cure diseases.

“New York City has the foundational elements for a thriving biomedical ecosystem, but lack of infrastructure and commercialization support has been a roadblock for entrepreneurs in the life sciences,” Richter says. “We believe JLABS @ NYC will fill a key gap in resources and remove a barrier to growth, providing well-paying jobs and allowing potentially transformative solutions for patients to advance."

And while JLABS is focused on the research and development of biotech, medical device and consumer products, Richter foresees an even broader scope down the road.

“I would love to innovate on the front-end of the system, looking at how people get access to care, how care is priced and how care is approved,” she says. “You can’t look at one without eventually looking at the other.”

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