Great post by Hugo Villanueva, Ph.D. and one that stimulated a lot of debate. Clearly our sector needs more effective tools for discovering and developing new therapeutics that achieve improved clinical development success rates. However, it’s not just about the technologies. Data driven decision making embedded in business models like the one we operate at Cumulus Oncology mean only the best assets are moved forward at every stage. Completely agree with Hugo’s point about the need for in vitro and in vivo validation of any output from the array of platforms at our disposal. Until we improve success rates in clinical development, the value of a given platform cannot truly be validated. Here’s hoping techbio coupled with evolving business models can move the dial on clinical success. That’s a meaningful outcome from all the hard work and investment.
Our friends over at OV Deeptech have a weekly #Deepthoughts posts, so we thought we’d join in for a bio special episode. With the rise of #techbio over the last few years, I wanted to assess whether some of the initial promises have come true. Do techbio companies really have ‘more shots on goal’? In theory yes, in practice I’m not so sure. The numbers of ‘shots on goal’ are ultimately a function of capital available. This capital is usually unlocked by hitting pre-clinical milestones in seed/series A companies. The number of #lifescience investors dwarfs techbio investors, therefore companies in the space will raise from the former at some point or another. It’s important to keep in mind that they are likely to value techbio companies by their assets rather than the platform. Without progress made on asset development to demonstrate the value of the platform, it makes it tougher for techbio companies to raise the next round and by default have more shots on goal. Are techbio companies really more capital efficient? Publicly listed techbio companies do not back this up, the major value inflection points are still clinical, which require the same quantum of capital if not more than standard biotech. Typically, techbio companies will focus their initial stages on generating internal datasets as a differentiation strategy and hone the accuracy of their platform. The longer time spent on platform development (and keeping it running) at the cost of R&D towards asset development, the smaller the IRR for early-stage VCs. In addition, the odds of extra capital needing to be raised at a flat or down #valuation from life science investors increases given lack of perceived value creation. Whilst AI-enabled platforms can perform well with companies focussed on a specific modality, this holds less true with regards to target choice, associated disease biology and potential toxicology which remain risks that current AI is still far from mitigating. This requires the same fundamental R&D costs, disease-relevant assays, and model development as a standard biotech. With the commoditisation of automation and AI in academia, I would be keen to see platform technologies stay longer in universities and take longer time validating it in vitro and in vivo before spinning out. It sounds counter-intuitive, but it would likely result in a higher shareholding by founders at the time of exit. Is TechBio really leading to more founder-led companies? I think the number of companies to list with a founder at the helm is increasing given the resources allocated to turn scientists into entrepreneurs. However, the founder-led bio movement is pushed by early-stage VCs for which the founder is the best placed person for platform development. Does that hold up at later rounds, B + when growth investors get involved? A few examples come to mind, but often these are repeat entrepreneurs or well-known ex-pharma superstars—not incredibly different from biotech.
