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Different types of stories cross my radar as a biotech journalist every day.
There are partnerships between established drugmakers that need new products and the little aspiring companies that need cash to develop their thing. Stories about clinical trial results that move markets. Regulatory actions that make or break companies and investors.
But for me, there’s something especially fun about talking with scientific entrepreneurs who raised their first big wad of investment cash. They’re latching onto some kernel of insight from a discovery. Or maybe they have a vision for stitching together a set of technologies. Either way, they are venturing into a great unknown to see if they can make a big step ahead in medicine. They often have insights that put them years ahead of the lumbering drug giants.
The odds are stacked against the creators. But even in failure, startups can sometimes offer clues on where medicine is heading. Sometimes outside groups will see what's wrong and fix it. And yes, sometimes the startups will succeed, going public or getting acquired.
Here were a few trends I observed from covering startups that will remain relevant in the year ahead.
New Ideas For The Treatment Of Alzheimer’s
Alzheimer’s disease is a demographic iceberg. As the baby boomers get older, the national healthcare bills for dealing with it are astronomical—with one analysis estimating Alzheimer’s will gobble up one-fourth of Medicare spending in 2040. The pharmaceutical industry has had no effective response yet. Billions of dollars have been invested in targeted antibody drugs that are supposed to help clear out the buildup of amyloid-beta protein plaques that are thought to gum up memory and cognition as we age. But we’re beginning to see some signs of support for alternative scientific approaches. Cambridge, Mass.-based Yumanity Therapeutics raised $45 million to create a new drug discovery engine for Alzheimer’s and other neurodegenerative diseases. South San Francisco-based Annexon Biosciences, a Stanford University spinout, raised $44 million to build on research that suggests you can fight Alzheimer’s by stopping the immune system from from removing synapses we need for neuronal functioning. And earlier this month, a bootstrap startup I wrote about in Timmerman Report, EIP Pharma, showed that an old anti-inflammatory drug improved cognition and memory in a small set of patients with mild Alzheimer’s. Given the urgent need, the enormous market, and the string of failures with anti-amyloid antibodies like Eli Lilly’s solanezumab, I suspect we’ll see pharma spread its eggs around into multiple baskets.
Scientists At The Movies
Much of drug discovery is based on static images of a molecular target. Chemists want to make compounds that can bind with the specific target. But many of these targets are fluid in real life, and their shape-shifting dynamics make them especially hard targets. What if instead of looking at a still photograph, you could watch a series of images, a “movie” to see how the protein targets folds in different configurations? Could you gather deeper insight into the particular toeholds that a drug could bind with? Two companies in the Boston area, Relay Therapeutics and Morphic Therapeutic, each raised more than $50 million in their Series A venture financings to see if they can better capture the fluidity of protein targets and use that knowledge to discover drugs. This is a big idea that big organizations are watching closely–Morphic is backed by Pfizer, GSK and AbbVie, while Relay Therapeutics was started by Third Rock Ventures and D.E. Shaw Research.
Solving the Problem, Not Just Pushing Drugs
One reason so many people hate the drug companies is not only because of the high prices. It’s because while they get rich off selling their products, many people aren’t getting their health problems solved. Smoking is one good example. A doctor can prescribe a smoking-cessation product like Pfizer’s varenicline tartrate (Chantix) or GlaxoSmithKline's bupropion hydrochloride (Zyban). Clinical trials will tell you that only goes so far for most smokers. While the big companies bring single-minded focus to pushing their products, researchers and health insurers know that an integrated combination of drug therapy and behavioral therapy is more effective at helping people kick the habit. One San Francisco Bay Area startup, Chrono Therapeutics, told me about a clever way of stitching together drugs, digital sensors and human coaching into an integrated approach. If they can put the puzzle pieces together, Chrono should do a better job of helping a person quit than just writing them a prescription, sending them home and hoping for the best.
Drugs For Us (and Our Bugs)
The science of the microbiome has taken biology by storm the past few years. This is thanks in large part to DNA sequencing tools that are yielding an increasingly vivid understanding of how we as humans coexist with the trillions of bacteria in our guts, and on our skin. When we get along well with the bugs, we’re usually what people would consider healthy. But when something goes off-kilter with a certain kind of bug or bugs, our immune systems can go haywire, attacking healthy tissue, causing autoimmune disease. Some research suggests gut bacterial composition affects our mood, opening up interesting new ideas for treatment of depression and other forms of central nervous system disorders and mental illnesses. Exactly how biotech and pharma companies can wrestle this science to the ground and figure out how make elegant drugs based on it, is very much an open question. Cambridge, Mass.-based Seres Therapeutics, a first-mover in the field, crashed this year with a microbiome-based treatment for C. difficileinfections. But money continued to flow toward a variety of microbiome-based drug discovery efforts that are quite different. A few examples I wrote about in FORBES are Vendanta Biosciences, Synlogic, and Second Genome. Timmerman Report subscribers may also see this recent story on Axial Biotherapeutics, a Caltech spinout that seeks to exploit “the gut-brain axis” for the treatment of autism and Parkinson’s.
Shifting Power Dynamics At The Nexus Of Academia And Industry
We as taxpayers invest in basic biomedical research, largely through the National Institutes of Health. When a discovery gets made, universities sometimes get a patent, and businesses sometimes license these inventions for further development. Traditionally, these raw discoveries need an enormous amount of investment and labor before they can be made into a practical product, like a pill in a bottle. Knowing this, businesses have often obtained intellectual property from universities as if it’s roughly on the 10-yard-line and needs a successfully sustained 90-yard drive from industry to reach the end zone with a marketable product. Businesses have usually paid peanuts to obtain these licenses. But as universities have gotten more skilled at some of the basic blocking and tackling that industry does well (things like basic manufacturing of biologic drugs, viral delivery vectors for gene therapy and more), the universities have been able to drive their assets further downfield. No surprise, that has allowed academics to drive a harder bargain with industry.
Harvard notably extracted a $20 million upfront payment from Merck in March for the right to develop a set of small molecule drugs for acute myeloid leukemia that fit this bill. Juno Therapeutics and Spark Therapeutics, prominent cancer immunotherapy and gene therapy players, respectively, had to pay through the nose to get ahold of foundational intellectual property for their companies (subscribers may read my previous coverage at Timmerman Report). The potential for conflicts of interest, and abuse of taxpayer resources, is always here in such deals. It’s also common to see oversimplified critiques of any and all academic-industry deals in the mass media. But I’d argue that universities have gotten more savvy at the tricky balance of technology transfer since the Bayh-Dole Act of 1980 encouraged them to quit letting inventions sit on the shelf. Academia will continue to strike more financially advantageous deals for themselves in the year ahead, and it will cause continued teeth-gnashing in industry and in the press.
Luke Timmerman is the founder of Timmerman Reportand the author of "Hood: Trailblazer of the Genomics Age."
