The University of Michigan is an affiliate of Osage University Partners, and I had the pleasure of talking shop with members of the university’s technology transfer office the other day. During the meeting Robin Rasor, Director of Licensing, pushed me on what life science areas I would not invest in. My response was that I would consider any company as long as it had defendable intellectual property wrapped around it.
Sure, there are challenging investment areas for life science VCs, but for everyone of those challenging areas you will see at least one notable VC playing in that space.
I thought it might be cool to write a blog entry about some of the more controversial life science investment areas and examples venture-backed companies in each space.
Gene therapy has held the title of ‘next big thing’ for the better part of the last 20 years. While I would agree that gene therapy has not quite lived up to its promise, there is still a considerable amount of VC action in the space. At Osage, we are quite interested in gene therapy companies and have already invested in one, Immune Design Corp. Immune Design has a novel lentivirus technology, based upon the work of David Baltimore at Caltech, that they use to specifically target dendritic cells to deliver a payload of antigens. Helix Therapeutics is a Yale University spinout that is backed by Canaan Partners and seeks to commercialize their proprietary triplex-forming oligonucleotides (TFOs). TFOs seek to excise aberrant sections of DNA and correct the mutated DNA via homologous recombination. AGTC is a University of Florida spinout that uses a proprietary AAV vector treat rare eye disorders and is backed by Intersouth and InterWest. Other venture-backed gene therapy companies include Bluebird Bio (Third Rock, Forbion, TVM, Easton) and ReGenX Biosciences (Fox Kaiser).
The patent cliff! The patent cliff! VCs have generally shied away from cardiovascular investments the last few years because of the looming patent cliff for such notable drugs as Lipitor and Plavix. As the CV market goes generic, the hurdle for getting a solid reimbursement rate for a new drug becomes much higher. Layer in the FDA’s requirement of clinical trials with 5-15,000 patients for a Phase 3 study, and you get some pretty unfavorable economics for venture investors. That being said, Regado Biosciences and Portola Pharmaceuticals are two promising startup companies in the field. Regado is a Duke University spinout that is backed by Domain, Quaker, and Caxton and seeks to develop a proprietary anticoagulant that can be rapidly turned off via a companion reversal agent. A blood thinner with an on/off switch comes in pretty handy when performing catheter-based procedures. Portola is backed by a number of investors, including Abingworth, ATV, Alta Partners, Frazier, MPM, and Sutter Hill. Portola’s lead anticoagulant, elinogrel, could act faster than Plavix, which would give the therapy a distinct edge in the market.
Today’s spine market has a number of challenges, from pricing pressures to pushback from payers around selected procedures, which has damped the enthusiasm for venture investors in this space. While the economics are changing in the spine market, the number of patients who are eligible to receive orthopedic intervention will continue to grow as people continue to live longer and desire more active lifestyles in their later years. Last month Spine Wave, a later stage startup company, raised a large venture round from NEA, Morganthaler, New Leaf, Foundation, and Canaan. Spine Wave is focused on commercializing technology platforms that offer surgical solutions for spinal fusion, vertebral compression fracture repair, and nucleus replacement and augmentation. Spinal Motion is developing total disc replacements designed to treat patients suffering from degenerative disc disease in the lumbar or cervical spine and is backed by Three Arch, Kearny, and Skyline Ventures. Other venture backed spine companies include Zyga Technology (Split Rock) and Gentis (Pappas, Easton).
I wrote a post on this topic a few weeks ago, and would suggest you check it out for a more detailed download. There are variety of new agents in development for the treatment of type 1 or type 2 diabetes, including dipeptidyl peptidase-4 inhibitors, glucagon-like peptide 1 analogs, thiazolidinediones, glinides, and new insulin formulations. There are also a bunch of recently formed startups in the diabetes space including PhaseBio (Duke University), Catabasis Pharmaceuticals (Harvard University), and the Metabolic Development Solutions Company (ex-Pfizer scientists).
Some people view November 17, 2010 as the day siRNA died. On that day, Roche announced that it was walking away from a very high profile partnership with Alnylam, a leading siRNA company. People had long known that tissue specific delivery of siRNA in therapeutic quantities would be the key to effective siRNA therapy. Roche leaving the siRNA field placed a giant question mark over whether tissue specific delivery could be achieved (let alone if siRNA works at all). Despite this fact, there is a new generation of siRNA companies that have risen to the challenge of delivering siRNA to specific tissues. Dicerna is a City of Hope spinout that is backed Abingworth, Domain, Oxford, and Skyline. The company’s DsiRNA therapeutic oligonucleotides are designed with different structures from first generation siRNAs – specifically, Dicerna’s DsiRNA molecules are 25 or more base pairs in length and are processed by the Dicer enzyme. PhaseRx is a University of Washington spinout that is backed by 5AM, Arch, and Versant Ventures. The company links it proprietary polymers to siRNA molecules, which enables the efficient trafficking of the complex into specific tissue types and avoids endosome-mediated degradation upon entering the cell. Liquidia is a University of North Carolina and NC State spinout that is backed by Canaan Partners and Pappas Ventures. Using a novel fabrication method known as PRINT (Particle Replication in Non-Wetting Templates), Liquid is able to create novel siRNA carriers that can target specific tissues.
This post covered a lot of ground in a short amount of time and there are certainly more areas that I would like to cover. If you think I missed an indication that you thought VCs avoid, or startup companies that are active in one of the indications I mentioned, then please comment on this post!