November 29, 2010FierceBiotech's 2010 Fierce 15
Every year FierceBiotech publishes its list of the top 15 up and coming biotech companies. Anyone can vote for his or her favorite company making the list rather subjective, but for the purposes of this blog entry that does not really matter. The main point I want to stress is the fact that 11 of the 15 companies (listed below) are university spinouts (according to my count). The remaining 4 companies were either created de novo or were corporate spinouts.
- Accerlon: Columbia, Harvard, MSKCC
- Adimab: Dartmouth, MIT
- Anchor Therapeutics: Tufts
- Catabasis: Harvard
- Dicerna: City of Hope
- Eleven Therapeutics: Harvard, UAB, Stanford, MIT
- iPieran: Harvard, Children’s Boston
- Kymab: Sanger Institute
- Plexxikon: NYU
- Tetraphase: Princeton
- Gelesis: MIT
I looked at a number of these companies as investment opportunities over the past year and believe that the above list has a number of fantastic companies. But, there are tons of other companies out there that could have made equally strong cases to be included in the Fierce 15. So what separates these 11 university spinouts from companies not included in the Fierce 15?
Scientific Talent: Many of these companies were founded by leading academics that are both thought leaders in their respective fields and have also had prior entrepreneurial success. For instance, Joseph Schlessinger, the founding scientist of Plexxikon, is one of the world’s top kinase researchers and previously founded another kinase-focused startup, Sugen (sold to Pfizer). VCs tend to be attracted to such scientists because they understand the challenges associated with creating a startup, are experts in their respective fields, and are able to attract top researcher scientists to their startups.
Business Strategy: Of the 11 companies, almost all of them are real companies, not virtual. VCs are on the hunt for startups that have multiple shots on goal and/or are developing a platform technology. Supporting the development of multiple products is way more expensive than for a single asset, but diversification provides a safety net for investors. Also, products can be partnered or licensed which results in non-dilutive capital generation for the company.
Management Talent: VCs like to invest in repeat entrepreneurs with significant domain expertise. To use Adimab as an example, the CEO, Tillman Gerngross, is a former Dartmouth Professor and a co-founder of GlycoFi (sold to Merck).
Hot Technology Area: There aren’t a lot of me-too or reformulation companies on the Fierce 15 this year. VCs are looking for creative ideas in the areas of antibody discovery, iPSC, kinases, and protein-protein interactions.