biotech
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Watch biotech startups pitch at IndieBio’s demo day today
IndieBio, the biotech startup accelerator that’s produced heaps of notable companies (including several that have graced the Startup Battlefield), is holding its twice-annual demo day today at 3PM Pacific Time. An even dozen young companies will be pitching their work, from AI-informed research to artificial meat, and you can watch them present live right here.
The IndieBio program is a four-month one that takes companies at the seed stage, often researchers straight out of graduate programs or university research groups, and gets them into shape for a proper Silicon Valley debut. Right now the companies get $250K in funding to take part, as well as plenty of resources, which parent VC firm SOSV can surely afford these days, what with raising $150 million last year.
Off the top of my head I remember two companies that competed at Disrupt SF 2016, Amaryllis Nucleics and mFluiDx, both very technical and highly talented teams. I’m always rooting for these kinds of wet lab companies, and it sounds like the current batch has plenty.
Watch the live pitches starting at 3PM below, and consult the list below the video for a summary of the companies presenting. We’ll be watching too!
New Age Meats: Pig farms are hell on earth. New Age Meats is a “cell-based meat company” that’s looking to replace animal-based pork sausage with a cleaner, more ethical grown alternative that goes just as well with pancakes.
NovoNutrients: Another non-traditional protein source, NovoNutrients uses industrial CO2 emissions to produce high-protein bacteria, which are harvested and sold as sustainable feed stock for aquaculture animals like fish.
BioRosa: An early detection method for autism spectrum disorders using blood tests that could shift diagnosis time to well before the current four years of age to potentially before the child is born.
Chronus Health: Hospitals need to do blood tests constantly, but often have to send samples to a central lab, which can take hours or days. Chronus has made a portable device they claim can provide complete blood count and metabolic panel tests essentially in real time.
Clinicai: Colorectal cancer, like other cancers, is best treated when detected early — and collecting and analyzing stool samples is a big part of that. These guys made a (prototype) device that attaches to ordinary toilets and non-invasively does what it needs to do, which could help people worldwide get proactive diagnosis and care.
Convalesce: Parkinson’s is a stubborn and tragic disease, but Convalesce is working on a treatment method involving injecting stem cells directly into areas affected by neurodegeneration.
Oralta: You can floss, brush, and rinse, but bad news bacteria are still going to take up residence in your mouth. Oralta hopes to combat them with good bacteria, reinforced by probiotic supplements. Fight fire with fire!
Ember: If someone is having a heart attack and it’ll take the EMTs 8-12 minutes to arrive, but your neighbor is a nurse trained in CPR, wouldn’t it be nice if they could stop by and help? That’s the idea with Ember, which hopes to improve outcomes by connecting patients with health professionals nearby.
Filtricine: The cancer treatment method being pursued by this company, instead of adding something lethal to cancer cells into the bloodstream, subtracts what they need to live while leaving normal cells unharmed. It could combine effectiveness with a blessed lack of side effects to become another tool in oncologists’ arsenals.
Serenity Bioworks: Gene therapy is another important therapeutic tool for a variety of problems, but some viral delivery methods can be fought by the body as if it’s fighting infection. Serenity is working on a system that suppresses that immune response and allows the friendly virus to deliver its payload.
Quartolio: So much scientific literature is published every year that there’s no way doctors and researchers can keep up. Quartolio aims to apply national language processing to journal articles to find connections and research opportunities that might otherwise have gone unnoticed.
Stämm: Bioreactors are used in practically every branch of biotech, whether for testing or drug manufacturing. Stämm is advancing the art with a modular, scalable microfluidic platform with highly tunable physical and chemical parameters.
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China is funding the future of American biotech
Silicon Valley is in the midst of a health craze, and it is being driven by “Eastern” medicine.
It’s been a record year for US medical investing, but investors in Beijing and Shanghai are now increasingly leading the largest deals for US life science and biotech companies. In fact, Chinese venture firms have invested more this year into life science and biotech in the US than they have back home, providing financing for over 300 US-based companies, per Pitchbook. That’s the story at Viela Bio, a Maryland-based company exploring treatments for inflammation and autoimmune diseases, which raised a $250 million Series A led by three Chinese firms.
Chinese capital’s newfound appetite also flows into the mainland. Business is booming for Chinese medical startups, who are also seeing the strongest year of venture investment ever, with over one hundred companies receiving $4 billion in investment.
As Chinese investors continue to shift their strategies towards life science and biotech, China is emphatically positioning itself to be a leader in medical investing with a growing influence on the world’s future major health institutions.
Chinese VCs seek healthy returns
We like to talk about things we can interact with or be entertained by. And so as nine-figure checks flow in and out of China with stunning regularity, we fixate on the internet giants, the gaming leaders or the latest media platform backed by Tencent or Alibaba.
However, if we follow the money, it’s clear that the top venture firms in China have actually been turning their focus towards the country’s deficient health system.
A clear leader in China’s strategy shift has been Sequoia Capital China, one of the country’s most heralded venture firms tied to multiple billion-dollar IPOs just this year.
Historically, Sequoia didn’t have much interest in the medical sector. Health was one of the firm’s smallest investment categories, and it participated in only three health-related deals from 2015-16, making up just 4% of its total investing activity.
Recently, however, life sciences have piqued Sequoia’s fascination, confirms a spokesperson with the firm. Sequoia dove into six health-related deals in 2017 and has already participated in 14 in 2018 so far. The firm now sits among the most active health investors in China and the medical sector has become its second biggest investment area, with life science and biotech companies accounting for nearly 30% of its investing activity in recent years.
Health-related investment data for 2015-18 compiled from Pitchbook, Crunchbase, and SEC Edgar
There’s no shortage of areas in need of transformation within Chinese medical care, and a wide range of strategies are being employed by China’s VCs. While some investors hope to address influenza, others are focused on innovative treatments for hypertension, diabetes and other chronic diseases.
For instance, according to the Chinese Journal of Cancer, in 2015, 36% of world’s lung cancer diagnoses came from China, yet the country’s cancer survival rate was 17% below the global average. Sequoia has set its sights on tackling China’s high rate of cancer and its low survival rate, with roughly 70% of its deals in the past two years focusing on cancer detection and treatment.
That is driven in part by investments like the firm’s $90 million Series A investment into Shanghai-based JW Therapeutics, a company developing innovative immunotherapy cancer treatments. The company is a quintessential example of how Chinese VCs are building the country’s next set of health startups using their international footprints and learnings from across the globe.
Founded as a joint-venture offshoot between US-based Juno Therapeutics and China’s WuXi AppTec, JW benefits from Juno’s experience as a top developer of cancer immunotherapy drugs, as well as WuXi’s expertise as one of the world’s leading contract research organizations, focusing on all aspects of the drug R&D and development cycle.
Specifically, JW is focused on the next-generation of cell-based immunotherapy cancer treatments using chimeric antigen receptor T-cell (CAR-T) technologies. (Yeah…I know…) For the WebMD warriors and the rest of us with a medical background that stopped at tenth-grade chemistry, CAR-T essentially looks to attack cancer cells by utilizing the body’s own immune system.
Past waves of biotech startups often focused on other immunologic treatments that used genetically-modified antibodies created in animals. The antibodies would effectively act as “police,” identifying and attaching to “bad guy” targets in order to turn off or quiet down malignant cells. CAR-T looks instead to modify the body’s native immune cells to attack and kill the bad guys directly.
Chinese VCs are investing in a wide range of innovative life science and biotech startups. (Photo by Eugeneonline via Getty Images)
The international and interdisciplinary pedigree of China’s new medical leaders not only applies to the organizations themselves but also to those running the show.
At the helm of JW sits James Li. In a past life, the co-founder and CEO held stints as an executive heading up operations in China for the world’s biggest biopharmaceutical companies including Amgen and Merck. Li was also once a partner at the Silicon Valley brand-name investor, Kleiner Perkins.
JW embodies the benefits that can come from importing insights and expertise, a practice that will come to define the companies leading the medical future as the country’s smartest capital increasingly finds its way overseas.
GV and Founders Fund look to keep the Valley competitive
Despite heavy investment by China’s leading VCs, Silicon Valley is doubling down in the US health sector. (AFP PHOTO / POOL / JASON LEE)
Innovation in medicine transcends borders. Sickness and death are unfortunately universal, and groundbreaking discoveries in one country can save lives in the rest.
The boom in China’s life science industry has left valuations lofty and cross-border investment and import regulations in China have improved.
As such, Chinese venture firms are now increasingly searching for innovation abroad, looking to capitalize on expanding opportunities in the more mature US medical industry that can offer innovative technologies and advanced processes that can be brought back to the East.
In April, Qiming Venture Partners, another Chinese venture titan, closed a $120 million fund focused on early-stage US healthcare. Qiming has been ramping up its participation in the medical space, investing in 24 companies over the 2017-18 period.
New firms diving into the space hasn’t frightened the Bay Area’s notable investors, who have doubled down in the US medical space alongside their Chinese counterparts.
Partner directories for America’s most influential firms are increasingly populated with former doctors and medically-versed VCs who can find the best medical startups and have a growing influence on the flow of venture dollars in the US.
At the top of the list is Krishna Yeshwant, the GV (formerly Google Ventures) general partner leading the firm’s aggressive push into the medical industry.
Krishna Yeshwant (GV) at TechCrunch Disrupt NY 2017
A doctor by trade, Yeshwant’s interest runs the gamut of the medical spectrum, leading investments focusing on anything from real-time patient care insights to antibody and therapeutic technologies for cancer and neurodegenerative disorders.
Per data from Pitchbook and Crunchbase, Krishna has been GV’s most active partner over the past two years, participating in deals that total over a billion dollars in aggregate funding.
Backed by the efforts of Yeshwant and select others, the medical industry has become one of the most prominent investment areas for Google’s venture capital arm, driving roughly 30% of its investments in 2017 compared to just under 15% in 2015.
GV’s affinity for medical-investing has found renewed life, but life science is also part of the firm’s DNA. Like many brand-name Valley investors, GV founder Bill Maris has long held a passion for the health startups. After leaving GV in 2016, Maris launched his own fund, Section 32, focused specifically on biotech, healthcare and life sciences.
In the same vein, life science and health investing has been part of the lifeblood for some major US funds including Founders Fund, which has consistently dedicated over 25% of its deployed capital to the space since at least 2015.
The tides may be changing, however, as the recent expansion of oversight for the Committee on Foreign Investment in the United States (CFIUS) may severely impact the flow of Chinese capital into areas of the US health sector.
Under its extended purview, CFIUS will review – and possibly block – any investment or transaction involving a foreign entity related to the production, design or testing of technology that falls under a list of 27 critical industries, including biotech research and development.
The true implications of the expanded rules will depend on how aggressively and how often CFIUS exercises its power. But a lengthy review process and the threat of regulatory blocks may significantly increase the burden on Chinese investors, effectively shutting off the Chinese money spigot.
Regardless of CFIUS, while China’s active presence in the US health markets hasn’t deterred Valley mainstays, with a severely broken health system and an improved investment environment backed by government support, China’s commitment to medical innovation is only getting stronger.
VCs target a disastrous health system
Deficiencies in China’s health sector has historically led to troublesome outcomes. Now the government is jump-starting investment through supportive policy. (Photo by Alexander Tessmer / EyeEm via Getty Images)
They say successful startups identify real problems that need solving. Marred with inefficiencies, poor results, and compounding consumer frustration, China’s health industry has many.
Outside of a wealthy few, citizens are forced to make often lengthy treks to overcrowded and understaffed hospitals in urban centers. Reception areas exist only in concept, as any open space is quickly filled by hordes of the concerned, sick, and fearful settling in for wait times that can last multiple days.
If and when patients are finally seen, they are frequently met by overworked or inexperienced medical staff, rushing to get people in and out in hopes of servicing the endless line behind them.
Historically, when patients were diagnosed, treatment options were limited and ineffective, as import laws and affordability issues made many globally approved drugs unavailable.
As one would assume, poor detection and treatment have led to problematic outcomes. Heart disease, stroke, diabetes and chronic lung disease accounts for 80% of deaths in China, according to a recent report from the World Bank.
Recurring issues of misconduct, deception and dishonesty have amplified the population’s mounting frustration.
After past cases of widespread sickness caused by improperly handled vaccinations, China’s vaccine crisis reached a breaking point earlier this year. It was revealed that 250,000 children had been given defective and fallacious rabies vaccinations, a fact that inspectors had discovered months prior and swept under the rug.
Fracturing public trust around medical treatment has serious, potentially destabilizing effects. And with deficiencies permeating nearly all aspects of China’s health and medical infrastructure, there is a gaping set of opportunities for disruptive change.
In response to these issues, China’s government placed more emphasis on the search for medical innovation by rolling out policies that improve the chances of success for health startups, while reducing costs and risk for investors.
Billions of public investment flooded into the life science sector, and easier approval processes for patents, research grants, and generic drugs, suddenly made the prospect of building a life science or biotech company in China less daunting.
For Chinese venture capitalists, on top of financial incentives and a higher-growth local medical sector, loosening of drug import laws opened up opportunities to improve China’s medical system through innovation abroad.
Liquidity has also improved due to swelling global interest in healthcare. Plus, the Hong Kong Stock Exchange recently announced changes to allow the listing of pre-revenue biotech companies.
The changes implemented across China’s major institutions have effectively provided Chinese health investors with a much broader opportunity set, faster growth companies, faster liquidity, and increased certainty, all at lower cost.
However, while the structural and regulatory changes in China’s healthcare system has led to more medical startups with more growth, it hasn’t necessarily driven quality.
US and Western investors haven’t taken the same cross-border approach as their peers in Beijing. From talking with those in the industry, the laxity of the Chinese system, and others, have made many US investors weary of investing in life science companies overseas.
And with the Valley similarly stepping up its focus on startups that sprout from the strong American university system, bubbling valuations have started to raise concern.
But with China dedicating more and more billions across the globe, the country is determined to patch the massive holes in its medical system and establish itself as the next leader in international health innovation.
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uBiome is jumping into therapeutics with a healthy $83 million in Series C financing
23andMe, IBM and now uBiome is the next tech company to jump into the lucrative multi-billion dollar drug discovery market.
The company started out with a consumer gut health test to check whether your intestines carry the right kind of bacteria for healthy digestion but has since expanded to include over 250,000 samples for everything from the microbes on your skin to vaginal health — the largest data set in the world for these types of samples, according to the company.
Founder Jessica Richman now says there’s a wider opportunity to use this data to create value in therapeutics.
To support its new drug discovery efforts, the San Francisco-based startup will be moving its therapeutics unit into new Cambridge, Massachusetts headquarters and appointing former Novartis CEO Joseph Jimenez to the board of directors as well.
The company has a healthy pile of cash to help build out that new HQ, too, with a fresh $83 million Series C, lead by OS Fund and in participation with 8VC, Y Combinator, Dentsu Ventures and others.
The drug discovery market is slated to be worth nearly $86 billion by 2022, according to BCC Research numbers. New technologies — those that solve logistics issues and shorten the time between research and getting a drug to market in particular — are driving the growth and that’s where uBiome thinks it can get into the game.
“This financing allows us to expand our product portfolio, increase our focus on patent assets and further raise our clinical profile, especially as we begin to focus on commercialization of drug discovery and development of our patent assets,” Richman said.
Though its unclear at this time which drug maker the company might partner up with, Richman did say there would be plenty to announce later on that front.
So far, the company has published over 30 peer-reviewed papers on microbiome research, has entered into research partnerships with the likes of the Center for Disease Control (CDC) and leading research institutions such as Harvard, MIT and Stanford and has previously raised $22 million in funding. The additional VC cash puts the total amount raised to $105 million to date.
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As biological manufacturing moves to the mainstream, Synvitrobio rebrands and raises cash
The pace at which the scientific breakthroughs working to bend the machinery of life to the whims of manufacturing have transformed into real businesses has intensified competition in the biomanufacturing market.
That’s just one reason why Synvitrobio is rebranding as it takes on $2.6 million in new financing to pursue opportunities in biopharmaceutical and biochemical manufacturing. Under its new name, Tierra Biosciences, the company hopes to emphasize its focus on agricultural and biochemical products.
The company is one of several looking to commercialize the field of “cell-free” manufacturing — where biological engineers strip down the cellular building blocks of life to their most basic components to create processes that ideally can be more easily manipulated to produce different kinds of chemicals.
There’s a standard way to create these cell-free processes (described quite nicely in The Economist).
Grab a few quarts of culture with some kind of bacteria, plant or animal cells in it. Then use pressure to force the cells through a valve to break up their membranes and DNA. Give the goo a nice warm environment heated to roughly the average temperature of a human body for about an hour. That activates enzymes that will eat the existing DNA.
Put all of it in a centrifuge to separate out the ribosomes (which are the important bits). Take those ribosomes and give them a mixture of sugars, amino acids, adenosine triphosphate (the molecular compound that breaks down to provide energy for all biological functions) and new DNA with a different set of instructions on what to make and voila! Micro-factories in a test tube.
Along with co-founders Richard Murray of the California Institute of Technology and George Church, one of the living legends of modern genetics, chief executive officer Zachary Sun designed Tierra to be an engine for new biochemical discovery.
“Everything floats in the cytoplasm… We keep that internal stuff and that allows us to run reactions where a cell wall isn’t necessary. I want to reduce the complex system down to its component parts,” says Sun. “We look at this as a data collection problem. We want to use cell-free to tell you what to put either in a cell or in cell-free systems… We can collect more data faster using our cell-free system.”
The startup is already working with the Department of Energy research institution at Oak Ridge National Laboratory to develop processes to create vanillin (vanilla extract) and mevalonate (turpentine) from biomass.
It’s an approach that is already showing the potential for investment returns in life sciences and pharmaceuticals. For inspiration, Tierra can look to the South San Francisco-based Sutro Biopharma.
That company has signed a drug discovery agreement with Merck to develop new immune-modulating therapies (that bring the immune system into check) for cancer and auto-immune disorders, in a deal worth up to $1.6 billion if the company hits certain milestones — in addition to a $60 million upfront payment. Sutro raised more than $85 million in new funding in July (from investors including Merck) and just filed to go public on the Nasdaq.
According to Sun, the newly named Tierra has its own partnerships with global 2,000 companies in the works. “We’re looking to scale those commitments. We see the application space as being this natural products environment,” he says.
There’re multiple avenues to pursue, with the technology widely applicable to everything from pesticides to pharmaceuticals, flavorings and even energy.
Cyclotron Road team photos. 2016. Zachary Sun.
“Synthetic biology at its core is about applying engineering best practices to speed up the ‘design-build-test’ cycles in the reprogramming of existing or construction of new biological systems. By component-izing and modularizing the cell they can radically increase the speed of those cycles,” says Seth Bannon, a co-founder of the venture capital firm Fifty Years, which invests in startups commercializing “frontier” science.
For the investors, entrepreneurs and reporters who witnessed the birth of the cleantech bubble a decade ago and then tracked its implosion in subsequent years, the excitement this kind of technology elicits is another of history’s rhymes.
Technologies like Tierra’s aren’t new. San Diego-based Genomatica has been working on biological manufacturing for the past 18 years. The company is now exploring a cell-free system to grow chemicals that are used in the manufacture of materials like Lycra. Since 2008, Medford, Mass.-based GreenLight Biosciences has been working to bring its own biologically based zero-calorie sugar substitute to market.
What may be different now is the maturity of the technologies that are being commercialized and the perspective of the startups coming to market — who have the benefit of avoiding the missteps made by an earlier generation.
Investors led by Social Capital with participation from Fifty Years, KdT Ventures and angel investors seem to see a difference in these companies. And large research institutions are also marshaling resources to support the vision laid out by Sun, Murray and Church. DARPA, the National Institutes of Health, the Department of Energy, Cyclotron Road and Lawrence Berkeley National Laboratory, the National Science Foundation and the Gates Foundation have all backed the company, as well.
“So many therapeutic molecules come from nature. As the DNA of plants, animals and microbes is read in exponentially increasing volume, we expect to find useful and game-changing chemistry encoded by it. Tierra’s platform will allow us to look for molecules which might otherwise be buried in the complexity of cells’ metabolism,” says Louis Metzger, chief scientific officer of Tierra, who comes from a background of drug discovery.
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CB Therapeutics’ lab-grown cannabinoids could unlock new medicines and make others affordable
Marijuana may still be on shaky legal ground, but the therapeutic benefits of the psychoactive molecules — cannabinoids — inside the plant are solidly established. Unfortunately, cultivation of that plant is resource-intensive and yields only tiny amounts of some useful medicines. CB Therapeutics, a new biotech company launching today at the Disrupt SF Startup Battlefield, aims to change the game with cannabinoids produced cleanly and cheaply in the lab — out of sugar.
Co-founder and CEO Sher Ali Butt says the idea struck him when he was working at cannabis testing lab Steep Hill. CBD, a compound found in the plant but in much lower concentrations than THC, the primary intoxicant, was producing extremely helpful pain and anxiety alleviation for some people without a high. The medicinal possibilities were obvious, but high-CBD strains of cannabis are not only uncommon, but a pain to cultivate and process for that purpose.
“CBD had all these applications, and I just thought that there’s got to be a better way to do this. The idea just stuck in my brain,” he told me.
After working on the problem on and off for years he decided to pursue it in earnest. Serendipitously, around this time he ran into Jacob Vogan, an old friend from college who was working in the field of bioengineering. It seemed like a natural fit to them to start the company together.
What CB Therapeutics has done is bioengineer microorganisms — specifically yeast — to manufacture cannabinoids out of plain-old sugars. This type of bioreactor isn’t a new idea; yeast and other organisms are used to create and isolate lots of drugs and substances.
“The vitamin C that we take in tablets, for instance — they didn’t squeeze oranges and lemons to get that,” Butt points out. “There isn’t enough agriculture to supply the global demand. It was produced synthetically and put in a box.”
CB Therapeutics is just doing the same thing for cannabinoids, and not just CBD.
“There are 118 cannabinoids, and only five have been studied,” Butt says. “These compounds are like .1, .01, even .001 percent in the cannabis bud. When you want to extract these, a kilogram can be like $100,000 to $350,000. How is someone supposed to do research with that?”
But the yeast don’t care. They take in sugar and output whatever molecule their biosynthesis pathway has been modified to produce — within reason, of course. You couldn’t output large, complex non-organics, but cannabinoids — even the rare ones — are well within their capabilities.
“The only thing we need to add is sugar — that’s the beauty of what we’ve done,” Butt beamed. “The yeast platform is agnostic, it makes everything for the same price.”
This has several benefits. First, it can bring down the price of a known and useful cannabinoid like CBD. Second, it allows the rarer ones to be studied for a reasonable price, and eventually distributed as well. And third, it takes pressure off the agricultural component of the cannabis industry.
That last is not only good from an ecological perspective, since demand is growing and these plants require a lot of water and land, but from the health side as well. Butt points out that a huge majority of cannabis products tested are found to be contaminated to some degree with pesticides and other unwanted compounds.
It’s getting better as the marijuana industry becomes an above-board one, but the problem is far from eliminated, and at any rate pesticides and other potentially harmful chemicals don’t cease to be a nuisance just because something is legal. The risk is there for the foreseeable future that, ironically, the “natural” option of using the plant itself is going to produce more impurities in the product, not less. But the yeast don’t — can’t, really — taint the product. So what comes out of the bioreactor should theoretically be as pure as the driven snow. (CB Therapeutics does test it, of course.)
It’s worth noting that the company’s main intellectual property is is the cannabinoid biosynthesis pathway it has developed. That hadn’t been fully documented or explored, Butt says, until their work.
Butt sees this change as more or less just the latest example of a useful class of molecules going from difficult to relatively easy to acquire.
“When you aren’t able to provide for the demand, that makes prices artificially high. People are going out and spending tens of thousands on CBD, for medical applications,” he said. “Insulin used to be harvested from pig pancreases, then Genentech solved that. Aspirin used to come from tree bark. This is inevitable for many compounds. We need to bring the cannabis price down to where anybody can use it.”
The pricing and volume are still somewhat of a question mark — once testing and the regulatory hurdles are taken care of, like any pharmaceutical it’s going to be a moving target. But scaling production shouldn’t be hard should the demand grow, and the backlog of new cannabinoids to isolate for testing should provide a source of income as well.
Medicine can be a risky sector for startups but CB Therapeutics seems to have it as close to sewn up as one can reasonably expect; in a way it’s almost alchemical, this ability to cheaply produce something so valuable. But really, it’s just science.
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Cytera CellWorks aims to bring cell culture automation to your dinner plate
Cytera CellWorks hopes to revolutionize the so-called “clean meat” industry through the automation of cell cultures — and that could mean one day, if all goes to plan, the company’s products could be in every grocery store in America.
Cytera is a ways off from that happening, though. Founded in 2017 by two college students in the U.K., Ignacio Willats and Ali Afshar, Cytera uses robotic automation to configure cell cultures used in things like growing turkey meat from a petri dish or testing stem cells.
The two founders — Willats, the events and startups guy and Afshar the scientist, like to do things differently to better configure the lab, as well — like strapping GoPros to lab workers’ heads, for instance. The two came together at the Imperial College of London to run an event for automation in the lab and from there formed their friendship and their company.
“At the time, lab automation felt suboptimal,” Afshar told TechCrunch, further explaining he wanted to do something with a higher impact.
Cellular agriculture, or growing animal cells in a lab, seems to hit that button and the two are currently enrolled in Y Combinator’s Summer 2018 cohort to help them get to the next step.
There’s been an explosion in the lab-made meat industry, which relies on taking a biopsy of animal cells and then growing them in a lab to make the meat versus getting it from an actual living, breathing animal. In just the last couple of years startups like Memphis Meats have started to pop up, offering lab meat to restaurants. Even the company known for its vegan mayo products, Hampton Creek (now called Just), is creating a lab-grown foie gras.
Originally, the company was going to go for general automation in the lab, but had enough interest from clients and potential business in just the cell culture automation aspect they changed the name for clarity. Cytera already has some promising prospects, too, including a leading gene therapy company the two couldn’t name just yet.
Of course, automation in the lab is nothing new and big pharma has already poured billions into it for drug discovery. One could imagine a giant pharma company teaming up with a meat company looking to get into the lab-made meat industry and doing something similar, but so far Willats and Afshar says they haven’t really seen that happening. They say bigger companies are much more likely to partner with smaller startups like theirs to get the job done.
Obviously, there are trade-offs at either end. But, should Cytera make it, you may find yourself eating a chicken breast one day built by a company who bought the cells made in the Cytera lab.
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Zbiotics says it’s bioengineered a hangover cure
Y Combinator backed Zbiotics has spend two years developing what they’re billing as the world’s first genetically engineered probiotic. The startup’s initial product isn’t exactly world-changing but it might just save your day — given they’ve invented an elixir of ‘next day’ life: Aka a hangover cure.
Although you actually have to take it before — or, well, during — drinking rather than waiting until the moment of regretful misery when you wake up.
How have they done this? For their first product they’ve bioengineered probiotic bacteria to produce more of the enzyme that the body naturally uses to break down a toxic chemical byproduct of alcohol which is in turn responsible for people feeling awful after too many alcoholic drinks. So you could say they’re hoping to put probiotics on steroids. (NB: No actual steroids are involved, obviously.)
While probiotics themselves aren’t at all new, having been in the human diet for thousands of years — with wide acceptance that certain strains of these live ‘friendly’ bacteria/microorganisms can be beneficial for things like human gut health — the team’s approach of using gene editing techniques (specifically fiddling with the bacteria’s DNA) to enhance what a probiotic can deliver to the person who’s ingested it is the novel thing here.
So new they haven’t yet conducted the placebo controlled, peer-reviewed clinical trials that will ultimately be necessary to back up the efficacy claims they’re making for their biotech enhanced hangover cure.
Nor are they therefore in a position to defend their forthcoming hangover elixir from accusations of supplementary ‘snake oil’ — and, well, the supplement industry as a whole often has that charge leveled at it. And yet people keep buying and popping its pills. (Therein lies the temple rub, vitamin potion and wellness capsule. And, well, also the investor appetite for carving a fresh chunk out of a very large pie.)
Zbiotics co-founders Zack Abbott and Stephen Lamb freely admit it’s going to be a challenge to stand out — and be considered credible amid all this, er, goop noise.
“This consumer space is rife with pseudo science,” agrees Abbott, who has a PhD in microbiology and immunology from the University of Michigan. “Everybody is banging the drum of real science. And so we have a huge challenge to differentiate ourselves. And really convince the consumer that we’ve built something specific.
“And it really is a first effort to invent a product to specifically address their problem, as opposed to grabbing vitamins off a shelf, putting them in a bottle and labelling it.”
“There are some companies… [that] address dehydration [for hangovers]; that’s not enough. There are other companies they just put [vitamins] into a bottle, that’s not enough. There’s so much noise out there. How do we break through that? It could take some time,” admits Lamb. “And it could take a lot of work.”
Tested in vitro — and on birthday beers
At this pre-launch stage, the founders say they’ve tested their beefed up probiotic on themselves — and will go so far as to say they’ve seen “promising results”.
“I had the fortune of having the final prototype built just a week or two before my birthday and so I ended up trying it out for my birthday and it was great,” adds Abbott.
They are also keen to say they don’t want to encourage irresponsible drinking. So don’t expect their future marketing to talk about ‘a biotech license for your next bender’. Product pricing is tbc but they say they’re aiming for widely affordable, rather than lux or overly premium.
With hangover results that could speak for themselves, their hope is that people will feel confident enough to have a pop and see whether the idea of a biotech enhanced probiotic that’s pumping out extra alcohol-metabolizing enzymes stands up to several pints of lager and a few chasers (or not).
Though — when asked — they do say they also want to carry out clinical trials to glean data on the efficacy of their hangover cure.
“We are a very science-first company and so we don’t want to be making any claims about anything that we don’t have data to back up,” says Abbott.
“At this point… we’ve done significant testing in a test tube, in vitro, and shown that the bacteria we’ve built do perform the function that they’re supposed to perform. Which is to break down acetaldehyde. But we can’t make further health claims until we do clinical trials. And we in the process of drafting up a protocol for a human clinical study with one of our scientific advisors — Dr Joris Verster — a world expert in academic hangover research. But in the meantime we can’t make those claims until we have that.”
They are also planning to launch a crowdfunding campaign later this year — in order to start making some of their own noise and trying to drum up interest and, well, willing guinea pigs.
Though they are also adamant the product is entirely safe. It’s just the efficacy vs hangover misery that’s yet to be stood up in human clinical trials.
While a hangover cure might seem a trivial problem to focus high tech bioengineering effort on, they say the unmissable fact of a hangover — or indeed the lack of one — was one of the reasons why they selected such an “everyday problem” for the first application of their technique vs going for a more fuzzy (and, well forgiving on the efficacy front) generic goal like ‘wellness’. Or indeed targeting an issue where a ‘cure’ is pretty subjective and hard to quantify (like anti-aging).
Absolutely no one is going to mistake a hangover for feeling great. Though of course the power of the placebo effect working its psychological magic cannot be ruled out — not until they’ve clinically tested their stuff against it in robust trials.
On the other hand, even if it ends up that a placebo effect is what’s making people feel better, given that the target problem is (just) a hangover there aren’t likely to be too many consumer complaints and cries for money back.
“One of the reasons why we chose this use-case was that it would allow people to try it and feel the advocacy for themselves. That was very important,” says Abbott. “It’s something you can feel the results of. So that was really important. Having a visceral read-out of efficacy. People can experience the product working for themselves.”
The other reason for choosing a hangover cure was more practical: They needed a problem that could be solved with an enzyme and therefore which could be helped by genetically engineering bacteria to produce more of the sought for substance.
“The whole point here is that we’ve engineered a bacteria to express an enzyme specifically that can solve a problem,” he explains. “Enzymes are these really powerful complex molecules that are not easy to deliver to people. So it has to be a problem that you can solve with an enzyme.
“There has to be a nice fit with the technology. So we look for things where parts of the body where bacteria has access to you; you have a lot of bacteria in your gut, in your skin, in your mouth, in your nose… places were we can deliver bacteria and they can express these enzymes to solve problems of everyday health.”
“We start with probiotics that have an extremely good safety profile, have been used in regular food by humans for centuries. And we identify those because we know that they’re going to be safe, and we know that they’re going to be able to interact with your body in the way that we want them to. And then we engineer those bacteria as oppose to choosing something that your body may never have seen before,” adds Lamb, who brings prior experience helping food companies enter new markets to the startup.
He says they’ve been safety testing their prototype probiotic for the past year and change at this point — “making sure that this is ready for market before we actually launch anything”.
“We are not going to launch any kind of product until it’s completely safety tested according to every regulatory framework here in the U.S. — and we’re totally comfortable with that,” he adds emphatically.
They do also intend to move beyond hangover cures, with the plan being to develop additional probiotics that target other use-cases. And say they’ve been building a gene editing platform that’s flexible for that purpose. Though they’re not disclosing exactly what else they’re working on or eyeing up — wanting to keep that powder dry for now.
“I spent over a year building the first product, and the lion’s share of that time was spent making sort of a genetic platform… that was adaptable to multiple use-cases,” says Abbott. “At first I just engineered the bacteria to be able to make a lot of enzyme generally. Whatever enzyme I put into the platform. And so the first enzyme I put in was to break down acetaldehydes. That being said it could be easily switched out for an enzyme to break down… a different toxin that your body has to deal with. So the platform is very adaptable and it was designed to be that way.”
“That being said there are certain use-cases we’re really excited about that may require additional optimization techniques in order to make them work specifically for that use-case. So, generally speaking, some may require more work than others but the platform we started with gives us a good launch pad,” he adds.
As well as YC’s standard startup deal, the team has raised an additional $2.8M in seed funding this year for R&D and the initial product roadmap. They’re hoping the forthcoming crowdfunding campaign will give them the additional lift to ship the consumer product into the US market.
Investors in the seed round aren’t being disclosed at this stage. Abbott also notes that he previously got a small amount of pre-seed funding, early on, to fund building the prototype.
It’s fair to say that biotech as an investment space isn’t a bet for every investor — given product development risks, timeframes and perhaps also some of the deflated hype of past years. Which perhaps explains why Zbiotics investors aren’t ready to shout all about it just yet. Even if they’re feeling great about not having a hangover.
“We’ve found different levels of success with different investors,” agrees Lamb. “Where we’ve found the most success is in investors who see the vision for the technology and understand it as something that is and can be truly innovative relative to what’s on the market today. So probiotics themselves — traditional probiotics — are a $40BN industry, and the fact is that most of those probiotics don’t do anything or are inconsistent at best. So we found investors who have a mindset where they can see how a novel probiotic, something that actually is engineered to work and is based in a high level of biotech is something that can really disrupt that area. And that may or may not be traditional biotech investors. Oftentimes it’s investors who are really looking to push the envelope.
“We definitely had to find the right investor and the traditional biotech investor often is looking for different things than we had to offer,” adds Abbott. “And different pathways — more traditional pathways. We’re going not conventionally I think with bringing this hard biotech to market quickly. So it definitely is threading the needle and finding the right investors.”
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While tech waffles on going public, biotech IPOs boom
For people who make investment decisions based on revenues and projected earnings, biotech IPOs are kind of a non-starter. Not only are new market entrants universally unprofitable, most have zero revenue. Going public is mostly a means to raise money for clinical trials, with red ink expected for years to come.
That pattern may be one reason the venture capital press, Crunchbase News included, tends to devote a disproportionately small portion of coverage to biotech IPOs. It’s more exciting to watch a big-name internet company pop in first-day trading or poke fun at an underperforming dud.
But with our fixation on all things tech, we’re missing out on the big picture. There are actually a lot more biotech and healthcare startup IPOs than tech offerings. In the second quarter of this year, for instance, at least 16 U.S. venture-backed biotech and healthcare companies went public, compared to just 11 tech startups. In three of the past four years, bio offerings outnumbered tech IPOs, according to Crunchbase data.
In the following analysis, we attempt to get up to speed on the pace of biotech offerings, assess where we are in the cycle and spotlight some of the rising stars.
Biotech outpaces tech
As mentioned above, U.S. bio IPOs outnumber tech offerings in most years. However, the bio cohort raises less total capital, partly because the largest technology IPOs tend to be much bigger than the largest bio IPOs. In the chart below, we compare the two sectors over the past four years.
Globally, the numbers are much higher. Using Crunchbase data, we’ve put together a chart looking at global VC-backed biotech and healthcare IPOs over the past four years. While we’re just over halfway through 2018, biotech and health IPOs have already raised more money than in any of the prior three full calendar years.
Fundamentals driven, cycle amplified
It’s pretty clear we’re in an upcycle for all things startup-related. VCs are flush with cash, late-stage rounds are ballooning in size and IPO and M&A action is picking up, too.
So what does that mean for bio IPOs? Is the uptick in the pace and size of offerings mostly a result of bullish market conditions? Or is the current slate of pre-IPO candidates more compelling than in the past?
We turned to Bob Nelsen, co-founder of ARCH Venture Partners, one of the top-performing biotech investors, for his take, which is that it’s a “fundamentals driven, cycle amplified” IPO boomlet.
More companies are launching well-received IPOs because the pace of startup innovation is faster than in the past. Nelson calls it “the result of the previous 30 years of investment and innovation in biotech that has finally led to essentially data-driven innovation.” That’s leading to more curative treatments, disease-modifying therapies and preventative technologies.
Yet we’re also in a bullish segment of the market cycle for biotech. That’s prompting companies that might have stayed private under other conditions to give going public a shot. It’s also providing bigger outcomes for emerging companies that were already on the IPO track.
The latest example of a big outcome IPO is Rubius Therapeutics, which develops drugs based on genetically engineered red blood cells. This week, the five-year-old company raised $241 million at an initial valuation of over $2 billion, making it the largest bio offering of 2018. The Cambridge, Mass. company, which previously raised nearly a quarter-billion-dollars in venture funding, is still in the pre-clinical trial phase.
This year has delivered several other good-sized offerings as well, including drug developers Eidos Therapeutics and Homology Medicines, recently valued around $800 million each, along with Tricida, valued around $1.2 billion. (See the full list of 2018 global bio and health offerings here.)
As for aftermarket performance, that’s been up and down, but includes some big ups. Last year, biotech led the pack for best-performing IPOs on U.S. exchanges. The sector accounted for four of the six top spots, according to Renaissance Capital, led by drug developers AnaptysBio, Argenx and UroGen, along with Calyxt, an agbio startup.
Looking ahead
While things are already up, bio VCs, generally an optimistic bunch, see several reasons why bio IPOs could go higher.
Nelson points to what he sees as the lagging pace of in-house innovation at big pharma and biotech players. Increasingly, they need to acquire startups and recently public companies to stay competitive and build out new product pipelines.
There is also tons of fresh capital earmarked for healthcare startups. In the U.S. in 2017, healthcare-focused venture capitalists raised $9.1 billion. That figure was up 26 percent from 2016, per Silicon Valley Bank.
More dollars also are flowing from venture firms that invest in a mix of tech and life sciences through a single fund. That list includes well-established VCs with dry powder to invest, including Polaris Partners, Founders Fund, Kleiner Perkins and Sequoia Capital.
Still, Nelson observes, deep into an IPO bull market, the average quality of offerings does tend to decline. That said, he’s been through similar inflection points in previous cycles and “for the same point in the cycle, the quality is markedly higher.”
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Meet the speakers at The Europas, and get your ticket free (July 3, London)
Excited to announce that this year’s The Europas Unconference & Awards is shaping up! Our half day Unconference kicks off on 3 July, 2018 at The Brewery in the heart of London’s “Tech City” area, followed by our startup awards dinner and fantastic party and celebration of European startups!
The event is run in partnership with TechCrunch, the official media partner. Attendees, nominees and winners will get deep discounts to TechCrunch Disrupt in Berlin, later this year.
The Europas Awards are based on voting by expert judges and the industry itself. But key to the daytime is all the speakers and invited guests. There’s no “off-limits speaker room” at The Europas, so attendees can mingle easily with VIPs and speakers.
What exactly is an Unconference? We’re dispensing with the lectures and going straight to the deep-dives, where you’ll get a front row seat with Europe’s leading investors, founders and thought leaders to discuss and debate the most urgent issues, challenges and opportunities. Up close and personal! And, crucially, a few feet away from handing over a business card. The Unconference is focused into zones including AI, Fintech, Mobility, Startups, Society, and Enterprise and Crypto / Blockchain.
We’ve confirmed 10 new speakers including:
Eileen Burbidge, Passion Capital
Carlos Eduardo Espinal, Seedcamp
Richard Muirhead, Fabric Ventures
Sitar Teli, Connect Ventures
Nancy Fechnay, Blockchain Technologist + Angel
George McDonaugh, KR1
Candice Lo, Blossom Capital
Scott Sage, Crane Venture Partners
Andrei Brasoveanu, Accel
Tina Baker, Jag Shaw Baker
How To Get Your Ticket For FREE
We’d love for you to ask your friends to join us at The Europas – and we’ve got a special way to thank you for sharing.
Your friend will enjoy a 15% discount off the price of their ticket with your code, and you’ll get 15% off the price of YOUR ticket.
That’s right, we will refund you 15% off the cost of your ticket automatically when your friend purchases a Europas ticket.
So you can grab tickets here.
Vote for your Favourite Startups
Public Voting is still humming along. Please remember to vote for your favourite startups!
Awards by category:
Hottest Media/Entertainment Startup
Hottest E-commerce/Retail Startup
Hottest Marketing/AdTech Startup
Hottest Enterprise, SaaS or B2B Startup
Hottest Platform Economy / Marketplace
Hottest Cyber Security Startup
Hottest Internet of Things Startup
Fastest Rising Startup Of The Year
Hottest GreenTech Startup of The Year
Best Angel/Seed Investor of the Year
Hottest VC Investor of the Year
Hottest Blockchain/Crypto Startup Founder(s)
Hottest Blockchain Protocol Project
Hottest Corporate Blockchain Project
Hottest Blockchain ICO (Europe)
Hottest Financial Crypto Project
Hottest Blockchain for Good Project
Hottest Blockchain Identity Project
Hall Of Fame Award – Awarded to a long-term player in Europe
The Europas Grand Prix Award (to be decided from winners)
The Awards celebrates the most forward thinking and innovative tech & blockchain startups across over some 30+ categories.
Startups can apply for an award or be nominated by anyone, including our judges. It is free to enter or be nominated.
What is The Europas?
Instead of thousands and thousands of people, think of a great summer event with 1,000 of the most interesting and useful people in the industry, including key investors and leading entrepreneurs.
• No secret VIP rooms, which means you get to interact with the Speakers
• Key Founders and investors speaking; featured attendees invited to just network
• Expert speeches, discussions, and Q&A directly from the main stage
• Intimate “breakout” sessions with key players on vertical topics
• The opportunity to meet almost everyone in those small groups, super-charging your networking
• Journalists from major tech titles, newspapers and business broadcasters
• A parallel Founders-only track geared towards fund-raising and hyper-networking
• A stunning awards dinner and party which honors both the hottest startups and the leading lights in the European startup scene
• All on one day to maximise your time in London. And it’s PROBABLY sunny!
That’s just the beginning. There’s more to come…
Interested in sponsoring the Europas or hosting a table at the awards? Or purchasing a table for 10 or 12 guest or a half table for 5 guests? Get in touch with:
Petra Johansson
Petra@theeuropas.com
Phone: +44 (0) 20 3239 9325
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ReviveMed turns drug discovery into a big data problem and raises $1.5M to solve it
What if there’s a drug that already exists that could treat a disease with no known therapies, but we just haven’t made the connection? Finding that connection by exhaustively analyzing complex biomechanics within the body — with the help of machine learning, naturally — is the goal of ReviveMed, a new biotech startup out of MIT that just raised $1.5 million in seed funding.
Around the turn of the century, genomics was the big thing. Then, as the power to investigate complex biological processes improved, proteomics became the next frontier. We may have moved on again, this time to the yet more complex field of metabolomics, which is where ReviveMed comes in.
Leila Pirhaji, ReviveMed’s founder and CEO, began work on the topic during her time as a postgrad at MIT. The problem she and her colleagues saw was the immense complexity of interactions between proteins, which are encoded in DNA and RNA, and metabolites, a class of biomolecules with even greater variety. Hidden in these innumerable interactions somewhere are clues to how and why biological processes are going wrong, and perhaps how to address that.
“The interaction of proteins and metabolites tells us exactly what’s happening in the disease,” Pirhaji told me. “But there are over 40,000 metabolites in the human body. DNA and RNA are easy to measure, but metabolites have tremendous diversity in mass. Each one requires its own experiment to detect.”
As you can imagine, the time and money that would be involved in such an extensive battery of testing have made metabolomics difficult to study. But what Pirhaji and her collaborators at MIT decided was that it was similar enough to other “big noisy data set” problems that the nascent approach of machine learning could be effective.
“Instead of doing experiments,” Pirhaji said, “why don’t we use AI and our database?” To that end she founded ReviveMed with her PhD advisor, Ernest Fraenkel, and shortly afterwards was joined by data scientist Demarcus Briers and biotech veteran Richard Howell.
Pharmaceutical companies and research organizations already have a mess of metabolites masses, known interactions, suspected but unproven effects and disease states and outcomes. Plenty of experimentation is done, but the results are frustratingly vague owing to the inability to be sure about the metabolites themselves or what they’re doing. Most experimentation has resulted in partial understanding of a small proportion of known metabolites.
That data isn’t just a few drives’ worth of spreadsheets and charts, either. Not only does the data comprise drug-protein, protein-protein, protein-metabolite and metabolite-disease interactions, but they’re including data that’s essentially never been analyzed: “We’re looking at metabolites that no one has looked at before.”
The information is sitting in an archive somewhere, gathering dust. “We actually have to go physically pick up the mass spectrometry files,” Pirhaji said. (“They’re huge,” she added.)
Once they got the data all in one place (Pirhaji described it as “a big hairball with millions of interactions,” in a presentation in March), they developed a model to evaluate and characterize everything in it, producing the kind of insights machine learning systems are known for.
The “hairball.”
The results were more than a little promising. In a trial run, they identified new disease mechanisms for Huntington’s, new therapeutic targets (i.e. biomolecules or processes that could be affected by drugs) and existing drugs that may affect those targets.
The secret sauce, or one ingredient anyway, is the ability to distinguish metabolites with similar masses (sugars or fats with different molecular configurations but the same number and type of atoms, for instance) and correlate those metabolites with both drug and protein effects and disease outcomes. The metabolome fills in the missing piece between disease and drug without any tests establishing it directly.
At that point the drug will, of course, require real-world testing. But although ReviveMed does do some verification on its own, this is when the company would hand back the results to its clients, pharmaceutical companies, which then take the drug and its new effect to market.
In effect, the business model is offering a low-cost, high-reward R&D as a service to pharma, which can hand over reams of data it has no particular use for, potentially resulting in practical applications for drugs that already have millions invested in their testing and manufacture. What wouldn’t Pfizer pay to determine that Robitussin also prevents Alzheimer’s? That knowledge is worth billions, and ReviveMed is offering a new, powerful way to check for such things with little in the way of new investment.
This is the kind of web of molecules and effects that the system sorts through.
ReviveMed, for its part, is being a bit more choosy than that — its focus is on untreatable diseases with a good chance that existing drugs affect them. The first target is fatty liver disease, which affects millions, causing great suffering and cost. And something like Huntington’s, in which genetic triggers and disease effects are known but not the intermediate mechanisms, is also a good candidate for which the company’s models can fill the gap.
The company isn’t reliant on Big Pharma for its data, though. The original training data was all public (though “very fragmented”) and it’s that on which the system is primarily based. “We have a patent on our process for getting this metabolome data and translating it into insights,” Pirhaji notes, although the work they did at MIT is available for anyone to access (it was published in Nature Methods, in case you were wondering).
But compared with genomics and proteomics, not much metabolomic data is public — so although ReviveMed can augment its database with data from clients, its researchers are also conducting hundreds of human tests on their own to improve the model.
The business model is a bit complicated, as well — “It’s very case by case,” Pirhaji told me. A research hospital looking to collaborate and share data while sharing any results publicly or as shared intellectual property, for instance, would not be a situation where a lot of cash would change hands. But a top-5 pharma company — two of which ReviveMed already has dealings with — that wants to keep all the results for itself and has limitless coffers would pay a higher cost.
I’m oversimplifying, but you get the idea. In many cases, however, ReviveMed will aim to be a part of any intellectual property it contributes to. And of course the data provided by the clients goes into the model and improves it, which is its own form of payment. So you can see that negotiations might get complicated. But the company already has several revenue-generating pilots in place, so even at this early stage those complications are far from insurmountable.
Lastly there’s the matter of the seed round: $1.5 million, led by Rivas Capital along with TechU, Team Builder Ventures and WorldQuant. This should allow them to hire the engineers and data scientists they need and expand in other practical ways. Placing well in a recent Google machine learning competition got them $200,000 worth of cloud computing credit, so that should keep them crunching for a while.
ReviveMed’s approach is a fundamentally modern one that wouldn’t be possible just a few years ago, such is the scale of the data involved. It may prove to be a powerful example of data-driven biotech as lucrative as it is beneficial. Even the early proof-of-concept and pilot work may provide help to millions or save lives — it’s not every day a company is founded that can say that.
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