This year’s Fierce 15 winners on burgeoning biotech investment and the decade ahead

This year’s class of Fierce 15 landed during a banner year for venture capital investment in biotech.

They’ve already raked in financing rounds and future commitments in the hundreds of millions of dollars to fund their ideas—$1.36 billion among them, all told. By comparison, the first eight months of this year saw $20 billion in funding raised for biotech ventures.

So, as innovations in science and healthcare continue at a breakneck pace—with the creation of new fields of research, inventions of new treatment modalities, and construction of new R&D hubs—is this amount of VC funding and investor interest going to become the new normal? Or is it a bubble set to burst? We posed the question to our 2018 Fierce 15 winners at this year’s awards reception.

“I've been doing this since 2002, and I've lived through ups and downs, so I don't know if I'd call it a bubble,” said Quentis Therapeutics CEO Michael Aberman. “One of the things that I think is unique is there's a lot of good science that's driving it. It's not just speculation.”

“The things we can do now, we couldn’t do even five years ago,” said Wilson Wong, co-founder of Senti Biosciences, which hopes to improve the safety of gene and cell therapies. “I hope it’s not a bubble yet. It seems scary, I would say, but it seems it keeps on going up.”

David Liu, co-founder of the single-letter gene editor Beam Therapeutics, said that recent advancements in biology will support a raft of exciting new therapies. “If that happens, it’s arguably not a bubble,” Liu said. 

VC investments have sought out not only new scientific areas and methods of treatment, but also new geographies, with cities like New York looking to assert themselves as a destination for R&D. 

“I think this is an incredibly exciting time for New York biotech. I'm excited to see my fellow company here, Kallyope—we're actually on the same floor back in New York City,” said Aberman, whose Quentis is exploring cellular stress pathways in the tumor microenvironment. “I think in 10 years, there will be multiple New York companies—hopefully there won't just be two in the Fierce 15 but maybe six or seven.” 

Rob Anstey, Kallyope’s vice president of business development, agrees that the science is a driver, but that it’s just one of a “confluence of factors” behind the funding boom. As long as rapid innovation and an open-minded FDA continue to converge with new investors that haven’t historically backed biotech companies, the field will be in a “really strong position,” he said. Kallyope itself has raised $110 million to fund its research into the gut-brain axis and CNS-focused small molecules. 

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“We all benefit from this—it’s a little inflationary, but the arrival of Asian investors and crossover investors willing to engage in A rounds and B rounds is changing the game,” said Jennifer Petter, founder and chief scientific officer of the RNA-mining Arrakis Therapeutics. “So far, their appetite has not diminished.” 

“I think we're at an inflection point in biotech, where we've got so many transformative therapies across the board in all different disease indications, and many new modalities and new approaches,” said Chief Science Officer Jo Viney of Pandion Therapeutics, which is working on bispecific antibodies that help organs mimic tumors to avoid autoimmune responses.  

“I think that now is a really good time to invest and catalyze that innovation, and make a difference in how we think about treating disease, whether it's cancer, rare diseases or autoimmune diseases,” Viney said.  

Compass Therapeutics CEO Tom Schuetz said he sees the level of VC interest and funding continuing.  

“Companies are taking a different approach to discovery and company building,” Schuetz said. “It’s not just this year, but prior to that there’s just been larger and larger series As, which I think set up a company well to move to the next steps.” 

“I agree, because I think part of it is driven by the fact that immuno-oncology really opened the gate to therapies and indications where we previously have not seen any activity, like non-small cell lung cancer or renal cell carcinoma,” added Vered Bisker-Leib, Compass’ chief business officer. “We've set up an ambitious goal of building on and expanding that, by examining the whole immune synapse and finding combinations that will raise the bar of immunotherapy agents.” 

As we continue to follow these companies, and their transitions from selling an idea to selling a product, where do they think they’ll be in 10 years? 

“Part of the vision is to have a sustainable enterprise,” said Gossamer Bio CEO Sheila Gujrathi, whose company has raised $330 million in two funding rounds, so far, to advance its early-stage immunology research.  

“I would love to say that we are a thriving organization, with integrated R&D and commercial capabilities along the lines of some of the excellent companies we have worked at, such as Gilead, Genentech and others,” said Gujrathi. “That's very bold—but to be able to say that we’re growing into those footsteps, I think, would be really phenomenal.” 

“Our CEO loves to say the following: ‘We aspire to be the Genentech of T-cell therapy,’” said Michael Christiano, chief business officer of Tmunity Therapeutics. “So in 10 years, … we hope to be a public company that is the leader in T-cell engineering, discovery, development and commercialization.” 

Many of this year’s winners were born from ex-Big Pharma researchers who’ve decided to go back to their roots at small, risky startups. And this time they're bringing their experience with them.  

“If you think about it, despite all these big companies downsizing, there's now a slew of people unemployed in our industry,” said Rallybio co-founder Stephen Uden. “What's happening is that they're finding themselves in companies like ours. … There's a lot of people with huge experience at all stages of drug development.” 

Rallybio’s trio of co-founders, including Martin Mackay, Jeffrey Fryer and Uden himself, all came from Alexion to pursue treatments for rare diseases.  

“I think that the future of innovation, and the investment that used to be in big pharma R&D, is now going into these smaller companies,” Uden said. 

“I made the change simply because I found myself doing a lot of things that I don't find interesting—organizational stuff, the risk committee, things like that. I like the science,” said Norbert Bischofberger, president and CEO of Kronos Bio, which aims to improve high-throughput screening toward undruggable targets.  

But there will always be a symbiotic relationship, said the former Gilead R&D chief, with the smaller companies bringing their innovations while the big companies provide their hefty resources, particularly in sales and marketing. 

During Bischofberger’s time at Gilead, for example, the company outlicensed Tamiflu; a drug treating a seasonal disease, marketed to an audience of general practitioners, doesn’t make sense for a company to take on unless it has thousands of sales reps, he said.  

“If we ever develop anything that’s for a larger audience like that, we will probably think about licensing it to a bigger company,” Bischofberger said.  

“At the right time,” added Kronos’ chief operating officer, Christopher Wilfong. 

“Yes, at the right time! And when the price is right,” said Bischofberger.

Ansun Biopharma, FLX Bio and Jnana Therapeutics were unable to attend the reception.