Looking for the LEAD in Chinaâ€™s drug discovery industry
LEAD Therapeutics has a catchy acronym built into its name, a trendy business model, a seasoned executive team and $17 million. Now, the company can set out to see if everything it believes about drug discovery today will work as billed.
The money comes courtesy of Pappas Ventures, ProQuest Investments and Mustang Ventures, an investment group that gambles on companies with a China strategy. Together, they pitched in on LEADâ€™s first venture round. For Mustang, itâ€™s the first biotech wager the venture fund has made. And for anyone looking to raise a significant amount of money for a start-up biotech, LEADâ€™s money-raising experience offers insights into the ways that some venture capitalists think about managing risk, capital efficiency and the mantra of all MBA-speaking entrepreneurs today: Building shareholder value.
One key attraction for the investors was a core group of executives who have been there and done that.
Thereâ€™s CEO Peter Myers, PhD, the former VP of drug discovery at SGX Pharmaceuticals, where he got experience in deal-making with Novartis. Before that he was vice president of Onyx, where LEAD Chief Scientific Officer Leonard Post, PhD, made his bones in the business collaborating with Bayer on the development of Nexavar. Beijing native Sofie Qiao, PhD, president and COO, completed stints at Genzyme, McKinsey and Syrrx before joining up with a CRO.
To understand the teamâ€™s goals, says its CEO, focus on the name.
â€œWe build it around the word â€˜lead,â€™â€ says Myers. â€œWeâ€™re trying to take leads we invented through to pre-IND candidates.â€
Then he spells out the plan.
L - Leveraging experience in the U.S. drug discovery field with some clear ideas about exploiting lower cost research work in China; E â€“ Eliminating risk by opportunistically targeting small molecules that can perform better than the experimental therapies currently in other companiesâ€™ pipelines; A â€“ Anticipating research trends in the U.S. as well as China, where scientists are shifting their focus from natural medicines to small molecules; D â€“ Delivering high-value therapies to pharma companies hungry to snare promising new drugs capable of snaring market share.
This isnâ€™t a Las Vegas-style start-up, says Myers, whoâ€™s done everything he can to make the odds work in his favor. â€œWeâ€™re not rolling the dice on one product.â€
By relying on lower drug discovery costs, along with less expensive Chinese chemists, LEADâ€™s team is promising to redefine the benchmark budget for advancing new drug candidates. They then plan to partner those candidates with bigger companies. As the partnership deals come in, the company expects to gin a significant amount of non-dilutive cash â€“ saving more of the equity for themselves -- as they advance more new therapies.
â€œBecause of our cost advantage,â€ says Qiao, â€œwe can deliver pre-IND-stage drug candidates for two, two-and-a-half million dollars, where the benchmark is upwards of $10 million.â€
There are two preclinical candidates in the hopper at LEAD, but the company is not trying to build up excitement about any individual prospect. If LEAD is to work, it will be because it can execute on a business strategy that requires them to build on the promising work of others. And they intend to do it all smarter, faster and less expensively than anyone else.
â€œThe drug industry is littered with examples where the first compounds are not the best,â€ says Myers. â€œWe are looking at targets where competitors are in late Phase I or early Phase II,â€ says Myers. â€œIf we can do much better, find a novel structure that does the same thing, patent it,â€ then they will be well on their way to success.
You could call it a platform approach to drug development, says Qiao. But you would need to be careful how you define platform.
â€œOur company is not based on cutting-edge technology,â€ she says. â€œWe are working on clinically validated targets, where we can generate a continuous stream of candidates. Thatâ€™s our definition of a platform. A unique technology is quite restrictive, with therapeutic areas and targets related only to that technology. We are unbiased in therapeutic areas.â€
Success, in this case, would be a steady stream of partnership deals and early-stage cash rather than the pot of gold that awaits other drug discoverers at the end of the blockbuster rainbow.
â€œInitially, we need to have some financing into the company,â€ says Myers. â€œWe have an option to say this one looks too precious to let any company get their hands on it. We will do clinical development ourselves. That is an option, but not an obligation.â€