Next Phase Newsletter

By Michael Quigley, VP of Investor Research, LSN

Due to a recent FDA decision, immuno-oncology has proven to be a key area for personalized medicine approaches.  In this article, Next Phase will explore what this could mean for new technology development.

Many currently marketed cancer immunotherapies struggle due to high toxicity and response patterns that differ when compared to traditional therapies (1). Both in a research and clinical setting, identifying those patients most likely to respond to these and other new therapeutic approaches represents a massive opportunity for pharma companies.  This has given rise to increasing interest and investment in the field of companion diagnostics.

In May, the FDA approved Keytruda as the first immunotherapy cancer drug based on tumor specific molecular characteristics. While there have already been such approvals for genetic based markers, the FDA’s approval of Keytruda based on tumor specific characteristics offers shows the regulatory environment’s positive sentiment on other personalized approaches as well.  This is the first of such successes of a long developed shift away from the more traditional organ based approvals/research for cancer therapeutics.

While this shows obvious promise for large pharma companies developing these types of therapeutics it also shines a very positive light on companies looking at innovative ways of profiling tumor and patient subtypes.  These include including sequence-based diagnostics, multiple gene and protein signatures, multiplexed and digital PCR, microfluidic systems and novel signal detection approaches among others. These methods for identifying predictive biomarkers and patient stratification stand to move the field of immunotherapy forward, away from its current toxicity and efficacy issues and into an era of more personalized medicine.

Looking farther into the future implications of this approval is another positive sign into the early research current being done into what is known as “theranostics”. Where companion diagnostics are generally developed for an existing therapeutic agent the development of theranostics is a process involving the co-creation of therapeutics and a diagnostic to identify which patients will respond most positively. This is the next frontier for personalized medicine, where therapeutics are designed inherently to be effective in sub-populations of a disease or condition. Though this approach would potentially shrink the potential market for a new drug rather than aiming for “blockbuster” status, it also presents the opportunity to dramatically improve research and clinical trial efficiency for these compounds.

Overall this latest Keytruda approval provides a signal that the FDA is on board with this trend towards personalized medicine that researchers and drug developers have been moving towards for years.  In an industry that is so filled with risk and uncertainty, any form of reassurance from the regulatory environment is always welcome, and investors may see this as a positive signal for the sector.

1. http://www.ascopost.com/issues/april-25-2016/immunotherapy-could-be-the-wave-of-the-future-but-problems-and-challenges-cannot-be-ignored/

By Cole Bunn, Senior Research Analyst, LSN

At the outset of your life science startup company, you may have great technology and a well-thought-out business plan, however oftentimes your company ends up looking much different than you had imagined. The long development timelines and capital-intensive nature of the life science sector usually doesn’t allow for much in terms of testing product/market fit, meaning these startups had better have done extensive research on their target market – various stakeholders, investor sentiment, market dynamics, end user and patient preferences, regulatory environment for target indication, and other important factors. However, at times even the most prepared company may encounter the need to pivot.

In the startup/venture tech community, the term ‘pivot’ is often used to describe the need to be open to strategically changing the company’s direction in response to market feedback. Even in life sciences, it’s essential for entrepreneurs to stay ahead of industry and regulatory developments and continually scrutinize feedback from potential partners and investors. This allows a company to more easily identify the reason their message is not gaining traction with investors and adjust accordingly, whether it be positioning, strategy, product/offering, or their business model.

Pivoting doesn’t necessarily need to be a complete shift to a new market or product, although that is what typically comes to mind. Relatively small tweaks or adjustments can have a significant impact, and might help reinvigorate your campaign.

Aligning Strategy with Market Drivers

While your product may be better, faster, cheaper than the standard-of-care, if you’re not correctly positioning your company with the big picture, you may run into some problems garnering interest in your venture as investors/partners might overlook how you fit in and thus your company’s potential. As an example, a medical device company in the urology space struggling to gain interest in their financing round saw a significant uptick in interest after rebranding their company as an infection control company rather than simply a medical device company. As the U.S. healthcare system is making changes to how healthcare services are delivered and hospitals are paid, the ACA made it such that hospitals are penalized for not meeting standards on hospital-acquired infection rates. Pivoting to better address this development allowed the company to clearly show how they could provide solutions to a defined problem as opposed to being another medical device company with a better product.

Sidestepping Negative Perceptions

Another potential roadblock is an unfavorable outlook on your technology type or indication. Regardless of how innovative your technology is and how compelling your data may be, if you’re targeting a highly-crowded space or an indication with a low success rate, such as most neuro indications, potential investors may write you off before even hearing the pitch. This may require you to completely rework your messaging so that you quickly and clearly point out the key differentiators of your technology and accentuate ways in which your mitigating the specific risks that have plagued similar, failed approaches. Additionally, it’s important that you pursue someone at the firm who has expertise in your specific area, if possible. These individuals are much more likely to take a serious look at your project rather than immediately shutting you down based on something such as an aversion to the space you’re in.

The bottom line is that the market dictates everything, and not properly addressing or even ignoring what it’s telling you won’t help you succeed. It’s important to note the cause of each pushback you receive; if you’re repeatedly receiving pushback on the same issues, it may be possible to make an adjustment, or if necessary a complete pivot, before you’ve depleted all your resources pursuing an un-fundable opportunity. That said, while not completely disregarding any input, it is advisable to give less weight to the declines from groups who have no expertise in your specific field as they may not have thoroughly understood or evaluated your proposal.

It’s critical to be completely in tune with new developments such as regulatory changes or moves by competitors; understanding what these changes mean for your company could provide opportunities for a pivot. It’s also important to be vigilant in documenting and evaluating the feedback you receive; this feedback could aid you in determining when and how to change direction to keep moving forward.

By Dennis Ford, Founder & CEO, Life Science Nation; Creator of RESI Conference Series

When LSN decided to bring RESI to San Diego, we took note of the rhythm of other events and receptions that take place during BIO week. What did we see? A distinct lull on Monday. That’s the day when we kick off the week, and LSN saw an opportunity to fill that gap with partnering meetings and early stage focused content.

Adding a day full of meetings prior to BIO is sure to make your week more productive, more connected and more fruitful. And to keep you busy between meetings, RESI has 3 tracks of investor panels and early stage workshops to edify and advise you in your fundraising. If you’d like to join us there, it’s not too late – you can sign up now.