“Like all VCs,” Amir Nashat is saying, “we come late to the story.”
Nashat is talking about the formation of Fate Therapeutics, and in one sense what he’s saying is true. Venture capitalists bankroll, advise, strengthen, and help grow companies built around other people’s innovations—and so the story of even a very early stage startup has often begun well before they get involved. But in some cases—as in this case—VCs slip into the earlier chapters of a company’s history by spotting emerging trends and assembling the cast of characters (scientists, engineers, executives) necessary to capitalize on those trends.
Fate’s formation was announced last November 29, to some of the greatest fanfare (some have said hype) received by any new biotech in recent memory. At the company’s core was a dream team of five leading stem cell scientists—from Harvard, Children’s Hospital in Boston, the University of Washington, Stanford, and the Scripps Research Institute. And they were banding together across geographic and institutional boundaries to solve one of the biggest challenges imaginable in medicine, one with untold commercial potential: to control the destiny of cells. Hence the name, Fate.
The venture kicked off with a $12 million funding round led by Nashat’s firm, Polaris Venture Partners of Waltham, MA, and Seattle-based Arch Venture Partners—an initial installment on the more than $100 million Nashat says Fate’s backers expect will be invested in the firm over the next few years. What’s attracting all that cash, and all the attention, are Fate’s rather novel approaches to capitalizing on the science of both adult and embryonic stem cells.
Instead of trying to find ways to isolate adult stem cells, grow them in the lab, and then inject them into the body to repair specific tissues, for example, Fate’s plan is to develop drugs that spur already-present adult stem cells to action right in the body. And instead of turning to ever-controversial embryonic stem cells as the raw material for custom-made organs and tissues for transplant, Fate is developing molecules to reprogram mature cells taken from the patient to behave like embryonic stem cells. As part of the launch press blitz, Ben Shapiro, retired executive vice president of Worldwide Basic Research for Merck and a member of Fate’s scientific advisory board, went so far as to proclaim, “Fate’s approach is the dawn of a new day in medicine.”
Over-hyped or not, Fate is definitely a big idea. And it’s intriguing not just for its scale and approach, but for the way it came about—in large part through the convergence of two venture capitalists, Nashat and a young Arch associate named Alex Rives, who were separately following different paths to commercializing stem-cell research.
“It’s a story of networking,” Nashat begins, in what might be considered an understatement. For the Polaris partner, who holds a PhD from MIT in chemical engineering and studied under renowned researcher (and Xconomist) Robert Langer, it began in early 2006. At that point, he says, a small group of scientists had been working for a decade or two to study the basic biology of stem cells, assembling clues about how to modulate their behavior. There was still so much to be learned, but as Nashat read the scientific literature, he realized that those researchers had made more progress than he had previously thought. “They were filling in a lot of the gaps. The science around the papers was looking really interesting,” he says. This got him thinking of the commercial ramifications of the work—the idea that you could develop drugs to turn particular cells on or off, and thereby rally the body’s built-in resources for repair or block the actions of harmful cells. “It looked like you could start to make drugs based on this biology,” is the way he puts it.
Not long after that, Nashat was invited to a meeting called by a deputy of then Massachusetts Gov. Mitt Romney who was working to help the governor understand stem cells and craft his position on the controversial topic. Some 15 scientists and policy leaders had also been invited, and one who particularly stood out in Nashat’s mind was David Scadden,
