Mark Levin co-founded Boston’s Third Rock Ventures in 2007 with the goal of funding life sciences discoveries through the Valley of Death—when early-stage startups are no longer eligible for federal grants but they haven’t progressed enough to attract the attention of VCs. Third Rock has launched and incubated eight startups, including Foundation Medicine, Warp Drive Bio, and Sage Therapeutics. The firm’s model is to infuse companies with $30 to $40 million in startup capital, then work closely with them to develop their clinical product candidates and to bring on additional partners to fund further growth.
Levin will pass along tales of innovation and tips for success at Xconomy’s April 4 forum, New England’s Emerging Biotech Stars. The afternoon event will feature a keynote chat with Levin, moderated by Aveo Pharmaceuticals CEO Tuan Ha-Ngoc. We’ll also hear from Biogen Idec CEO George Scangos and R&D chief Doug Williams, plus the CEOs of Genocea, Dicerna, Adimab, Syndax, and Aileron.
You can see the full agenda and get your tickets here.
As a preview, Xconomy asked Mark Levin to weigh in on some of the pressing issues in biotech innovation. Here are some excerpts from our interview.
Xconomy: Many entrepreneurs still gripe about the Valley of Death in life sciences funding. Do you think it’s all that bad? Or is the landscape for early-stage investing in biotech improving?
Mark Levin: I agree that most people are not investing in the early stages of life sciences. About five to ten years ago, venture capitalists started moving downstream. Pharmaceutical companies aren’t doing well in discovery and they need those downstream products. But they’re often not investing early in discovery opportunities.
But we are ultra-super positive when it comes to innovation. We see a lot of opportunities for breakthroughs in science and medicine. That was our premise when we started Third Rock. We step in on Day One with capital and spend a lot of time getting our startups through the Valley of Death. We also make a huge effort to get Big Pharma on board with these companies early.
X: What therapeutic areas is Third Rock most interested in these days?
ML: We have built up a lot of expertise in oncology. We’re also interested in rare genetic disorders. When there’s a single gene mutation that can be addressed, you have the opportunity to do breakthrough science, so we’re building multiple startups around rare genetic disorders. And we’re working in the field of cardiology, particularly on the device side, looking for products that can treat congestive heart failure and other diseases.
We’re also investing significantly in obesity. This is a major disease across the world. Yes, we worry about regulatory challenges, but we believe if we can develop products that make a major difference, pharmaceutical companies and other venture capitalists will invest along with us.
X: Recently you have struck funding deals involving pharmaceutical companies—Sanofi with Warp Drive Bio and Genentech with Constellation Pharmaceuticals—that give them an option to buy the startups down the road. What are the advantages of this type of deal?
ML: It helps us get through the Valley of Death. And the guaranteed exit can be an incentive for other VCs to come in later. Take Agios and Celgene, for example. That was a very early relationship. And it allowed us to bring in a large mezzanine round of funding recently. So these types of relationships either eliminate the need for future funding, or they help create motivation for others to invest.
X: At our April 4 forum, we will have a panel discussion on grant funding from foundations. How important is this as a source of funding for early-stage biotechs?
ML: They’re an important part of it. Foundations have all the right networks. So in addition to the funding, they help connect entrepreneurs with key opinion leaders and folks who can help with clinical trials. It’s not just the dollars, it’s the contacts they bring to the startup.
X: Recently we’ve seen a handful of successful IPOs, including that of Verastem. Does this signal a turnaround in the market for biotech IPOs?
ML: I don’t see anything dramatic. Every once in a while, a company squeezes out an IPO, but it’s not encouraging. We’ve resisted the IPO route. We don’t believe in becoming a public company too early—I don’t think it does anyone any good. We’d rather have pharmaceutical partners helping us build our companies.
You can hear more from Levin on April 4 at Xconomy Forum: New England’s Emerging Biotech Stars. We’ll gather at 1:30 p.m. at Biogen Idec in Cambridge, MA, and the afternoon will include plenty of time for networking. Register today. And don’t forget to follow the action on Twitter at #XCBiostars. See you on April 4.
