the plan. Cubist knew both companies very well—particularly Optimer, which it had already partnered with—and it was going after both. But Bonney said while Cubist was in talks with one company and a deal looked “pretty promising,” the second company was going through a public auction process and Cubist was told it was out of the picture. “[We were told] go back to the drawing board, you’re not in the right ballpark,” Bonney said. (He didn’t specify which was Trius and which was Optimer, though Optimer said it was considering a sale early last year.)
But the situation changed abruptly. About a week before announcing one of the deals, Bonney called the CEO of the second company (Optimer), thanked him for their successful collaboration, and mentioned that he was surprised that (Optimer) hadn’t already announced its buyout deal.
“He said, ‘Well, funny you should mention that,’” Bonney recalled, implying that nothing had materialized.
Cubist immediately jumped back in and put a deal together in a week—just so it could announce the two transactions together.
“That was a little bit of a wild week,” Bonney said. “And it wasn’t helped by the fact that one bank was representing both entities as well.”
—Editas Medicine was so intriguing it stirred a VC firm beauty pageant. Most biotech startups have to pitch their ideas to venture firms and hope for the best. For gene editing startup Editas, it was the complete opposite. Polaris Partners, Flagship Ventures, and Third Rock Ventures all wanted in, and rather than duking it out with one another and creating competing startups, they decided to “lock arms” and create one company. And that meant making a powerpoint presentation pitch to the entrepreneurs that would become Editas’ scientific founders—among them Zhang (pictured above, with Bitterman) and George Church.
As it turns out, that was a busy time for the Broad Institute’s Feng Zhang. VC firms from the East and West Coasts had previously contacted him to talk about building a company, and he and the other Editas scientific founders had just heard a pitch that morning from another West Coast venture firm. So what convinced Zhang to go with the Polaris-Third Rock-Flagship team?
“It was very nice to have two pitches to us on the same day, because you can make a very sharp contrast and compare what their investment philosophies and their company-building philosophies are,” he said. “In the morning [the first firm was] very focused on what the term sheet looks like, what are the financial terms…and not so much about what their vision is for building the company. In the afternoon, the pitch was very succinct, but very clear. It just pointed us to a vision where we want to build a therapeutic product, we have the experience and know what the pieces are that need to come together, and how to really have the most effective capitalization to make this a success.
Zhang added: “It was very easy to see who is the right team to work with to really make this successful.”
—“I would argue that in order to be innovative, you first have to be contrarian.” Syros’ Simonian noted that major biotech breakthroughs often come from people who aren’t afraid to challenge norms.
“When you start out doing something brand new, you’re going against what everybody else is doing, there’s going to be a lot of people who say I don’t get it, I don’t understand, why do I want to do this?” Simonian said. “It’s only when you ultimately prove that you have answered all the questions and provided value that everyone calls you innovative.”
This is the kind of journey that Simonian is in the early stages of right now. She said, for instance, that while disease typically happens due to gene errors within a cell, more than 90 percent of the industry’s R&D resources have been spent on molecular targets on the cell membrane and in the cytoplasm—not the nucleus. That’s changing due to evolving scientific understanding and gene sequencing, which is giving rise to new ideas, like the discovery of so-called “super-enhancers”—transcription factors, and other cellular machinery that control the expression of about 200 or so genes that ultimately determine the fate of a cell. Syros’ contrarian view is that these super-enhancers are overlooked, new potential drug targets for small molecules.
—This whole drug development thing would be way more efficient if we just pooled a bunch of debt together. The valley of death, or the gap between basic research and potential drug candidates, is named as such because it’s where promising therapeutics go to die. But what if there were some other untraditional ways to keep these projects alive, like, say, debt? Roger Stein talked about a paper he co-published in Nature Biotech a few years ago, proposing a radical idea to finance drug development: establishing a single financial entity that would fund a large number of programs—more than 100—by issuing billions of dollars in debt. With that type of structure, a large number of projects could get financed and more potential drugs could see the light of day, while the sheer size of the portfolio of compounds would help mitigate the risk of clinical failure. Stein said, for instance, that such a structure might provide a more stable return for investors, albeit not the big home runs that venture firms can get.
“This is for the folks that run a pension fund,” Stein said. “If you’re CalPERs, you’re trying to get [a] 7.5 percent return.”
—“You get to tell as many poop jokes as you want, and people kind of applaud you.” David Berry jokes that’s one of the unexpected benefits of talking about the microbiome, the focus of a startup he’s heading at Flagship called Seres Health. Seres is looking for ways to use drugs to bring the microbiome—the catch-all term for the trillions of bacteria that live in the gut—back into balance. Essentially, Seres is looking to duplicate the results of fecal transplants, where a healthy person’s stool is transplanted into a diseased person. Berry said, for instance, that fecal transplants work between 60 and 80 percent of the time on the first attempt in people with c. difficile infections, compared to a 70 percent failure rate for standard-of-care antibiotics. Seres’ plan, like another local startup called Vedanta Biosciences, is to pack some live bacterial organisms into a pill that would counteract ‘bad’ bacteria and tip a person from diseased to healthy. With about $11 million in financing, Seres has gotten to the point of running its first clinical trial.
“We started [Seres] out in a basement because no one wants to have anything dealing with a microbiome on a main floor where you can see it or actually see the people,” Berry joked.
