First came Inception Sciences, a holding company for spinning out biotech startups established by Versant Ventures and Peppi Prasit, the veteran San Diego drug developer. Then came COI Pharmaceuticals, the shared “community of innovation” for startup biotechs established by San Diego’s Avalon Ventures as part of its partnership with GlaxoSmithKline.
And now there is Dauntless Pharmaceuticals, a third San Diego-based holding company created with an innovative business model for starting new biotech companies as efficiently as possible.
Even though Dauntless was founded almost exactly a year ago, CEO Joel Martin has been trying to maintain a low profile, saying, “We don’t want to tip our hand. We are definitely interested in oncology, but there is no value in disclosing details.”
As for the business model, Martin said, “It’s a little like Inception. It’s a little like what Avalon is doing. But it’s structured differently. We tried to learn from what everyone else has done.”
Unlike a conventional biotech, which may hold a number of drug candidates in various stages of development, Dauntless is focused on advancing each drug candidate as the sole asset of each separate company it forms. Dauntless says its simplified business structure is more capital-efficient, and there are important tax advantages for investors and other stakeholders. It should result in shorter timelines, lower costs, and higher returns.
“We really have a development focus,” Martin told me. “We don’t have our own laboratory. We outsource everything. We’re trying to minimize the total cost [of drug development] because our needs change with each stage of development.”
Dauntless came to light after the MoneyTree Report on second-quarter venture capital activity turned up a couple of funding deals for “Dauntless 1,” the first biotech created by the umbrella company.
Dauntless said last year it had raised $12 million to advance DP1038, a preclinical-stage drug intended to treat endocrine cancers. But so far, the company has actually drawn only $3 million last year and $4 million earlier this year. “There will probably be a third closing at some point” to be determined, Martin said. “We are taking capital as needed, not sooner.”
(The MoneyTree Report, which showed Dauntless raising $8 million in the first quarter of 2016 and $4 million in the second quarter, was inaccurate, Martin said.)
All of the company’s funding so far has come from Sofinnova Ventures, and Mike Powell, a Sofinnova general partner in San Francisco, is board chairman. David Kabakoff, a Sofinnova partner in San Diego, also is a Dauntless board member.
Martin said Powell, a longtime pilot and aviation buff, inspired the company’s name. After reviewing a list of famous airplanes, Martin said the co-founders picked the Navy’s Dauntless SBD, a carrier-based scout plane and dive-bomber during World War II.
Dauntless has only five employees, including two who worked with Martin previously at Cebix, the San Diego biotech that shut down in early 2015. “Our concept was to take advantage of a team that works very well together and has the trust of their financial backers,” he said.
When a conventional biotech gets acquired, the acquiring biopharmaceutical is often interested in only one drug, so it shuts down the biotech and indefinitely shelves other drugs that were under development.
In a statement last year, Dauntless disclosed that its first drug candidate was licensed from Aegis Therapeutics, a San Diego drug-delivery and drug-formulation company. In an interview last July with the industry e-mail newsletter BioWorld, Powell said that Sofinnova had provided enough funding to take DP1038 through proof-of-concept studies in endocrine cancer, using the 505(b)(2) pathway to FDA approval.
The Dauntless co-founders declined to provide further details at the time. But Martin told me the company might be ready to disclose more details by the fall.
