Biotech Voices is a collection of exclusive opinion editorials from some of the leading voices in biopharma on the biggest industry questions today. Think you have a voice that should be heard? Reach out to Amber Tong.

When a glob­al pan­dem­ic hit, the bio­science in­dus­try an­swered the call for vac­cines and ther­a­pies in record time, which will save mil­lions of lives. This re­sponse was pos­si­ble be­cause of a sus­tained in­vest­ment of risk-cap­i­tal by the ven­ture cap­i­tal in­dus­try in life sci­ences com­pa­nies, peak­ing in 2020. Great sci­en­tists, vi­sion­ary lead­er­ship and high-qual­i­ty in­vestors that backed new sci­ence and bold en­tre­pre­neurs led to the in­no­v­a­tive tech­nolo­gies of BioN­Tech and Mod­er­na that con­tributed to the ini­tial Covid-19 vac­cines.

As the sec­tor right­ly basks in the glow of this year’s ac­com­plish­ments, there is a con­cur­rent re­al­i­ty to con­front. Covid-19 has fur­ther ex­posed the in­equities in so­ci­ety, dis­pro­por­tion­ate­ly im­pact­ing women and mi­nori­ties. This im­bal­ance is al­so ev­i­dent in the bio­science com­mu­ni­ty, pro­vok­ing many lead­ers to act on in­equal­i­ty.

Ven­ture cap­i­tal­ists find­ing rea­sons to change

The ven­ture cap­i­tal in­dus­try, not on­ly with­in life sci­ences, has well-doc­u­ment­ed chal­lenges with di­ver­si­ty, eq­ui­ty and in­clu­sion. On­ly 2.6% of to­tal VC fund­ing in 2020 has gone to Black and Lat­inx founders, and fund­ing for fe­male founders has sunk to lev­els not seen since 2017. De­spite that, I per­ceive a grow­ing ap­petite for change. The ques­tion is – How?

In VC firms, the low at­tri­tion of in­vest­ment part­ners and the lim­it­ed ex­pan­sion of firms lim­its ca­reer op­por­tu­ni­ties for the many tal­ent­ed As­so­ci­ates and Prin­ci­pals that rep­re­sent the fu­ture. With no vis­i­ble route to part­ner, these em­ploy­ees seek op­por­tu­ni­ty else­where, out­side ven­ture cap­i­tal. The loss of such tal­ent re­duces the chance to in­tro­duce more di­ver­si­ty among a ven­ture firm’s part­ner ranks.

A lack of di­ver­si­ty among VCs great­ly in­flu­ences in­vest­ment de­ci­sions and cap­i­tal al­lo­ca­tion. For ex­am­ple, re­search shows how in­ter­ac­tions with in­vestors dif­fer be­tween men and women en­tre­pre­neurs (We Ask Men to Win and Women Not to Lose: Clos­ing the Gen­der Gap in Start­up Fund­ing. Kanze, Huang, Con­ley and Hig­gins). The ques­tions di­rect­ed at men ex­plore the size and mag­ni­tude of the op­por­tu­ni­ty. In con­trast, women are more like­ly to be ques­tioned about pre­ven­tion fac­tors and down-side risk.

Cre­at­ing a new com­pa­ny in life sci­ences, and grow­ing it, in­vari­ably re­lies on ven­ture fi­nance. VC firms have a strong in­flu­ence over the com­pa­ny build­ing process, in­clud­ing the com­po­si­tion of boards and se­nior man­age­ment, as well as the tal­ent and cul­ture. In­suf­fi­cient di­ver­si­ty among ven­ture in­vestors can lim­it a port­fo­lio com­pa­ny’s com­pet­i­tive­ness in the tal­ent mar­ket be­cause di­verse can­di­dates se­lect em­ploy­ers where they see them­selves rep­re­sent­ed and suc­cess­ful. Just 3% of VC in­vest­ing part­ners are racial or eth­nic mi­nori­ties and around 11% are women. This leads to an ex­ist­ing bias among VCs to­wards his­tor­i­cal suc­cess pat­terns, which has been to the detri­ment of mi­nori­ties and women.

Pri­vate com­pa­nies re­act to pub­lic mar­ket re­quire­ments

The re­cent Nas­daq pro­pos­als to the SEC on board di­ver­si­ty and dis­clo­sure, along­side new state laws and reg­u­la­tions, are forc­ing many pub­lic com­pa­nies to be­come more di­verse. Mean­while, pri­vate com­pa­nies in the bio­science sec­tor re­main strong­ly in­flu­enced by ven­ture in­vestors who many per­ceive as pas­sive re­gard­ing di­ver­si­ty and in­clu­sion.

The in­ter­play be­tween ven­ture in­vestors and port­fo­lio com­pa­nies is a source of great op­por­tu­ni­ty to ad­vance DE&I in the sec­tor. In­creas­ing di­ver­si­ty will cre­ate val­ue for all stake­hold­ers, and re­duce the fric­tion points as com­pa­nies tran­si­tion from pri­vate ven­ture own­er­ship to the pub­lic mar­kets. Chang­ing the com­po­si­tion of the board and the man­age­ment team takes time and en­er­gy and can cause a com­pa­ny to lose vi­tal mo­men­tum. Cul­ture is of­ten seed­ed ear­ly in a com­pa­ny’s life and pos­i­tive­ly ad­dress­ing cul­ture from the get-go re­duces the need for cul­tur­al cor­rec­tions as a com­pa­ny ma­tures.

The pow­er of the col­lec­tive

For small com­pa­nies, with­out the ex­per­tise and hu­man cap­i­tal, the in­tent to im­ple­ment DE&I prac­tices, tools and poli­cies of­ten fails. Prac­tices bor­rowed from large in­ter­na­tion­al com­pa­nies are not rou­tine­ly ef­fec­tive ei­ther.

The range and com­plex­i­ty of DE&I is­sues com­pa­nies need to tack­le, make the task daunt­ing and com­pli­cat­ed. In­stead of or­ga­ni­za­tions in­di­vid­u­al­ly piec­ing to­geth­er a DE&I strat­e­gy, con­stituents have an op­por­tu­ni­ty to work col­lab­o­ra­tive­ly and pre-com­pet­i­tive­ly to de­vel­op DE&I so­lu­tions that are de­signed for the op­er­a­tional re­quire­ments of ven­ture cap­i­tal firms and ven­ture-backed pri­vate com­pa­nies. The Bio­science & In­vestor In­clu­sion Group (BI­IG) is one such op­por­tu­ni­ty (www.bioin­clu­sion.org).

Bio­science & In­vestor In­clu­sion Group chan­nels col­lec­tive com­mu­ni­ty ac­tion; some­thing the bio­science sec­tor does well. BI­IG en­ables com­pa­nies and in­di­vid­u­als to con­tribute their per­spec­tive or ex­pe­ri­ence to struc­tured work­ing groups ini­tial­ly pri­or­i­tiz­ing In­vestor In­ter­ac­tions; Hir­ing and On­board­ing, and Peo­ple Growth and Re­ten­tion. The DE&I so­lu­tions BI­IG de­vel­ops will be freely ac­ces­si­ble to help ad­vance and ac­cel­er­ate DE&I in the in­dus­try.

When in­vestors and en­tre­pre­neurs link arms in the face of chal­leng­ing prob­lems, they are ca­pa­ble of re­mark­able achieve­ments. This uni­ty and the open and col­lab­o­ra­tive spir­it of the bio­science com­mu­ni­ty can tack­le an­oth­er big prob­lem the sec­tor must con­front — in­equal­i­ty.

Karl Simp­son is the CEO of Lift­stream and a founder of The Bio­science & In­vestor In­clu­sion Group.

Biotech Voic­es is a con­tributed col­umn from se­lect End­points News read­ers. Read more here.

89bio said its drug was better than placebo at lessening fibrosis without worsening nonalcoholic steatohepatitis, or NASH, in two of three dose groups.

The San Francisco biotech said it thinks the Phase IIb data pave the way for a potential Phase III, following in the footsteps of another biotech in its drug class, Akero Therapeutics. To fund a late-stage study, CEO Rohan Palekar told Endpoints News 89bio “would need to raise additional capital,” with the company having about $188 million at the end of last year.

The National Institutes of Health has again declined to use so-called “march-in” rights to lower the price of Astellas and Pfizer’s prostate cancer drug Xtandi despite being invented at UCLA with grants from the US Army and NIH.

“Given the remaining patent life and the lengthy administrative process involved for a march-in proceeding, NIH does not believe that use of the march-in authority would be an effective means of lowering the price of the drug,” NIH told prostate cancer patients Robert Sachs and Clare Love, in a letter shared with Endpoints News. The institutes’ analyses found Xtandi “to be widely available to the public,” an indication that there was not a pressing need for the US to act.