The view from Brittany Meiling
The emergence of new players dabbling in biopharma money has been the subject of giddy (and sometimes ominous) observations during financial boom times. As tech investors, family offices, and other relative newbs to the space clamber to join biopharma deals, some in the industry aren’t certain the newcomers are good for business.
The topic arose during a panel discussion I attended last week at Biocom’s annual partnering conference in San Diego. The panel — about the “future of venture investing” — included speakers from OrbiMed, Venrock, Lilly Ventures, Sanofi’s venture arm Sunrise, and Domain Associates.
Unsurprisingly, the topic of tech investors entering biopharma surfaced. That’s because tech investors have made a lot of headlines this past year, including two stories we wrote here at Endpoints about the 50 most active biotech VCs in 2017 and the 100 top VCs in the industry. Both reports noted the rapid rise of formerly tech-focused players, including GV (previously Google Ventures), which climbed 75 spots in one year on our annual list ranking top VCs.
When the moderator noted the new interest of family offices and tech investors in biopharma, Venrock partner Camille Samuels expressed some skepticism over whether their emergence was a good thing for fundraising startups.
“A lot of people are taking tech money for their Series A — often at too high of a valuation,” Samuels said.
These startups often turn to more traditional biopharma investors by the time they need a Series B round, she said, at which time they’re “in a world of hurt.” No one wants to touch them at such a high valuation.
Acknowledging her opinion might be controversial, she added she’d rather invest alongside “these guys” (gesturing to the more traditional investors sitting next to her) than tech investors.
But others on the panel challenged that thought. The fields of tech and biopharma often merge and mingle these days, like the recently launched Senti Biosciences. That company came out of the gate with $53 million last month, partially from tech investors.
“Designing genetic circuits… requires a lot of engineering and platform-building to build, test and learn,” Senti’s founder Timothy Lu told Endpoints. The automation and computational tools needed to make it work was the kind of story that resonated with tech investors, he said.
“I think it’s great to get tech investors involved,” said Armen Shanafelt, general partner at Lilly Ventures. These new players can bring something to the table that he and his partners cannot — savvy and connections in a different area, he said.
Plus, some startups may not have to worry about valuations too high for biopharma VCs. The current fundraising environment gives startups lots of other options, said Kim Kamdar, partner at Domain Associates.
“The pool of capital currently available to these companies is hard to ignore,” Kamdar said.
Look at Grail, she said. Grail is a high-flying Silicon Valley startup founded by San Diego’s Illumina that hauled in a massive $900 million Series B round last year. The company was backed in part by GV and other big names in San Francisco tech (Amazon, Bezos Expeditions, Bill Gates, etc). Now, there’s rumors the startup is considering a $500 million IPO, listing on the Hong Kong public markets — yet another new avenue of capital for biotech upstarts.
After the panel, I talked the subject over with Sanofi’s Kathy Bowdish, VP of global R&D and head of the VC arm Sunrise. She said she’s not too worried about new entrants to the biopharma investing space increasing competition for deals.
“There’s so much great science out there right now, so you try not to sweat it too much if you miss (a deal),” Bowdish said. “It just doesn’t seem like there’s a shortage of fantastic science.”
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