What does it take to succeed as a New York biotech startup?
There are many reasons that the biotech industry should flourish in New York. The area boasts a concentration of world-class academic institutions, top-notch researchers and clinicians, and a profusion of investment capital and entrepreneurial talent.
While some of the largest pharma companies have set up shop in the city, biotech start-ups have had a hard time settling in for the long term—partly due to high real estate prices and a dearth of wet-lab space in the city.
Additionally, biotechs in Cambridge and San Francisco consistently draw the majority of venture dollars, relegating New York to a second tier. The heavy biotech presence in those two hubs creates a virtuous cycle, as many venture funds choose to invest close to home.
Three-fifths of all venture dollars invested in biotechs last year came from funds located in California and Massachusetts, according to an Endpoints analysis of data from Thomson Reuters.
But there are signs New York’s biotech scene may be growing in stature, even as the overall biotech market struggles to shake off a year-long slide.
Uptick in start-up funding
The good news is that much has improved over the last decade for biotech start-ups in New York.
In 2010, the Alexandria Center for Life Science became the city’s first life sciences research park, and now boasts more than 730,0000 square feet of lab and office space.
Eli Lilly was one of the first tenants and has since been joined by Roche and Pfizer's Center for Therapuetic Innovation. These companies have helped make room for biotech start-ups in NYC by aligning with venture capitalists to support incubation projects.
In 2013, Lilly, Celgene, and GE Ventures committed $40 million to support biotech start-ups as part of the Early-Stage Life Sciences Funding Initiative in NYC.
The NYC Economic Development Corporation added another $10 million, and last year two big venture capital companies, Flagship Ventures and Arch Venture Partners, stepped in with additional capital to build out the initiative. All told, the project has amassed $150 million to invest in supporting 15 to 20 biotech startups.
At the same time, biotech startup activity has accelerated.
Kallyope, which was spun out of Columbia University, completed a $44 million round of financing in December last year and subsequently set up shop in the Alexandria Center for Life Science.
The life sciences investment firm Accelerator oversaw a $48 million funding round for Petra Pharma in January, along with backing Lodo Therapeutics that same month.
Similar to Kallyope, Petra and Lodo are spin-offs from NYC-based medical institutions (Weill Cornell and Rockefeller University, respectively). Both have moved into the Alexandria Center.
Despite the increased activity, there are still many hurdles to overcome. For example, although New York receives about 6% of NIH funding, it attracts less than 2% of biotech-directed venture capital.
Rgenix, which raised $33 million in Series B financing earlier this month, is representative of some of the recent successes seen by New York-based biotechs.
Spun out of Rockefeller University, Rgenix is developing a micro-RNA drug discovery platform and plans to develop treatments aimed at refractory cancers. In particular, Rgenix hopes its technology can reverse immune evasion and drug resistance by targeting immunosuppressant cells in the tumor microenvironments.
And Masoud Tavazoie, CEO of Rgenix, is committed to keeping Rgenix in New York, instead of decamping for Cambridge or San Francisco as the company grows.
“New York city has been really integral to our success,” he said.
Tavazoie co-founded Rgenix with his brothers Saeed and Sohail. Saeed is a professor at Columbia University while Sohail runs a research lab at Rockefeller University while practicing oncology at Memorial Sloan Kettering Cancer Center.
The three brothers have focused their work on developing medications for hard-to-treat cancers, especially for patients who have exhausted existing treatment options.
Finding undiscovered targets
The promise is in the platform, according to Tazavoie. “The targets we find with our platform would not be discoverable with even the most advanced sequencing methods,” he said.
“Despite the breakthroughs we’ve seen in cancer treatment, there are still a lot of patients with cancer who lack effective treatment options. Our goal is to use the platform to identify novel druggable cancer targets and address unmet medical needs.”
So far, unraveling the role of the liver X receptor (LXR) as a druggable target has been Rgenix’s most important discovery. LXR is implicated in cancer metabolism because it increases APOE—the protein component of lipoprotein particles—in the tumor microenvironment.
It was in Dr. Sohail’s lab that researchers determined APOE is a suppressor of cancer progression. With that knowledge in hand, the team scoured the industry for shelved LXR-related drug candidates that had been in development but were ultimately found unsuitable.
In the process they found the compound which eventually became RGX-104, an immunotherapy which targets LXR.
“We found out that GlaxoSmithKline has shelved an LXR agonist, which it was developing for cardiovascular disease, because it increased cholesterol levels in preclinical studies,” Tazavoie explained.
Rgenix believes RGX-104 can overcome tumor resistance by triggering LXR activity, which would in turn increase APOE in the tumor microenvironment.
Resistance is a common problem that leads to treatment failure in patients who have previously responded to therapy. Despite recent advances in cancer therapy, most patients will eventually succumb to their disease due to drug resistance and immune evasion.
With preclinical work complete, Rgenix plans to evaluate RGX-104 against a variety of solid tumor types in clinical trials starting later this year. Testing will focus on heavily pretreated patients with triple-negative breast cancer, metastatic lung cancer and colorectal cancer.
A number of high-profile VC firms, including Alexandria Venture Investments, Novo A/S and Soffinova Partners, have backed Rgenix. But the list of backers is perhaps indicative of the challenges biotechs face in attempting to secure local venture funding. Both Novo and Soffinova are based in Europe.
The recent series B deal boosted Rgenix’s fundraising totals to $44 million, and the $33 million raised two weeks ago represents the second-largest funding for a private New York biotech this year, according to Xconomy.
As to be expected after securing major new funding, Tazavoie is optimistic about the path forward for Rgenix. “The funding we received will be enough to fund us through 2018 and allows us to generate proof-of-concept data,” he said.
“Clinicians, oncologist, scientists and investors are interested because of the strength of the science and the strength of our team,” Tazavoie said. “I’m proud to be part of a company that is flourishing in this nascent biotech ecosystem in NYC.”