GV partner Cathy Friedman has stayed bullish about biotechnology’s future, despite the strong headwinds that have faced the industry over the past year and a half.
It may be an easy view to hold for Friedman, considering her post. Since 2022, Friedman has been working at the venture capital firm formerly known as Google Ventures, which uniquely has a single, deep-pocketed financier — Alphabet — that can afford to invest patiently even in a tough environment. A number of GV’s recent gambles in life sciences have paid dividends, too, as investments in high-profile gene editing companies Prime Medicine, Beam Therapeutics and Verve Therapeutics preceded lucrative initial public offerings.
“We don't need a vibrant IPO market this year to make ourselves excited about investing,” Friedman said in an interview with BioPharma Dive at GV’s San Francisco office, which from its location in the historic Ferry Building offers a sweeping view of blue waters and the Bay Bridge.
Friedman, who has spent more than three decades in finance and biotech, has been a director on the boards of small molecule drug developer Vividion Therapeutics and cell therapy maker Lyell Immunopharma, among other life sciences companies.
She moved to California in 1994 to help start Morgan Stanley’s West Coast biotech practice. She stayed put, overseeing biopharma and health tech companies there.
At GV, she hopes to support more companies working in women’s health, while incubating startups trying to cure diseases. Friedman is part of a nearly 40-person investment team, which has deployed more than $1 billion in capital to life sciences companies since 2020.
“I'm a big believer in finding all these things early so we can cure them, as opposed to just dealing with the onslaught at the other end,” Friedman said.
BioPharma Dive spoke with Friedman about how GV decides whether to invest, and how to spot promising companies. This conversation has been lightly edited and condensed for clarity.
BIOPHARMA DIVE: What is GV’s philosophy when it comes to investing in 2023?
CATHY FRIEDMAN: Our view is we want to invest in the best companies. Some things make a ton of sense to invest in more than once. We have enough people in our house that if we ever thought there was any sort of conflict, we can deal with them.
In this market, we're very lucky — we have a large fund that just got refreshed at the beginning of this year. We also have the ability to invest over the long term. So it's not like we're going to change our strategy based on what’s hot and not.
For some funds, this year’s like, “Oh my God, what are we going to do?” It's like a new awakening.
For us, it's more of the same: We're going to put our heads down. We're going to make the best investments we can make. We're going to make sure that not only [are we] going to invest in the first investment in that company, but that we save dry powder to invest again if they merit that. There's no big strategy change.
Are you worried about companies working on the same target?
FRIEDMAN: Pick cancer. If the worst thing that happens is we invest in two companies that both have a product to cure HER2 breast cancer, sign me up. That’s OK. We're not sharing scientific data between companies. They know that. We've never had any issues of impropriety with data or anything else.
We're not going to incubate two companies that do the same thing. But we can invest in companies that ultimately may have webs that might overlap.
It seems like investors are scared off from platform companies right now. What makes you have faith?
FRIEDMAN: The cool thing about a platform is they're never one-trick ponies. If you have a single-molecule company, you invest in them and they have proof-of-concept, but then they go in the clinic and fail, they fail. If you find a company that's an amazing platform with super smart people across a broad array of things, they're going to have more than one shot on goal. So it's just a good investment.
Let’s talk fairy tales: platforms that are just talking mumbo jumbo, they have this platform and they don't have any direction and any time[line]. We always want to see the timeframe. Where are the inflection points? We're not going to put in more money when it's still this pipe dream. We want to see proof-of-concept.
It can be so incredibly fruitful to have a company that has more than one thing. Prime [Medicine] would be a good example.
Some biotechs are cagey about sharing their science publicly. Why is that?
FRIEDMAN: It might be because they don’t have any. It might also be that they do believe they have a platform, but they haven't done enough science to know where it's going to be translated.
Because we have [former Agios Pharmaceuticals CEO] David Schenkein and a few other Schenkein-type people around us, we know how to take science and translate that into something that's going to help a patient. That's the platform we want to invest in. The [company] that’s got a platform, but they're going to be able to translate that to make something that's ultimately going to be hopefully given to a patient. If the first one doesn't work, they're going to have a second, third and fourth one. There's something about pattern recognition for people who've been in drug discovery.
What are you tired of being pitched?
FRIEDMAN: Literally every company comes in who's on the margin, who has an AI platform — like three slides in, and no ballasts there whatsoever.
For a long time, ‘genomics’ was a buzzword, and [AI] is just like the buzzword of the week. There was a time [that] a lot of the tech investors did tourism into healthcare investing. They don't know enough about healthcare investing to be dangerous. Mixing all these tech and biotech terms got people excited. To a certain extent, it's marketing too if you don't do a lot of deep diligence. I think that helped people raise money.
If you look beyond the white noise, credible science is being developed at the cutting edge of biology, AI, and machine learning.
[But it’s also] more important than ever before for entrepreneurs to be equally discerning about the long-term investing relationships they make. Today's biotech entrepreneurs should seek to partner with investors with deliberate mindsets, domain expertise in AI and biotech, and a track record of success.
How do you decide when to invest and when to incubate a company?
FRIEDMAN: It's very bespoke. We scour what's going on in academia and have a lot of deep relationships. In the Boston area, a lot of partners came from what I’ll call the Harvard-MIT complex, they know everyone there and out here at the Stanford-UCSF complex. Then we also have relationships with tons of biotech people, not just at the CEO level, but down deep into the research organizations as well. So if an idea percolates, we're talking to people.
The entrepreneurs-in-residence that have come here specifically to start a company typically have been people we've known from a different world. We have Kevin Marks, who worked with David Schenkein at Agios. Rosana Kapeller was known to us because we had invested in some of her earlier companies. And then Mojca [Skoberne] in immunology had been at a company with one of our other partners. She came in first to help us look at some other companies, and then she said “Hey, I have an idea.” We've funded her for the last two years to focus on starting a company, which she's going to do. We've gone from literally zero to launching the company with her. It's fun that two of our first three EIRs are women. We plan to bring on more.
You’ve expressed interest in bringing more startups focused on women’s health into GV’s portfolio. How do you plan to do that?
FRIEDMAN: One of the problems in women's health in terms of investing is, because there haven't been any pure women's health companies that have become big companies and either been bought or gone public, a lot of investing firms are saying, “No, we're not going to do that, because there's not a track record for these companies.”
What we need to do is we need to create a track record for those companies. We need to either have them be successful in their own right and go public or be acquired. Right now, there aren't that many companies acquiring women's health companies. Organon is one, and they are very focused on women's health and doing acquisitions and investing. Bayer does a little bit of women’s health stuff as well.
There are public companies that have four to six products, either on the market or really close, that trade at $1 or $2 [per share]. That’s just nutty. Finding new modalities in women's health is going to be super important.
Correction: Cathy Friedman did not serve as a consultant with Third Rock Ventures. This story has been updated to correct the fact.