Before Ketan Patel was a partner at F-Prime Capital, one of the biotechnology sector’s most well-known investment firms, he was an aspiring doctor.
Like other life sciences investors with a medical background, Patel is well familiar with the myriad diseases that ravage the human body, and the lack of drugs available to treat some of them.
Patel’s training in internal medicine imbued him with a drive to help. His curiosity about drug development led him to realize there were ways to help patients outside of a physician’s office. After dabbling in pharmaceutical consulting, he was contacted in 2007 by a headhunter looking for people to join a venture firm affiliated with the parent company of financial services giant Fidelity Investments.
Patel has been a part of that firm, first known as Fidelity Biosciences and now F-Prime, ever since. Over that time, he’s invested in and sat on the boards of more than a dozen drug companies and medical device makers. Some of his firm’s investments, like Beam Therapeutics, Aclaris Therapeutics and Prime Medicine, are publicly traded. Others, like Ivenix and Vicept Therapeutics, were bought by larger companies.
“This job is a dream job,” Patel said in an interview with BioPharma Dive. “You’re meeting different companies and people of diverse backgrounds. They're people who are thinking out of the box, who want to bring medicine and drug discovery forward. You're always learning something new from experts in their field. What's not to love about that?”
BioPharma Dive spoke with Patel about his experience finding and creating new biotech companies. This conversation has been lightly edited and condensed for clarity.
BIOPHARMA DIVE: How do you know when to invest in a company?
KETAN PATEL: Some of it just happens to be timing. Most of what we're doing – probably more than 75% – is Series A and seed company formation. We try to spend time looking at really high-level unmet needs. What therapeutic areas are they and how do we work backwards from that?
The other ways are technology-based. Some of the really early investments we made in gene editing with Beam and Prime Medicine, those were really technology-driven. CRISPR has brought a change to drug discovery and development. There was a next-step function on top of that with gene editing. Those investments were driven by the science.
F-Prime made a number of significant investments over the past year despite a downturn in the sector. How did you go about navigating that environment?
2020 and 2021 were very different from 2022, and even the beginning of the first half of 2023. But the fundamentals in life sciences haven't changed. The capital environment has changed to a certain extent.
There's still a lot of unmet need out there, really common diseases and rare, genetically driven diseases. The way we look at it is, if you can get drugs that address some of these diseases, at the end of the day, everything will work out from the investment perspective, as long as you take the right steps.
Historically, we've done early-stage investing and we like taking things from academic institutions and helping drive them. But if it takes a long time, you always have to be thinking about when the next window is.
We’re looking at it as, in the next two to three years, the window will get juicy again. You can raise capital and the companies that you're building today can get to the point where they’ll need a lot more because they'll be in late-stage clinical [trials].
You mentioned working with academic labs to advance their research. Why invest in them instead of more experienced biotech company creators?
Because it takes so long to get through a regulatory process, [biotech] has almost had “reverse ageism,” where it's [the] older, the better because you have a lot of experience. You've been through maybe one or two drug discovery cycles.
In the last seven years or so, the capital markets were really accommodating. We saw a lot of novel technologies coming out of labs, with first-time entrepreneurs. At the end of the day, those entrepreneurs are often the postdocs in the labs where the technology was discovered. Who knows it better than some of those folks?
We have started companies behind first-time entrepreneurs. There is a lot more that goes into building the company over time. It does require having a lot of support [from] people who are not necessarily first timers in the drug discovery business. [But] there aren’t enough entrepreneurs out there to go after unless you start chasing first-time entrepreneurs as well.
Within drug [development], there are really different skill sets, from clinical development, to preclinical development, regulatory and manufacturing. When we’ve got a brilliant postdoc coming out of the lab, the first thing we tell them is to put together a team that hits those pieces. That's the most important thing, because those are the people that are going to help you get from point A to a drug.
Many of your portfolio companies are based outside of the prominent biotech hubs in Boston, San Diego and San Francisco. Why?
We’ve had a relationship with a venture fund called Eight Roads, a group that has Fidelity as their main limited partner. They've always been focused outside of the U.S., and have, over time, done quite a bit of healthcare and life sciences [investing]. We had boots on the ground and people that were like-minded with us. What we don't believe in is trying to invest from afar without a local presence, it's really hard to do.
The more we did, the more we learned that innovation is truly global. Historically, the belief has been that innovation, at least in our space, comes from Boston, San Francisco, North Carolina, some San Diego, for a while Minneapolis. I think that’s true without a doubt, but the academic institutions, especially in China, are rapidly developing and catching up. A lot of folks who did their PhDs and postdocs in labs in the U.S. or London have now gone back and are academics there, so we're seeing innovation come from everywhere.
A great example is a biologics company called Innovent, which we started in our offices here [in the U.S.] It’s a public company now, and has multiple drugs approved – they have China's first or second PD-1 [inhibitor].
We continue to look at the U.S. and Europe as hubs for life sciences. Then there's the emerging markets, which are primarily China and India for us. We look at Japan as well, even though it’s not an emerging market. It's emerging in that it's starting to develop less of a big pharma and more of a biotech culture.
Editor’s note: This story has been updated to clarify the origin of F-Prime Capital.