Jeff Jonas was ready for a change.
A veteran biotechnology executive, Jonas had spent nine years at neuroscience drug developer Sage Therapeutics. Hired as CEO in 2013, Jonas helped build Sage from a tiny startup into a large, publicly traded company that brought to market the first approved drug for postpartum depression. A second depression drug that’s part of a $3 billion alliance with Biogen could be submitted to regulators this month.
But as Sage grew, Jonas said he yearned for the company’s early days. The priorities and job description of top executives change as small biotechs grow and evolve. Early scientific research and clinical development give way to regulatory discussions and commercial planning. There are more shareholders to appease, bigger budgets to manage and profits to build.
“I missed the startup environment,” Jonas said in an interview.
Sage had suffered setbacks, too. There were drug failures and strategic changes, most notably a negative readout in 2019 that erased much of Sage’s market value and led the company to lay off more than half its workforce.
That year, Jonas began laying the groundwork for his exit. In December 2020, he was named “chief innovation officer” as Sage brought in Barry Greene, a longtime Alnylam executive, as its new leader. That title gave Jonas freedom to focus on Sage’s pipeline and guide Greene during the transition, he said.
“Two years was good enough for that,” he added. “I did my job.”
Now Jonas has returned to the startup world, but in a much different role. Last month, he left Sage to become the CEO of Abio-X, a young Boston-area biotech incubator funded by Asia-based private equity firm CBC Group. From that perch, Jonas has $150 million to spend forming and molding a group of new drugmakers. Two of them, Adcentrx Therapeutics and Ensem Therapeutics, had already raised sizable funding rounds before he arrived. Another as-yet-undisclosed company is in the works, he says, with more to come.
BioPharma Dive spoke with Jonas about his decision to join Abio-X and how he aims to compete in an arena full of experienced venture capitalists and rival incubators. This conversation has been lightly edited and condensed for clarity.
BIOPHARMA DIVE: How did you end up running an incubator? Why not retire instead?
JEFF JONAS: We all have these personal odysseys. I just realized that I missed the startup environment, and I also missed running things. I really enjoy science. I really believe that what our industry does is important. It’s one of those places where you can benefit people, remain active and add value. I just didn’t want to play golf every day.
Why not run a startup again?
JONAS: I’ve done it. When I was at Sage, we grew the company and if you include the Biogen deal we probably raised almost $4 billion. The things that I really love are science and the flexibility of being a small company. I like mentoring people and the ability to grow people's careers.
As you get bigger, there are a lot of important things you do, but they are structural, administrative, and it wasn't something I really was interested in doing at that point. There's a ceremonial aspect to being a CEO at a midsize and large company, and that's not who I am. It's not part of my DNA.
I also wasn't interested in doing another startup where I was tied to one particular catalyst chain.
Why did you choose to join a private equity group like CBC, rather than building companies at established venture firms?
JONAS: In many ways this was unique. This is a group that really wanted to establish their U.S. presence, they wanted it in Boston, and they were agnostic about indication. They have global reach, and I really wanted the opportunity to look for technology globally and bring it into the U.S.
They also were already committing $150 million, which would allow me to incubate at least one and probably a few other companies and be permitted to build the model the way I see fit.
This is a competitive space, with other incubators offering ways for biotechs to get going. How do you plan to stand out?
JONAS: Part of it is going to be our overarching vision — not just big ideas, but ideas in areas where I can rapidly generate human data and get to very rapid ‘go/no-go’ decisions.
I'm going to focus almost certainly on biologics or small molecules, and potentially cell therapies, but I'm not interested in the big idea that's going to take five years to get me data. That’s better off for some of the other firms that are well suited for that.
I'm going to try to keep [companies] geographically close so you can move people around as you need to and create career opportunities. I’ll probably try to bring in more core expertise — for deals, contracting, compliance, things of that nature — rather than hire consultants.
Those are the kind of core functions that we might be able to provide in a more tangible way than the conventional incubators or VC portfolio companies. I think that gives us an opportunity to create real leverage internally, save money, and be much more efficient.
Does that near-term focus mean you won’t invest in platform companies? Some investors have indicated they will shift away from such companies given the tough funding environment.
JONAS: We will. My only point about platforms is there has to be a tangible horizon. I don’t want to do something that’s gonna be eight years in the making. Given the market right now, there's a real opportunity to find those types of technologies that can yield catalysts in the near-to-intermediate term.
There's a lot of money to be deployed right now. People are a little nervous. They’re melancholic. I do think that creates an opportunity to find technologies.
You’re only just stepping in now, but what can you say publicly about your portfolio?
JONAS: We have three working entities right now, and potentially a few others we’ve not made public yet. One group has really excellent protein design and display capabilities. Another has some really interesting antibody conjugates. I’d like to bring on one or two more companies in the next six months, and I have some leads already I’m working with.
Each company, if we're successful, will go out independently and do their own thing and then we'll be shareholders. The idea will be to incubate them in Boston, and then people will go where they want to go.
How would you describe the funding environment right now?
JONAS: People are waiting to deploy resources right now, but they’re also looking for investments. There’s a lot of pressure now to go into later-stage molecules. But what’s nice is I don’t have a fund structure. There's not a 10-year horizon or requirements. I can deploy assets as appropriate, not because I have a mandate to do so.
How will your companies be able to grow in this environment?
JONAS: We need to design companies that operate in a fiscally prudent manner, so that they're not perpetually looking for cash right now. The market’s going to turn. It’s going to change. The key is always having clear catalysts, operational excellence, and things that create real value. I have a lot of faith that when we accomplish good science and meaningful data, we’ll be able to raise cash when we need to.
What would make this a successful endeavor?
JONAS: Having companies go out on their own and go on to IPOs. Basically, being an incubator is like being a parent: Your goal is to become obsolete at some point. Ultimately, you want these companies to flourish and thrive on their own.
We want to be able to add significant value and grow the pre-money [valuation] before they go to a Series A or B. And at that point, they'll do what's right for the company.