Kevin Parker is an expert in genomics, immuno-oncology and computational biology. A Ph.D. scientist from Stanford University, he has helped author research in prestigious journals like Science, Nature Medicine and Cell.

But two years ago, when Parker was working with colleagues on an idea for a new biotechnology company, he found himself in unfamiliar territory. Skilled at navigating thorny scientific challenges, Parker was stumped by the process of building a startup.

“The logistics of getting a company started — incorporating it, getting all the legal affairs in place, getting a bank account set up, getting health insurance, like the very nitty gritty of it … there’s no book on how to do that,” said Parker.

Launching a biotech wasn’t always on his radar. The head of his laboratory, physician-scientist Howard Chang, encouraged students to explore many career paths — even ones in industry, spurring Parker to take an internship at drug startup Maze Therapeutics. There, he got a glimpse of academia’s constraints.

“It’s really focused on analyzing data, publishing it and moving onto the next one, while the industry is focused on translating those ideas into how it impacts a person,” said Parker, who in 2020 founded cancer drugmaker Cartography Biosciences.

Making the jump between fields wasn’t easy, however, and he considers himself fortunate to have done it successfully. A new generation of biotech leaders, Parker among them, hopes to make that transition easier, filling in for future entrepreneurs the gaps where they felt lost. Frustrated with how drug startups are usually formed, they are not only creating their own, but building a new kind of community, too.

“There is a wellspring of grassroots energy. They’re taking all the knowledge accumulated and spreading it,” said Tony Kulesa, a principal at venture firm Pillar VC who has become a prominent voice in this loose collection of executives, scientists and students.

To Kulesa, Parker and others like them, the moneyed venture capital firms that incubate most new biotechs aren't forming startups quickly enough to harness that energy, leaving many aspiring entrepreneurs without a path forward.

Some also say traditional investors are too focused on their own formulas and objectives to give room to unorthodox ideas. Often, venture investors will install an executive or seasoned entrepreneur in new drug companies they’ve started around already-vetted research. “For an investment firm, the product is the company,” said Roivant Sciences CEO Matt Gline in a recent interview with BioPharma Dive.

To be sure, the VC model has produced many successful biotechs as well as new medicines. "How these companies are created has been turned cookie cutter at least in some shops," said Maha Katabi, a general partner at Sofinnova Investments, "but it's certainly not the reality of the vast majority of how this industry has developed."

Some entrepreneurs argue, though, that researchers with great ideas who want to retain control can be shut out. Using terms like “founder-led biotech” and “techbio,” this new generation sees themselves growing a movement to encourage and support more academics launching drug companies. In the process, they hope to broaden the industry’s borders beyond its well-trodden hubs of Boston, San Francisco and San Diego.

An open-source approach

The growth of this community was on display last fall, when hundreds of scientists and entrepreneurs attended a virtual event dubbed the “Founder-led Biotech Summit.” Among the sessions were panels such as “New Funding and Organizational Models” and “Pathways to Entrepreneurship.”

It was the second time the event had been held, said Kulesa, who started the summit through Pillar VC, a firm that provides startups with seed capital. More than 3,500 people registered for the summit, which also included sessions on areas that receive relatively less venture investment like reproductive health.

Attendees described how they stumbled onto the idea of launching their own companies partway through their forays in academia. “You just came to class and were like, ‘I just started a company,’” Kulesa joked with former Massachusetts Institute of Technology classmate and Amber Bio founder Jacob Borrajo, during one of the summit’s sessions. “And I was like, ‘You can do that? That’s wild.’”

For many, the draw of this community appears to be its boundlessness. Rather than growing out of prestigious universities and labs in Boston and San Francisco, the founder-led biotech network has been built on Zooms, virtual events and Twitter. The aim is to help people from all over connect with like-minded entrepreneurs and investors.

“There’s a lot of great science and a lot of latent demand from people that previously weren’t a part of the networks and culture of startups, and are now trying to enter that,” Kulesa said.

Take San Antonio, Texas-based biotech entrepreneur Guillermo Vela. A former Johns Hopkins University cancer and stem cell researcher, Vela returned to his home state to pursue a startup career. Building his cancer drug discovery company, NeuScience, involved many cold calls and emails. The executives and investors who answered often connected Vela with others in the industry.

Having received a helping hand, Vela is now active on social media and other forums, trying to pass along knowledge and “demystify” the company creation process.

“There’s no denying this is a sector where you do have to have some experience, and there’s a lot of know-how you can only gain through the years,” he said. “But there’s a lot of secret sauce, secret knowledge that isn’t published because there’s no real, good mechanism.”

Groups like Alix Ventures’ BIOS community and Nucleate, a mentorship community for researchers, college students and entrepreneurs, are trying to share some of that know-how.

Nucleate has even gained the attention of established drugmakers, including Genentech and Alnylam Pharmaceuticals, the latter of which in July announced a partnership with the graduate student-led group. And Nucleate, which is in part run by one of Kulesa’s colleagues, Michael Retchin, has also created a venture fellowship with support from Pillar VC. 

From Retchin’s perspective, Nucleate’s objective isn’t to “staple a term sheet to every Ph.D. and say ‘go.’” Nor is it to criticize biotech investors for how they operate because, in his view, a wider range of ideas has been getting funded recently.

Instead, he wants to see founders who have previously launched successful companies or taken a drug to market play a more active role in mentoring up-and-coming leaders. “Bringing in more people and giving them excellent advice, rigorous thinking and processes from these veterans can solve a lot of problems,” Retchin said.

A ‘tricky business’

Yet trusting a biotech newcomer with a startup can add risk to an already fraught endeavor. Though some of the industry's most successful companies, such as Genentech and Regeneron, blossomed under young founders, more often investors call on trusted executives or surround an industry outsider with veteran help.

“It's really important to keep in mind that drug development is a tricky business and it's a long path that requires both an experienced management team and experienced investors,” said Sofinnova’s Katabi.

Successful biotech companies typically spend many years and hundreds of millions of dollars to bring a new medicine to market. Each step of the journey involves different types of expertise, from discovering a medicine to designing clinical trials and working with regulators.

Founders who have previously built startups or worked as biotech executives can be better prepared to raise funds, execute on a business plan and pilot a company through ups and downs. Even business-savvy scientific founders might need experienced people on their management teams to help navigate drug development.

“There’s very little that happens in a vacuum in biotech,” Katabi said. “It’s really putting these two minds together and experienced investors around the table that create these ultimate biotech successes.”

Those successes include many drugmakers that emerged from the established venture capital ecosystem. Alnylam, now the industry’s largest developer of so-called RNA interference medicines, was once a startup formed by Atlas Venture, Arch Venture Partners and a few other firms. COVID-19 vaccine developer Moderna was built by Flagship Pioneering and privately funded for years before it became a household name.

Other companies that have brought medicines to market in recent years or soon could, like Bluebird bio, CRISPR Therapeutics and Sage Therapeutics, were also either incubated within or closely ushered along by blue-chip biotech investors.

There are also biotech veterans who argue for patience. The next generation of leaders has to learn the ropes first — whether that means spending years working at a pharmaceutical giant or at other startups — before expecting an idea to land with investors.

“This is not a business where impatience serves you, because it’s so heavily regulated,” said Jeff Jonas, the CEO of biotech incubator Abio-X and a veteran drug developer who previously ran Sage. “There’s so many rules and regulations about how to do stuff. You can’t be impatient. You can be urgent, but you have to always be willing to learn.”

Still, young founders see other ways to accumulate industry know-how, such as via an experienced board of directors, and are eager to forge their own path.

A decade ago, Armon Sharei was completing his Ph.D. at MIT when he began searching for a way to apply his research to drug discovery. He connected with one investor who was interested but skeptical Sharei’s idea could be the foundation of a full-fledged company. Others told him not to bother, while venture capital firms were hesitant about his lack of experience.

Sharei continued building his startup, later named SQZ Biotech. The company entered MassChallenge in 2014 and took home the $100,000 grand prize. More importantly in Sharei’s view, it was where he met Amy Schulman, an investor at Polaris Partners.

Schulman mentored Sharei as he completed his postdoctoral fellowship, advising SQZ and later becoming its executive chair. Having her name attached to the company seemed to ease investor concerns about having a young scientist running it.

“She helped get Polaris on board to lead the initial financing,” Sharei said. “Through her time on the board, it was like, ‘OK, we have the faith you won’t screw it up.’”

Still, things don’t always work out. Though SQZ went public in 2020, peaking at $32 per share that fall, its stock has lost nearly all its value since. Citing “differences in company strategy,” Sharei parted ways with SQZ in November 2022, when it announced a restructuring.

Room for both?

The growth of the founder-led movement suggests an appetite for new biotech career paths and a more open approach to company creation.

Yet Julia Moore, a co-founder and managing partner at Breakout Ventures, which invests in early-stage biotech and medical technology companies, believes there’s a place for both traditional venture-backed as well as founder-led startups.

“When you’re doing something that doesn’t follow an existing playbook and it takes the passion of someone whose baby this is, that can be a really strong recipe for success and focus,” Moore said.

Greater collaboration with a new generation of entrepreneurs could lead to biotech companies that look a bit different. And it could mean more drugs get developed for diseases that have been historically neglected.

Amylyx Pharmaceuticals, for instance, was founded by a pair of Brown University undergraduates, Justin Klee and Josh Cohen, who remained at the helm of the company through Food and Drug Administration approval of its ALS drug Relyvrio.

Stories like Amylyx’s are still the exception rather than the norm, though. It’s rare that a pair of students with no company creation expertise develop a drug and bring it to market. Amylyx’s success isn’t necessarily a model that can be readily replicated, either.

Still, industry veterans can do more to help, some founders say. “There’s a supply and demand issue,” Sharei said, with far more would-be entrepreneurs than industry mentors to guide them.

A few initiatives from larger venture firms do exist to bring more academics into the world of biotech company creation. Sofinnova has a program to introduce graduate students to biotech investing, where the firm’s higher-ups give lessons on business development and clinical trials. Foresite Capital offers a fellowship in tandem with its incubator, Foresite Labs, teaching academics about venture investing and company creation.

Other programs start even earlier, such as Project Onramp, a Boston biotech internship program funded in part by Third Rock Ventures that recruits college students from low-income backgrounds.

Having a greater number of entrepreneurs compete for investor dollars, Kulesa argues, should bring forward more diverse ideas to complement those backed by traditional venture investors.

Ultimately, though, the measure of success in biotech is the development of new medicines that help patients. Starting and funding new drugmakers is just the first step in a yearslong journey, and how much of an impact the founder-led movement can have is very much an open question.

“Time will have to tell, right?” Kulesa said.

Ben Fidler contributed reporting.

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.

SR One, the former venture arm of GSK, has raised its second fund since spinning out of the pharmaceutical company, announcing March 27 a new $600 million bankroll to invest in young biotechnology companies.

As the biotech sector pulls back on initial public offerings, SR One is eyeing opportunities to get in at “more attractive” entry points for later-stage investments, though it will still invest in seed and Series A rounds, said CEO Simeon George.

In 2020, SR One completed a $500 million fund that infused cash into emerging biotechnology companies such as Nimbus Therapeutics and MiroBio before their blockbuster deals, along with Arcellx before its Nasdaq debut.

SR One’s decision to become a standalone firm after serving as GSK’s venture arm for 35 years was what George described as a “win-win” for both entities.

GSK wanted to put more money into its drug pipeline. The investors at SR One, on the other hand, were itching to build their own portfolio.

Three years later, that split has paid off. SR One is now free to broaden the scope of its investments, while GSK shares in its successes by contributing to its fund.

Some of the firm’s bets have paid off handsomely, too. SR One supported Nimbus, for example, before the biotech sold an autoimmune drug to Takeda for $4 billion, and MiroBio prior to its acquisition by Gilead Sciences. It also invested in Arcellx, one of a short list of biotechs that have found IPO success over the last two years.

“It was, frankly, an amazing year for us,” George said. “It's really focused on those fundamental value creation points — show me that you have a drug that's actually treating patients. If you do that, even in the worst year that we've had in a number of years, you create value.”

SR One has already been putting its second fund to work. One of the beneficiaries was Mineralys Therapeutics, which raised $192 million in 2023’s largest IPO to date.

Going forward, George and his fellow investors are interested in product-focused and “platform” biotechs based on broader drugmaking technologies, he said.

The company was an early investor in the gene editing biotech CRISPR Therapeutics, and remains “excited” to do platform investments, he said. But George expressed a preference for more narrowly built platform companies that have a clear value proposition, a sentiment that’s become more common during the market’s pullback.

“There does need to be a thesis around where you can exemplify why this is the right modality to be able to derive a clinical benefit,” he said of investments in platforms.

One investment that’s currently in the works has roots in River Vision, a startup acquired by Horizon Therapeutics and a key reason Amgen recently agreed to buy the company for $28 billion. SR One was an investor in River Vision, and is working with the scientists behind the startup to develop two companies focused on kidney disease, he said.

The fundraise, meanwhile, adds to what’s been a record haul of late for venture capital investors. Venture firms raised about $163 billion in 2022 and put nearly $31 billion into biotech and pharma investments last year, according to the National Venture Capital Association.

Stationed on the perimeter of cells, the proteins are akin to a neighborhood watchdog. Called G protein-coupled receptors, or GPCRs for short, they handle many of the signals that pass through the cell’s membrane.

Unsurprisingly given their important role, they’re one of the top targets in the drugmaking playbook. According to one estimate, a third of medicines approved by the Food and Drug Administration through 2017 targeted a GPCR in some fashion.

GPCRs were first uncovered in the 1970s by Robert Lefkowitz, a Duke University and Howard Hughes Medical Institute researcher. At the time, GPCRs were a mystery to scientists, who had no way to see their structures.

A series of breakthroughs culminated in the early 2010s, when Lefkowitz and Stanford University scientist Brian Kobilka published research on the structure and function of GPCRs, winning the 2012 Nobel Prize in Chemistry for their efforts.

Their work provided “tremendously detailed” information about how those proteins behave, said Kenneth Jacobson, a senior investigator at the National Institute of Diabetes and Digestive and Kidney Diseases. “As a chemist, that's extremely helpful for searching for new compounds” that can impact GPCRs.

Scientists also now know the receptors can signal via multiple pathways, Jacobson added. That means researchers can hunt for more selective molecules, potentially avoiding off-target effects.

Young biotechnology companies have sensed an opportunity, which is why several startups have formed in recent years hoping to develop better GPCR drugs. Here's where they stand.

What are GPCR-targeting drugs, and how do they work?

GPCR-targeting drugs have a broad variety of potential applications, from possible uses treating cancer to managing diabetes and obesity. ​​In cancer, for instance, the receptors can control tumor growth and spread through activating certain cell functions.

Currently available drugs aimed at GPCRs include antihistamines and opioid agonists. Other examples include the diabetes drug Victoza and the multiple sclerosis treatment Gilenya.

While hundreds of GPCR-targeting medicines are approved, they generally are aimed at a small number of specific GPCRs — leaving room for scientists or drugmakers who want to try elsewhere.

“Most of the success has been around a relatively small number of these GPCRs,” said Jeff Finer, the CEO of Septerna, a startup co-founded by Lefkowitz that’s developing drugs to target the proteins. “There's hundreds more that could be potential therapeutic opportunities.”

For years, though, researchers have struggled to isolate GPCRs, making it harder to design drugs. The methods used to remove the proteins from their surrounding cellular membranes can also inadvertently destroy them. GPCRs are not made in very large quantities by the body, either, upping the challenge.

As a result, pharmaceutical companies researching how to drug the receptors frequently came up short, challenged by both mapping the proteins and by side effects that emerged during clinical trials.

Now, biotechs are trying to develop technologies that allow them to squeeze GPCRs out of their cells more easily, so they can identify possible drug compounds that can attach themselves to the receptors.

What are startups developing GPCR drugs doing differently now?

Drugmakers’ past challenges going after GPCRs has left opportunities for others. Newly formed startups aim to explore areas that were previously ignored or bypassed because they were considered harder to reach.

“An undruggable target could include orphan receptors, olfactory receptors or receptors that might have drugs, but the drugs have too many side effects,” Jacobson said.

Some GPCRs, meanwhile, aren’t as easily reached with small molecules, historically researchers’ go-to tool. Those tough targets often have large "ligands," or signaling molecules, according to Alise Reicin, CEO of Tectonic Therapeutic, a company developing biologic drugs against GPCR targets. “You don’t get enough real estate with a small molecule,” she said.

And biotechs are going after different parts of the receptors, too, buoyed by advancements in protein engineering. Many existing GPCR-targeting drugs look for where ligands bind to a receptor's active site. Developers of the next generation of these drugs are eyeing other nooks and crannies to bind to the protein.

Structure-guided drug discovery, meanwhile, could further optimize the types of medicines developed.

Which companies are developing GPCRs?

Earlier this year, Structure Therapeutics went public with the ticker symbol ‘GPCR,’ advertising its focus in a sign readily recognizable to investors on Wall Street. The $161 million it raised represented one of the largest initial public offerings in biotech over the past twelve months.

Structure is not the only emerging biotech laying claim to new frontiers in the GPCR space, though. Septerna, funded by major biotech investors such as Third Rock Ventures and Samsara BioCapital, launched last year with a $100 million Series A round.

Escient Pharmaceuticals is among the most richly funded, with around $238 million raised in private financing since its launch in 2018.

Structure, Escient and Septerna are joined by nearly half a dozen others that have launched in recent years, raising roughly $900 million combined.

What is the status of these newer drugs?

Structure has two GPCR drugs in Phase 1 clinical trials: one for diabetes and obesity, the other for a couple of disorders affecting the lung and heart.

Escient has put one of its drug candidates, dubbed EP547, into early-stage clinical testing in conditions associated with end-stage kidney disease and liver diseases.

Pharma companies are buying into others, injecting cash into drug development plans. Last week, Belgium-based Confo Therapeutics announced a licensing deal with Eli Lilly, securing $40 million upfront in exchange for Lilly gaining rights to CFTX-1554, a non-opioid painkiller in a Phase 1 trial.

Merck and Co. is collaborating with Teon Therapeutics, while Lilly and Japanese pharma Sosei Heptares announced a deal in December to develop GPCR-targeting drugs.

AbbVie did the same with Sosei in August and also acquired a GPCR drug startup, DJS Antibodies, in October. Johnson & Johnson is developing a GPCR drug candidate for multiple myeloma.

In November 2022, a well-funded biotechnology startup called Faze Medicines abruptly shut down.

The specific reasons for Faze’s closure aren’t yet known. In a statement then, Third Rock Ventures, which led Faze’s initial $81 million funding round in 2020, said the company’s scientific progress didn’t “meet our bar for further investment.” Management recommended it close and the board agreed, the investor said.

Faze’s fate is a lesson for a promising field of drug research into “biomolecular condensates” — microscopic, fluid-like droplets found within cells that partake in an array of important functions.

Identified in 2009 in the cells of worms by researchers at the Max Planck Institute of Molecular Cell Biology and Genetics, biomolecular condensates are viewed as a source of new drug targets and an alternate way to treat a range of disorders, from neurological conditions to heart disease and cancer.

Research progress has led to the formation of at least five startups in recent years, several of which have drawn the interest of large pharmaceutical companies. Yet their work remains in early stages and, as Faze’s fall demonstrates, has significant obstacles still to overcome. Here’s where things stand:

What are biomolecular condensates, and how do they work?

Biomolecular condensates are tiny blobs inside cells that are filled with hundreds of proteins, nucleic acids and other molecules.

Under a microscope, condensates look like the shape-shifting contents of an ultra-small lava lamp. They are constantly forming, merging with one another and then, once their job is done, vanishing into the cell’s cytoplasm.

These membraneless-droplets were once ignored by scientific researchers. But they have several purposes. Condensates help organize chemical reactions within a cell. They’re involved in its response to stress as well as in its signaling mechanisms. They can speed up or slow down cellular reactions by bringing molecules together or by keeping them apart.

Since condensates’ discovery, researchers have studied them in greater depth and begun to associate malfunctions within them to disease. Genetic mutations can affect how pieces of condensates function, for instance by making them stickier and unable to dissolve as quickly as they should. Early research has tied aberrant behavior within condensates to cancer, infections and neurodegenerative conditions.

Those properties have made biomolecular condensates an intriguing area of biology for drugmakers to mine for potential therapies.

Still, there are many hurdles ahead, as a team of scientists at one condensate biotech wrote in Nature Reviews Drug Discovery in August. Researchers need to understand the structure and function of specific condensates, as well as how they form. They have to tease apart the signaling and regulatory pathways that misfire within them, figure out how to target them and prove that interfering can treat a disease.

Condensates’ shape-shifting nature, meanwhile, will make reaching them with drugs harder.

“To address each of these challenges, the drug-hunter must understand the individual components of a target condensate as well as the collective behavior of the molecular community,” the authors, who work at Dewpoint Therapeutics, wrote. “However, this remains challenging.”

What makes biomolecular condensates an intriguing drug target?

Small molecules, the chemical-based drugs that have been a mainstay of the pharmaceutical industry for nearly a century, are typically used to block a protein’s action or change how it works. These types of drugs often latch onto the nooks and crannies of a protein, like a molecular lock and key.

But that isn’t always possible. Small molecules can only currently hook onto a fraction of the proteins produced by “druggable” genes, leaving many drivers of disease beyond their reach. Companies and researchers have spent years trying to unlock more targets, with mixed results.

Homing in on condensates could be one way to expand the target universe. Rather than trying to go after a tough-to-drug protein directly, companies could indirectly change its function by using small molecules to interfere with a condensate that protein resides in.

Biotechs could try to stop a condensate from forming or, alternatively, speed up its creation. They might design a medicine to infiltrate the droplet. In their Nature paper, Dewpoint scientists described using drugs to stop a protein from entering a condensate, or forcing it out.

One example is an RNA-binding protein called TDP-43 that, when mutated, causes condensates to harden and is associated with ALS. Dewpoint is developing an ALS drug that’s meant to change the composition of condensates to release the protein.

Another company in the field, Aquinnah Pharmaceuticals, is developing drugs that affect the presence of “stress granules,” a type of condensate the body creates to repair damage but that can become sticky and harmful in neurodegenerative diseases like ALS. It’s zeroing in on stress granules related to TDP-43 as well as other targets, according to CEO Glenn Larsen.

Additionally, as condensates contain so many different molecules, affecting them as a whole could be useful in treating complex conditions, like heart disease or cancer, that can involve many factors. But that hasn’t been proven.

Which companies are working on biomolecular condensates?

With Faze’s closure, there are at least four biotech startups still developing drugs aimed at condensates.

Dewpoint officially launched in January 2019 based on the work of Anthony Hyman, the head of the team of Max Planck researchers that discovered condensates. It’s since raised $287 million in three funding rounds and struck partnerships with Bayer, Merck & Co., Pfizer and biotech Volastra Therapeutics. The company is led by Ameet Nathwani, a former Sanofi and Novartis executive.

Nereid Therapeutics debuted in November 2020 with $50 million in funding from investment firm ATP. Nereid was spun out of the research of Clifford Brangwynne, a former post-doctoral fellow in Hyman’s lab and also a pioneer in the field. (Brangwynne is now a Howard Hughes Medical Institute investigator at Princeton University.)

Transition Bio was seeded that November as well and followed up earlier this year with a $50 million Series A round. The company’s founding research comes from Harvard University professor David Weitz and University of Cambridge professor Tuomas Knowles, who developed a way to study the properties of condensates and design drugs to target them. The startup is run by Greg Miller, who previously worked at Visterra, Concert Pharmaceuticals and Genzyme.

Aquinnah has existed longer than the others, forming in 2014 around research from Ben Wolozin, a neuropharmacologist at the Boston University School of Medicine. The company has publicly disclosed just over $15 million in investments from Pfizer, AbbVie and Takeda. In February, it inked a collaboration with Roche.

Faze was backed by Third Rock and the venture arms of Novartis, Eli Lilly and AbbVie.

What is the status of the technology?

As condensates are a young field of drug research, the work remains in early stages. Some companies are still building the technologies they’ll eventually use to make drugs, while others have made their development intentions clearer.

Dewpoint appears the furthest along. The company claimed to have over 20 pipeline programs when it closed a Series C round in February, and has said it intends to get into human testing by the end of 2023. Among those prospects are treatments for ALS, an HIV drug being developed with Merck and a treatment for a neuromuscular disorder known as myotonic dystrophy type 1 that it’s working on with Pfizer.

The company is also researching with Bayer possible drugs for diseases of the heart and lungs.

Aquinnah has three programs in preclinical testing and could begin human testing in two to three years, according to CEO Larsen.

Nereid has said it plans to develop drugs for neurodegenerative diseases and certain cancers, but hasn’t disclosed any specific programs. Neither has Transition.

Before it closed, Faze was studying the role of condensates in ALS, cancer and myotonic dystrophy.

In 2011, cancer cell therapy was closer to science project than treatment. 

Immunologist Carl June and his colleagues at the University of Pennsylvania were struggling to raise money for a small study of a cell therapy for leukemia. The trial “was an academic exercise,” said June. “We had no idea it would turn into a commercially viable product.” 

The treatment June was working on, now sold as Kymriah, became the first CAR-T cancer therapy to reach market, establishing cell therapy as a new class of medicines. Other, similar treatments have followed since and are used to treat leukemia, lymphoma and multiple myeloma. When they work, they can produce durable remissions. 

Yet, despite a decade of rapid progress since June’s 2011 study, CAR-T therapy’s reach remains limited. It hasn’t been used effectively for non-malignant diseases and, even in oncology, its success is confined to blood cancers.

Many companies are working to overcome CAR-T’s shortcomings and broaden its potential applications. One strategy involves turning CAR-T from a complex process performed outside the body into a simpler infusion. This inside-the-body, or “in vivo,” approach could make cell therapy more accessible. It also may open up other conditions for CAR-T treatment. 

At least five startups have formed in recent years to develop in vivo cell therapy. June co-founded one of them, Capstan Therapeutics, and the rest have drawn interest from top-tier investors or large pharmaceutical companies. Here’s where things stand: 

What is in vivo cell therapy and how does it work? 

Constructing a CAR-T therapy is delicate, laborious work. Doctors must first draw out a patient’s white blood cells, which are then frozen and shipped to a laboratory. There, scientists alter T cells by adding a gene for a new receptor — called a chimeric antigen receptor, or CAR — that helps them grab proteins on the surface of cancerous cells. These souped-up T cells are multiplied many times over, frozen and — about two to three weeks after the whole process began — reinfused back into the patient. 

With Kymriah, for example, T cells are modified to lock onto a protein called CD19 that’s expressed on cancerous B cells in leukemia and lymphoma. Multiple myeloma cell therapies like Bristol Myers Squibb’s Abecma, by comparison, consist of T cell hunters seeking a protein called BCMA. 

Once these engineered CAR-T cells are infused, they search for and destroy cancer cells expressing their target proteins, sometimes driving an immune response so strong it can be life-threatening.  

As the bulk of this work takes place in a lab, CAR-T is considered an “ex vivo,” or outside-the-body, procedure. With in vivo cell therapy, companies aim to modify immune cells inside the body, with the help of technologies like gene editing and messenger RNA. 

June’s startup, Capstan, is using mRNA technology similar to that involved in COVID-19 vaccines to teach T cells to recognize diseased cells. Its founders showed that mRNA stuffed into fatty spheres known as lipid nanoparticles are taken up by heart cells in mice, where they were translated into new surface proteins and helped repair damaged tissue. Umoja Biopharma, meanwhile, is using lentiviruses to deliver genes designed to help the body make its own CAR-T cells. 

Other startups are also turning to in vivo cell engineering. Ensoma is carving out the viral genome of an adenovirus and using it to carry gene editing instructions into the body. Vector BioPharma, meanwhile, uses virus-like particles to transfer genetic material into the body. Both approaches could be used to treat inherited diseases as well. 

These methods come with risks. Synthetic mRNA, for example, can trigger an immune response that, while helpful for a vaccine, could be harmful when used as treatment. Adenoviruses have a checkered past, having been the source of safety concerns in gene therapy experiments long ago. Lentiviruses can erroneously trigger cancer-causing mutations, a risk flagged by the Food and Drug Administration in the review of two Bluebird bio gene therapies and a reason they’re mostly involved in tightly controlled ex vivo processes. 

What advantages does in vivo cell therapy have over existing treatments? 

CAR-T therapies take weeks to produce. While patients wait, their disease can worsen or they might become too weak to receive treatment. They also require a “conditioning” chemotherapy regimen to prepare them for treatment, and monitoring for weeks afterwards to guard against potentially severe side effects. 

These hurdles have made CAR-T an expensive treatment primarily available at specialized centers and less accessible to people who live in rural areas or poorer nations. They’ve also weighed on the commercial outlook of other “ex vivo” gene-based treatments for inherited diseases like sickle cell and beta thalassemia, which are made with similarly complex manufacturing processes. 

An “in vivo” solution delivered through an infusion could be quicker and less costly to manufacture. Inside-the-body techniques could also provide an alternative to the “off-the-shelf” therapies involving donor cells, which have safety concerns and efficacy questions of their own. They might eliminate the need for chemotherapy conditioning regimens.

Some companies working on inside-the-body approaches aim to overcome the limitations of gene therapies that rely on adeno-associated viruses, or AAVs, to deliver their genetic cargo. While AAVs are widely used, the effects of the treatments they deliver may wane in cells that frequently divide. They can only carry a small amount of genetic material, too, and are sometimes targeted by the body’s defenses. 

What companies are working on in vivo cell therapy?

At least five startup companies have emerged since last year with technologies they claim are capable of producing in vivo cell therapies. 

Umoja was seeded by MPM Capital and DCVC Bio and formed by scientific researchers at Seattle Children’s Research Institute and Purdue University. It has since raised more than $260 million and brought its first drug candidate into clinical testing in May. 

Ensoma officially launched in February 2021 alongside a wide-ranging partnership with Takeda that covers up to five experimental programs. It’s run by Emile Nuwaysir, the former CEO of Bluerock Therapeutics, a cell therapy startup Bayer bought in 2019.  

Interius BioTherapeutics followed in May 2021 with $76 million from Cormorant Asset Management and others including Bain Capital and Pfizer’s venture arm. The company is based on research by UPenn physician-scientist Saar Gill and is led by Phil Johnson, who was once chief scientific officer at The Children’s Hospital of Philadelphia. 

Vector BioPharma launched in August with $30 million from Versant Ventures and technology spun out of protein engineering expert Andreas Pluckthun’s lab at the University of Zurich. The month after, Capstan, co-founded by June, fellow CAR-T innovator Bruce Levine and mRNA pioneers Drew Weissman and Hamideh Parhiz, came out of stealth with the backing of five pharma companies. 

Publicly traded biotech Sana Biotechnology is also working on in vivo cell therapy. Novartis, meanwhile, is developing a CAR-T manufacturing process that minimizes the amount of work done outside the body, allowing modified cells to expand inside patients rather than in a lab.  

What is the status of their research? 

Most in vivo cell therapy work is still in early stages, though some developers have revealed details about their plans. 

Sana has more than half a dozen experimental treatments in preclinical testing for blood cancers and rare inherited diseases. It expects to ask the FDA later this year to begin Phase 1 testing of one candidate being developed for two types of leukemia and non-Hodgkin lymphoma. 

Umoja’s first program, for a type of bone cancer tumors, is a typical ex vivo CAR-T treatment with a separately administered drug that “tags” tumor cells for destruction. The company could ask regulators as soon as next year to begin human testing of two in vivo programs for solid tumors and blood cancers, according to its website.  

Vector expects to have “technical proof-of-concept” data in 2022 and animal data for its lead programs in 2023, it said in a statement. 

Capstan is starting with in vivo CAR-T therapies for diseases with no effective treatments, but plans to develop drugs for certain genetic blood disorders too. It hasn’t disclosed timelines. Neither have Ensoma or Interius, the latter of which is also looking at cancer immunotherapy.

Infused or injectable medicines that interfere with RNA, the messenger molecules that turn genetic instructions into proteins, have taken the spotlight in recent years, winning approvals for several rare diseases. A group of biotechnology startups are trying to find similar success by targeting RNA with pills instead.

History shows they face a daunting task. It’s long been considered futile to use chemical-based compounds to go after RNA because of its shifty nature. When scientists have succeeded, it’s typically been by accident. Last decade, for instance, Merck & Co. discovered an experimental antibiotic it was developing blocked a type of bacterial RNA. Pfizer inadvertently found one of its drug prospects affected translation of a protein that regulates cholesterol.

Now, drugmakers are doing it intentionally. Helped by better sequencing technologies, screening methods and a broader understanding of RNA, researchers can more easily capture how the information molecules look and design drugs that attach to them.

If successful, they could help unlock disease targets that small molecules can’t currently reach, bringing forward new ways to treat neurodegenerative disorders, cancer and other diseases.

At least eight startups are developing small molecules that target RNA. Large pharmaceutical companies including Sanofi, AstraZeneca, Amgen and Roche have shown interest in their research, promising hundreds of millions of dollars in a string of deals. Here’s where things stand.

What are RNA-targeting small molecules, and how do they work?

Small molecules are chemical-based drugs that usually target proteins and block or change the way they work.

Due to their size, they can reach most tissues in the human body, slip into cells and bind to the craggy parts of their targets. They are the bedrock of the pharmaceutical industry, making up a large majority of drugs on the market.

But small molecules have limited reach. About 3,000 of the roughly 20,000 known genes are considered “druggable,” meaning they can be targeted by a medicine. Of the proteins they produce, only a few hundred are targeted by available drugs. Many of the others don’t have the well-defined pockets that small molecules can nestle into, making them more challenging to reach.

Targeting the RNA molecules that help make disease-associated proteins could give drugmakers an alternate route. In theory, such a drug could stop production of a potentially harmful protein, or make more of a helpful one.

For example, Arrakis Therapeutics is working on a medicine that would block the body from making a well-known, but long thought “undruggable,” cancer protein called Myc. An experimental Expansion Therapeutics drug destroys RNA implicated in a type of muscular dystrophy. Accent Therapeutics and Storm Therapeutics, meanwhile, aim to target the special proteins involved in transcribing and modifying RNA.

They and others in the field face significant challenges, such as finding the right RNA sequences and, within them, the correct locations to target. They also need to ensure their small molecules only stick to their intended targets and not other RNA, which could lead to side effects or other health risks.

What advantages would RNA-targeting small molecules have over existing technologies?

Drugs that interfere with RNA have proven to be powerfully effective tools to treat a range of diseases.

One method, pioneered by Alnylam Pharmaceuticals and known as RNA interference, involves using small, synthetic RNA molecules to “silence” genes and prevent them from creating harmful proteins. Another, similar method, used by Ionis Pharmaceuticals and others, uses strips of nucleic acid called antisense oligonucleotides to adjust or shut off protein production.

Both have advanced RNA drug research, leading to medicines for rare genetic diseases such as spinal muscular atrophy and transthyretin amyloidosis, as well as more common conditions like high cholesterol. The effects of the medicines can last up to months at a time.

While significant progress has been made in delivering these kinds of RNA therapies into the body, they’re still largely restricted to disease targets in the liver, meaning there are many diseases they can’t yet treat.

Research has also noted their propensity to trigger immune responses and, in some cases, difficulty in crossing the blood-brain barrier or entering cells.

Small molecules could help solve these problems. They’re a better known quantity to drugmakers, easier to deliver than nucleic acid-based therapies and, because they’re taken orally, are more convenient for patients.

Small molecules might also be better at permeating cell walls and are more easily absorbed and taken up by the body. They’re cheaper to manufacture, too.

Which companies are working on small molecules that target RNA?

At least eight startups have formed to develop oral RNA-targeting drugs. Half have already caught the eye of bigger pharmaceutical companies looking to invest in the field.

The most richly funded, Skyhawk Therapeutics, has raised at least $181 million in private funding and equity, and more than $400 million in upfront cash from partnerships, according to the company. In July, Sanofi partnered with Skyhawk to develop drugs for cancer and research programs for oncology and immune diseases. Skyhawk also has deals in place with Merck, Biogen and Vertex Pharmaceuticals.

Arrakis, launched in 2015 by a team of Biogen veterans, has raised $113 million to date. Its research has drawn the attention of first Roche and then Amgen, which handed the company a combined $265 million through deals to develop medicines aimed at a variety of disease targets.

Accent has also been successful in luring big pharma, having signed partnerships with AstraZeneca and Ipsen. The company, which is focusing on cancer research, has also raised more than $100 million in venture funding.

Remix Therapeutics joined the field more recently, launching late in 2020 with $81 million in funding. The company added another $70 million this May, a few months after it teamed up with Johnson & Johnson.

Expansion, formed by pioneering RNA researchers at the Scripps Research Institute, has secured $135 million in funding and is backed by a wide range of investors including the venture arms of Sanofi and Novartis.

Storm, Gotham Therapeutics (which was folded last year into another private biotech called 858 Therapeutics) and Twentyeight-Seven Therapeutics are also researching RNA-targeting small molecules. Storm formed a cancer drug collaboration with Exelixis in 2021.

What is the status of the technology?

While several drugs built on other RNA technologies have made it to market in recent years, small molecules capable of targeting RNA are just beginning to show their potential.

The first to do so was Evrysdi, a drug from Roche and PTC Therapeutics that was approved in 2020 and helps produce a protein that people with spinal muscular atrophy lack. An experimental Huntington’s disease drug from Novartis, known as branaplam, is also in human testing, though recent safety concerns could derail its progress.

So far, none of the startups developing RNA-targeting small molecules have brought a drug prospect into clinical testing. The pipelines for some are beginning to take shape, however.

Skyhawk Therapeutics appears on the cusp of entering clinical trials, previously indicating plans to begin to advance its first drug into human testing sometime this year.

has previously said it expected to test its two lead therapies, both neurodegenerative disease treatments, in humans by the end of 2021. Storm plans to launch a clinical trial for a cancer drug by the end of this year and Accent is working to push forward a cancer medicine with Ipsen. Both candidates target METTL3, an enzyme that affects RNA function.

Arrakis lists early research programs for cancer, dyslipidemia and a COVID-19 antiviral as its most advanced targets. Expansion, meanwhile, is pursuing drugs for muscular dystrophy and ALS.