#017: Longevity Biotech Investing According to Venture Capital.

Oxford Venture Network Event with Sebastian Brunemeier.

📡 In this edition of Longevity Marketcap Telemetry.

  1. Last Week in Longevity

  2. Longevity Futures

  3. Notes: Oxford Venture Network Event — Sebastian Brunemeier VC. @Cambrian BioPharma // Apollo Health Ventures

  4. Technical Analysis

*Disclaimer: This information should not be taken as financial advice. It is only for educational purposes.

**Warning: Investing in biotech is risky!

-Nathan Cheng. Twitter: @realNathanCheng

LongevityMarketcap.com // LongevityList.com // Biohackstack.com

📝 Last Week in Longevity Biotech

  • Send in the Senolytics: Nature Biotechnology. An excellent review of the burgeoning senolytics industry — from its beginnings in the lab, to the Unity Biotechnology failure, and future companies.

  • Pumping the hype in Hyperbaric Oxygen Age Reversal? A study claiming to reverse the aging process in humans using Hyperbaric Oxygen therapy (HBOT) made the rounds in the mainstream media last week. Even my dad forwarded it to me.

    • The study found an increase in patient immune cell telomere lengths and decrease in number of senescent immune cells after 60 daily HBOT sessions.

    • Unlike most other somatic cells immune cells can naturally express telomerase and can lengthen with cell division.

    • The small (30 person) study was conducted by an operator of HBOT clinics in Florida

    • Most importantly! The study lacked a control group.

    • Tldr: This study might be a hint to pursue further investigation. But without a randomized control group you can’t really say anything definitive.

  • Insilico Medicine teams up with Merck KGaA for AI generative drug discovery. Another win for Alex Zhavoronkov’s AI startup adding to its partnerships with Pfizer, Taisho, among others. I can’t wait for the Juvenescence IPO (they invested in Insilico).

  • Longevity Fund alum companies mooning? Laura Deming’s Longevity Fund has funded 3 companies that have gone on to IPO: Unity Biotechnology (UBX), Precision Biosciences (DTIL), and ALX Oncology (ALXO).

  • Novartis licenses Mesoblast’s remestemcel-L for Covid-19 /ARDS. Shares of the Australian stem cell company rose 16% on the news. Phase 3 readout for the therapy to treat covid ARDS is expected this quarter.

📅 Longevity Futures

Notes: Sebastian Brunemeier Longevity VC Talk, Oxford.

Sebastian Brunemeier is a co-founder of Cambrian BioPharma, founder of Samsara Therapeutics, and previously a venture partner at Apollo Health Ventures.

Probably one of the best talks on longevity biotech investing I have seen in awhile. I highly recommend you watch the entire video. Here are my main takeaways and thoughts:

1. Silver Tsunami — a threat to the global economy?

  • Demography is destiny. Japan and Europe already skew to elderly demographics.

  • By 2050 most nations (ex-Africa) will have 20%+ of their populations 65+ years old. Too many retirees depending on the productivity of too few working age individuals.

  • Some economists believe by 2035 the strain of the elderly demography (and the dependency ratios) will bankrupt the US government. One solution: Longevity biotechnology —reducing the healthcare burden of old age while allowing older people to continue working. Longevity biotech is more than just about saving grandma, it’s about saving the global economy, too.

2. Longevity — a Fundamental Theory of Medicine.

  • What is the number one risk factor for lung cancer? It’s not smoking, it’s age. The risk of dying from top killer diseases (cancer, heart disease, diabetes, Alzheimer’s) increases exponentially with age. 20 year-olds don’t get Alzheimer’s. Why?

  • Aging is the root cause of most diseases. This is abundantly clear with age-related diseases. Even in many infectious diseases (Covid-19) age is the primary risk factor.

  • Modern medicine has few cures for age-related diseases. Current treatments are palliative instead of curative because they do not treat the root cause: Aging. Longevity is the fundamental Grand Unified Theory of medicine.

  • We have drugs that extend lifespan and healthspans of mice. The first drug that extends healthy lifespans in humans will become the most valuable. My take: Valuable in the human sense but perhaps not in the profitability sense if the first drug turns out to be off-patent (metformin, rapamycin). But there will be others.

3. Pipeline in a Pill + Label Expansion

  • Pipeline in a pill. If an anti-aging drug targets a fundamental aging process then it will naturally have applications in multiple different age-related diseases.

  • Label expansion. The current paradigm for longevity companies is not to first demonstrate lifespan extension. Rather, they first test drugs for specific age-related diseases (AMD, osteoarthritis) or indications that have an underlying cause similar to aging (i.e rare genetic diseases affecting the mitochondria). Then they expand to trials for other indications with the same drug. Pharma is already used to doing this. Just look at how many indications there are for Humira

  • One issue I can see is the “jack of all trades but master of none” problem for the first round of longevity drugs. Perhaps drugs like metformin and rapamycin can extend lifespans by some modest amount (say 5%) but do not have large effects in treating any one particular age-related disease, especially compared to existing therapies. Phase 3 could be a high bar to clear. This really just highlights the importance of indication selection.

  • In the longevity label expansion paradigm humans will have been taking life extending drugs long before it is proven they do in fact extend lifespan. Perhaps some are already taking them today.

4. How to scout for geroscience innovation

  • Three main pillars: Pharmacology, Geroscience, and Commercialization. (see figure above)

  • My takes: Pharmacology: Toxicity seems to be very key as it limits the method and size of dosing. Unity Biotechnology is using repurposed cancer drugs as senolytics but their toxicity prevented them from systemic delivery or repeat injections (UBX0101). Perhaps this was the fatal flaw for their pipeline.

  • Geroscience: Multi-morbidity potential is key. Pipeline in a Pill, etc. Samumed’s Wnt signalling approach is so powerful because it allows them to target so many different indications.

  • Commercialization: Track record of the lab that published the original science is extremely important. Reproducibility is key and if there are no other labs confirming the observation all you have to go on is track record.

5. Investing opportunity for retail? Or Will Big Pharma dominate Longevity through acquisitions?

  • Almost all biotechs sell to Big Pharma before getting to revenue. Biotech is full of mergers and acquisitions. Longevity biotech will probably be the same. This might make it difficult for retail investors to invest specifically in longevity companies if they get snapped up by pharma giants before going public.

  • Big Pharma is bad at early stage R&D. Most of the action is at the startup level. Early R&D has now been farmed out to startups, funded by venture capital firms (and also Big Pharma). Big Pharma spends more of their money doing marketing than R&D in house. A lot of the longevity investing action is happening at the venture level.

  • However that being said, many of the hot areas of biotechnology (gene editing, CAR-T, immunotherapy) have produced plenty of retail-investible public companies. Just don’t expect all of them to stay public in the future, especially after Phase 2 readouts. Buyout will come.

  • I remain optimistic about the opportunities for investing in longevity biotech through public markets. Of all the longevity biotech companies listed in agingbiotech.info I can only think of one that has been snapped up by a larger “pharma” (Alkhaest bought out by Grifols). The proof of concept of longevity biotech has not yet been demonstrated in human trials so my guess is big pharma is still waiting to see how this plays out. Perhaps the Sirtris debacle scarred everyone off ten years ago.

  • Other opportunities for retail to invest in longevity biotech startup. There are a number of marketplaces for private shares in tech / biotech startups including Sharespost, Equity Zen, and Forge. There is also a startup called Molecule which is trying to create a marketplace for biotech IP, which is interesting but probably best for people with a solid understanding of the science.

6. Biotech VC vs Tech VC

  • Capital intensive. A startup requires roughly $30 million to get from pre-clinical to Phase 2.

  • More technical. Biotech VC requires more technical expertise across a wider range of subjects.

  • Graduate degrees required.

  • Connections to a limited number of partners. Most biotechs will sell to bigger pharma companies. Biotech startups are generally unable to generate revenue on their own.

7. Asian regulators will be the first to approve longevity drugs

  • Asian cultures place greater value on longevity. Obligatory Longevity Brand condensed milk reference.

  • Asian countries are some of the fastest aging nations (Japan, South Korea, China getting there as well).

  • Asian regulators and governments tend to be more forward thinking. Japan is a leader in the stem cell industry in part due to accommodative regulations. In 2012 Shinzo Abe announced Japan would be investing $1 billion dollars into regenerative medicine. In 2014, Japan passed laws allowing fast track approval of stem cell / regenerative medicine therapies.

  • Singapore has also prioritized longevity in their policies. Brian Kennedy (previously President at The Buck Institute) moved to Singapore for this reason and there is talk of the city state becoming a hub for longevity biotech.

8. Tech vs Biotech. Patents expire, monopolies don’t.

  • Referencing Peter Kolchinsky, society has made a social contract with the biopharma industry. We pay high sticker prices for drugs now but after 20 years the patents expire and we pay next to nothing for them forever.

  • In contrast the tech industry has no such social contract with society. The outsize gains in companies like Google, Facebook, and Amazon have been through monopolies. The patents for Google’s Page Rank algorithm may have expired but Google is free to dominate (abuse?) as they please.

9. Promising longevity therapies you might not have heard of…

  • Cleara Biotech: A company developing a senolytic peptide that inhibits FOXO4. Unlike the approaches by Unity Biotechnology (using toxic chemotherapeutic drugs to induce apoptosis — hence the local injection, low dose), Cleara’s FOXO4 inhibitor does not show the same toxicity issues. Peptides generally have better selectivity than small molecule drugs.

  • Exercise in a pill (Gpld1). Isolating proteins produced during exercise that boost cognition (in mice). Could be promising to slow or reverse aging in the brain.

  • Young bone marrow transplantation extend lifespan in mice. Young blood transfusions were so last year. The new kid on the block is young bone marrow transplants, which can extend lifespans of old mice and preserves cognitive function.

10. Other juicy tidbits

  • Biotech Venture is getting big. Brunemeier mentions that there is some controversy within the community as to whether it is getting “bubble-licious” or it has reached a permanently high plateau. Traditional tech VC firms are increasingly getting in on the bio action. My opinion is that (smart) longtime insiders usually sound the alarm on bubbles way before they pop. I would guess we have plenty of time left.

  • Venture is all about insider trading. Private markets leverage asymmetry in information and relationships.

  • GlaxoSmitKline buyout of David Sinclair’s Sirtris Pharmaceuticals was justified, according to Brunemeier who spoke with some of the GSK insiders at the time. This despite the pharma giant shuttering down the resveratrol-analog program only two years later. Apparently the decision to shut down the program was more due to internal politics. However if this is true why is GSK just sitting on it 10 years later?

  • The problem with biotech venture funds. There is an optimal fund size beyond which it is difficult to get a decent return due to the limited total size of biotech M&A exits and their exit return multiples. However, venture capital fund partners have an incentive to grow the fund as large as possible to collect management fees (usually a percentage of the total fund). This is a bit of a conundrum. See Bruce Booth’s analysis of optimal fund size in biotech.

  • Bearish on ECM. He believes the evidence is not solid for extracellular matrix stiffening as another hallmark of aging.

  • Best backgrounds to get into longevity biotech venture capital? Start a biotech company (very hard but learn a lot), patent law, pharma development, etc.

11. Suggested Readings

Technical Analysis

Let’s see where the momentum is in the market.

Mesoblast (MESO)

(weekly chart). Mesoblast, the Australian stem cell company, took a major hit in September after the FDA rejected Ryoncil for treatment of Graft vs Host disease. After finally exhausting downwards momentum on the weekly scale the stock bounced off of a TD 9 weekly and the 200 day moving average. Then on Friday they announced a licensing deal of with Novartis to treat ARDS in Covid / non-Covid patients sending the stock up 16%.

It looks like the trend is bullish now but watch out for the Phase 3 readout of the Covid ARDS trial sometime before the end of the year.

Unity Biotechnology (UBX)

Unity Biotechnology has been on a steady march upwards ever since it bottomed from its UBX0101 Phase 2 failure (-66%). The stock is now up 60% from its recent low but a pullback might be coming. The TD weekly 9 was hit and the daily RSI is at 70ish. The stock is coming up on $5.00 share so I imagine this resistance might be a good place for a bit of a pullback. Phase 1 data on their UBX1325 Diabetic edema trial is expected in 1H 2021.

Longview Acquisition Corp (LGVW)

(medtech. not biotech). This is a SPAC that recently announced it would be acquiring Butterfly Network, makers of a portable handheld ultrasound device that plugs into a smartphone. I have been following Butterfly’s founder, Jonathan Rothberg, for awhile and have deep respect for his drive and innovation. The SPAC acquisition announcement was made Friday (stock jumped 20%) and we have had a whole weekend for the hype to stew. Very interesting.