Two GV investors on biotech’s reset and building their next drug startups
13 Feb 2024
Executive ChangeAcquisition
Since being spun out of the tech giant in 2009, GV has backed diagnostics developers, health tech companies and drug startups. GV was an investor in Flatiron Health and One Medical before their acquisitions by larger companies, and has supported several gene editing startups, among them Editas Medicine, Prime Medicine and Verve Therapeutics. Last year, it participated in nine funding deals, making it one of the most active biotech investors, according to a report from HSBC.
GV has also expanded its ranks by hiring physicians and entrepreneurs. The leader of its healthcare team, Krishna Yeshwant, is a former doctor. General partner Ben Robbins was a psychiatrist. David Schenkein and Dan Lynch were previously biopharmaceutical executives.
On Tuesday, Anthony Philippakis, a cardiologist and formerly chief data officer at the Broad Institute of MIT and Harvard, officially joined them. Phillippakis has worked with the firm in a part-time role for more than a decade, during which time he helped form startups like Verve and healthcare AI company Layer Health. He's now a general partner with the firm, having left his post at the Broad in September.
Philippakis and Yeshwant spoke with BioPharma Dive about what they look for in biotechs, and how to build them in bubbles as well as downturns. This interview has been condensed and lightly edited for clarity.
BIOPHARMA DIVE: What are your first steps when building a new company?
ANTHONY PHILIPPAKIS: I thought the job would be reading more cell and genomics papers than anybody else, finding the diamond in the rough everybody else had missed or the fatal flaw in the company everybody else loved. That has been the usual way things have played out.
What is much more the bigger component of success is the people who are around the table. Rather than starting with an idea and trying to fit the people to it, I tend to start with the person and their vision, and then work backwards from there. So when you say to me, “What are you looking for?”, it's more people like Sek [Kathiresan, CEO of Verve Therapeutics], and David Sontag [co-founder and CEO Layer Health], who you can partner with and feel they have a vision you can get behind.
What do you make of the newfound optimism surrounding biotech right now?
KRISHNA YESHWANT: It feels much more calibrated to where the science is and how things are going. During the bubble, we didn't change too much of what we did. But we saw a lot of things happening that we couldn't quite make sense of in terms of very large or high-priced rounds. Things seem to be back toward where we expect them.
There were many rounds that happened during the bubble where we would talk to a company and they would tell us that we had a week to decide, or needed to decide right there on the call. We weren't able to do that and still be good fiduciaries of capital.
Now it feels like we can learn the science and get to know the team. That's healthier for everybody, because all these companies go through ups and downs. If we know what we're getting into and who we're doing this with, then we can completely weather that. That's what we're built to do. But if these things are happening overnight, and nobody quite knows who they're making these deals or what the partnerships look like, that's all getting strained.
PHILIPPAKIS: This is a time when good ideas really can get the support they need, and you can build a company. At the same time, there isn’t this feeling of needing to get more capital out the door for the sake of doing so.
How does GV adjust during the good or bad times?
YESHWANT: If you look over all the years GV has been operating, we saw this huge run-up and bubble, and then a reset in the markets, especially in biotech. We re-examined and talked about it several times internally, and we haven't really changed our approach. We look for great people, for things that can have some sort of profound impact on patient care. During the bubble, we didn’t ramp up in any notable way, and as things have reset, we haven’t ramped down.
Drug discovery and development takes a long time. This is an opportunity for everybody to reassess and make sure they're heading in the right direction. To us, it's really important that the core vision of what companies were started around continues.
What science are you most interested in?
PHILIPPAKIS: The area that I am most excited about, and that I feel is perhaps the least occupied, is the role of genomics and data science in running clinical trials. There are an emerging number of opportunities for AI instruments to better select patients that will have increased therapeutic benefit and to prove the technical probability of success of the trial. There's also a big world of opportunities in terms of improving the operational efficiency by which we run trials.
What types of startups are you working on building?
PHILIPPAKIS: There are several projects that are still in the seed stage. The North Star is molecular information and precision medicine, with a special focus on common chronic diseases.
A lot of diseases were underserved in the last two decades, such as diabetes and coronary diseases, [amid] a movement towards rare diseases and cancer. I see them making a comeback because of advances in human genetics that have given us a lot of drug targets.
What puts GV in a position to build those companies?
YESHWANT: If you look at our team, we have a lot of physicians around the table. Anthony and I met roaming the halls of Brigham and Women's Hospital together. Anybody who works in a clinical context immediately sees that despite all the successes and progress made, most patients still have fundamental needs that are not met by the products we have.
We're very grateful that a fund like GV is able to take this amount of research. We're able to invest a billion dollars per year across ideas that are often quite risky. But if they work, it would be transformative in some way to patient care.
Editor's note: This article has been updated to clarify Philippakis' title.
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