CEO Roundtable: Biotech leaders enjoy deep interest from investors amid pandemic

The ongoing pandemic has created a wealth of interest from venture capital investors and the broader public in what biotech companies are able to achieve if it’s flush with resources.

That was the sentiment of a group of Boulder area biotechnology industry leaders, who met virtually at BizWest’s CEO Roundtable on the biotechnology industry Tuesday morning.

Steady stream of investor dollars

Biotech was one of the few industries that was relatively unaffected from a financial standpoint during the pandemic, and multiple companies marked significant financial milestones just in the past few months. Edgewise Therapeutics Inc. (Nasdaq: EWTX) raised $202.4 million in late March after filing for a confidential initial public offering, and SomaLogic Inc. agreed to go public via a special purpose acquisition company merger in a deal that would add up to $651 million to the company’s balance sheet this year.

Inscripta Inc. also secured $150 million in its Series E round this year.

Emily Roberts, the vice president at the Colorado Bioscience Association, said the industry has remained steady despite the global health crisis. Her group reported a record-high figure of $704 million in venture capital to biotech companies in the state within the first quarter of 2021.

“We’ve seen that COVID has really shone a light on both the importance of health, innovation and science, but also … I think the industry has shown itself to be pretty resilient during this pandemic and really been a driver for the recovery,” she said.

Edgewise CEO Kevin Koch said using video chat to talk with investors and build competition for shares at his current company was far more efficient than the in-person meetings he took as a co-founder of Array Biopharma as it was going public.

“When we took Array public, it was I think a three-week roadshow,” he said. “We executed an IPO in three days and saw a wide range of investors that way.”

Boulder Ventures Ltd. managing partner Kyle Lefkoff said the appetite for early-stage pharmaceutical assets is still strong, which is making it easy for startups to get plenty of capital. 

“That’s good for innovation; it’s bad for prices for a guy like me who likes to buy things early,” he said.

However, he said funding liquidity tends to be cyclical, noting the particularly tough times around 2010 and the Great Recession.

Even companies that are adjacent to new drug development have found success in the bull market that investors have created.

Double Helix Optics CEO Leslie Kimmerling said her small nano-imaging startup landed funding because of the opportunity it presents to drug developers and medical researchers.

“We were able to raise money during COVID, and I think that’s reflective of this new focus on bioscience and what we can do with the future,” she said.

Golden Eagle Partners principal David Traylor said the state has an opportunity to carve out a niche as a home to biopharmaceuticals that use cannabis since it has a first-mover advantage at a time where states are decriminalizing or legalizing the drug en masse.

“We’re still way behind the curve on the innovation in the cannabis sector, so it’ll be interesting to see what happens,” he said.

COVID puts rapid testing on the map

David Brunel, the former CEO of Biodesix Inc. and an advisor to the nonprofit group COVIDCheck Colorado, said overreliance on large testing companies early in the pandemic led to test turnaround times of as much as 10 to 12 days in late spring and early summer of last year, despite there being testing capacity at the local level.

Public health experts largely said a turnaround of that time made the tests useless for tracing cases back to a spreader event or location.

“That gap between getting what people needed to them was maybe the toughest thing that we had to solve,” he said.

LightDeck Diagnostics CEO Chris Myatt said COVID has shown that slow turnaround for tests can have deadly consequences, especially when testing for the presence of a highly infectious virus. His company is what emerged from a merger of Brava Diagnostics and Mbio Diagnostics last year.

The company has a COVID antibody test approved for use and is in the middle of developing a rapid test for current coronavirus infections, which can show immediate benefits in the coming months where pent-up demand to leave the house will conflict with efforts to monitor the spread of COVID.

“This idea of waiting a few days for tests, you can’t get on an airplane (in certain cases without a negative COVID test result),” he said. “These things that have really burned everyone are going to be a long-term tailwind to a point-of-care company like ours.”

Although nearly half of American adults are either partially or fully vaccinated, it’s not clear how long the immunity window lasts. The National Institutes of Health has yet to issue a formal recommendation, but leaders at both Pfizer and Moderna have said in recent weeks that additional booster shots are likely within six to 12 months of a patient getting a second dose, if not annually in combination with the flu shot.

MFB Fertility Inc. CEO Amy Beckley said her company’s at-home ovulation and fertility tests sales grew three times over after traditional in-office visits for that speciality became infeasible when hospitals shifted almost all of their resources toward COVID patient management.

“The need for at-home diagnostics is going to be huge, and I don’t see that going away when people realize it’s so convenient,” she said. “…I hated that it took a pandemic to do this, but it’s definitely moved our company and a lot of companies that do similar things forward.

Supply chains strained by competition

Almost every commodity in the world was affected by the pandemic, whether by shortages of labor at ports or extreme demand for items such as shipping containers. The race to develop and produce billions of doses of COVID-19 vaccines put immense strain on crucial ingredients and materials used to develop drugs and other medical equipment, raising questions as to whether a global supply chain that has mostly been built in China will be on-shored.

Roy Parker, the director of the BioFrontiers Institute at CU-Boulder, wondered what the best response would be to that issue.

“Is the solution here going to be government encouragement of people building manufacturing sites in the U.S.?” he said. “Is it going to be… companies that are doing manufacturing increasing their footprint in many different places around the world, so the supply chain is more resilient?” 

InDEVr CEO Kathy Rowlen said venture capital groups have invested billions in biotechnology manufacturing sites in the U.S. in response to calls for onshoring critical manufacturing as a national security issue.

“I don’t think the government needs to be involved. Frankly, I think the private industry has realized that there’s an opportunity here, and it’s an important thing to do for the nation,” she said.

The strain is also affecting those relying on services from outside vendors.

AmideBio Inc. CEO Pawel Fludzinski said the company’s research into diabetes treatments wasn’t affected by work-at-home requirements, but the small company has to rely on third-party testers for some in-vitro and in-vivo testing and saw significantly slower turnaround due to demand from other research groups.

“Our dependence upon third parties has certainly slowed down some of our test results to some extent,” he said.

Going hybrid and out of the lab

Dirk Lange, the CEO and president of contract drug-maker KBI Biopharma, said the company managed to keep its productivity at pre-pandemic levels by shifting how many people could be in the building at once and figuring out ways to access the lab remotely.

“We can still run basically 100% throughput and even drive efficiency up by having rotating schedules, by having people access instruments from their homes, doing data analytics on a piece of instrument that’s sitting in the lab but dialing in through a VPN, and actually doing a lot of the data interpretation and report writing from home,” he said.

The mass experiment of near or fully-remote work across the world has mostly shown that people can work effectively from wherever they are, and that bodes well for startups looking to attract talent from expensive biotech hotspots like Boston and the Bay Area.

However, it poses a tricky question over how to build workplace cohesion.

Arpeggio Biosciences Inc. CEO Joey Azofeifa said his company hired its 11th employee not too long ago, and once he is fully vaccinated, the company will fly its employees on both coasts to Boulder for its first-ever full staff meeting.

As the company embarks on a growth plan, Azofeifa said it’ll be a challenge to establish workplace culture and a sense of belonging as the hybrid work model stays after this pandemic wanes.

“We’ve never met some of these people. Like, they’ve just been a floating head on a screen since March of last year,” he said.

Novartis

Wilson said she has been in contact with several drug manufacturers and local economic development officials about acquiring the Novartis AG (NYSE: NVS) plant in Longmont. The pharmaceutical giant is shuttering the plant and laying off 400 staffers just more than a year after it started the process of securing federal approval to make gene therapy drugs at the site. It previously told BizWest that it already has enough capacity to make those treatments at its sites in Illinois and North Carolina.

Koch said Novartis’ departure and other high-profile manufacturers like AstraZeneca PLC (Nasdaq: AZN) from Colorado in recent years is more likely due to water restrictions or geographic aspects of the state creating hurdles for the manufacturing process, but not necessarily for the research and development process.

“I think as a research location, Colorado has tremendous advantages relative to San Francisco and Boston; there’s a saturation of companies and getting talent in those locations is fierce,” he said.

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The CEO Roundtable is sponsored by Plante Moran (represented by Jim Cowgill, Sean Nohavec and Jeremy Wilson), Berg Hill Greenleaf Ruscitti (represented by Ashley Cawthorn and David Kerr) and Bank of Colorado (represented by Aaron Spear).

© 2021 BizWest Media LLC

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