Investing in Biotechnology: The Merging of Technology and Life Sciences

Our biotech industry has been working at unprecedented speeds to bring a COVID-19 vaccine to market. Most industries, including life sciences, are witnessing a transformation, owing to increasing cost pressure, a greater need for productivity, and new and innovative market players, in addition to disruption caused by the pandemic. Our current crisis has shown that when push comes to shove, industry and government can move faster. But what happens after the pandemic? And what are the key lessons for the biotech industry and regulators?

Excelsior Capital hosted a conversation with industry experts, Dr. Ronjon Nag and Dr. Josh Trantum, in a webinar discussion to answer these questions and explore investment opportunities coming out of the pandemic.

Topics that were addressed:

• How is the emergence of artificial intelligence (AI) being utilized to improve drug development and personalized medicine?
• Actionable investment ideas in the biotech, life sciences and healthcare sectors
• Global biotech industry growth, specifically in the US and China

Public vs. Private Portfolios in Biotechnology

Dr. Josh Trantum, co-founder and president of CUREX Capital Advisors, opened the conversation by sharing a brief background of his company: “We’re a manager of a long-short investment fund that invests solely in life sciences.” Trantum’s company invests in publicly traded equities and what they view as “long-term, innovation-driven secular growth in life sciences.” With a number of new technologies developing, there are new products, services, and tools that are able to detect and monitor diseases like never before. This has opened the door for immense investment opportunities in biotechnology. Trantum provided a few examples of where he sees these new technologies converging:

• Breakthroughs in molecular biology and immunology
• Material science combined with data analytics
• Artificial intelligence (AI) and cloud computing

As a result of these new technologies coming together, we’re seeing revolutionary ways of treating disease. Trantum believes there’s definitely a movement towards more integrated technologies. “With the advent of molecular diagnostics and some relatively new tools that can be combined with traditional pathology, there’s a number of different layers of data that can be added to what that pathologist would normally or historically be limited to.”

As a complement to Trantum, Dr. Ronjon Nag, president of R42, was able to provide his perspective from investing in private companies, where he is typically involved in the early stages of development. R42 is a venture fund that focuses on deep-science and deep-tech. “We like to invest in what I call, ‘tough tech’ or ‘difficult technology’. Usually, there are fewer competitors in these kinds of segments. The fund is entitled as an artificial intelligence (AI) and longevity fund- that covers pure AI, pure biotech, and longevity.”

General Trends

Over the past few years, many broad trends have unfolded in the biotech industry. Trantum and Nag provided a few significant examples of macro themes they’re seeing progress today:

1. Entirely New Classes of Therapeutics
Messenger RNA (mRNA): What underpins some of the COVID vaccines
Gene editing based (CRISPR-Cas9) being the new basis of a highly precise way of editing genes and editing out malfunctioning genes

Nag certainly agreed with Trantum’s theme of mRNA, saying ‘“there’s going to be a sea of explosion” due to the COVID-19 vaccine. This has de-risked a whole segment of companies, especially start-ups, that are using this technology that, prior to the pandemic, were unable to show proof of concept.

2. Next Generation DNA Sequencing
Unlocking new applications

3. Spatial Biology
Early cancer detection

4. Computational and Technological Advancements

• Computing literature databases
• Advancements in genomic databases
• Databases from patient groups and the ability to get fast-tracked

Can we accelerate drug development?
Trantum answered by explaining how “drug development is notoriously expensive and long but the advances in technology might be a disruptive force in the next few years.” The rapid development of the COVID-19 vaccine has shown just how quick this process is becoming.

5. Longevity
Can we live forever?

In the last few years, there has been an increase of interest in this question. Nag was quick to respond with his theory: “Is it possible to find components, techniques, treatments to actually live longer? Or if not forever, how can we live longer…Maybe just 10 or 20 years? Within those 10 or 20 years we can come up with another invention to live another 20 years after that, and it continues on. There’s a number of things people are looking at, beyond diet and exercise and the usual things.

There’s two other ideas:

1. We’re like a car, things begin to fall off and you have to fix them as they appear (heart disease, cholesterol problems, etc.) The question is, can we detect the disease before it develops?
2. Is there something that fixes all these things all at once?”

What to Look for When Investing in Biotech

When looking for new investments, Trantum likes to identify a few aspects to mitigate risks. Their ideal candidates are companies that:

• Have platform technologies with strong intellectual property and some demonstration with a proof of concept
• Are based on a mechanism of action in the body that is well understood
• Have a tight association and understanding of how that target plays into the disease progression

Nag agrees that investors are looking for platform companies and gave a few ideas of what to look for when investing in the biotech industry:

1. New technologies: One of R42’s most recent investments is with a company called Helix, whose aim is to get out one hundred drugs in the next five years. How is this possible? These two factors could allow them to do so:
   Looking at databases
   Drug repurposing (using existing drugs in different combinations)
2. New tools: SQZ biotech is another company they are excited about. With so many treatments for diseases, it’s just as important to correctly deliver them to the precise location, which is exactly what SQZ focuses on.
3. New devices: BioAmp Diagnostics, another R42 investment, is a company that is working to detect antibody resistance.

Is this just the beginning?

The rapid development of the COVID-19 vaccine has been revolutionary in the biotech industry, and has sparked interest among many individuals who see the value of investing in innovation. The biotech industry has brought a wealth of opportunity amidst a distressed market. With new technologies and innovations coalescing, this may just be a glimpse of what’s to come in the future for the industry.