March 19, 2020 PAP-Q1-20-CL-031
Biologic drugs are attracting increasing attention. These large-molecule treatments, particularly newer, more complex antibody and cell and gene-based therapies, are often highly targeted to the site of action, providing reduced side effects compared with systemic, small molecule drugs. In addition, they can often be engineered to impact genetically driven disease pathways associated with specific patient populations.
As a result, approximately 40% of pharmaceutical pipeline candidates — upwards of 5,000 biomolecules — are biopharmaceuticals,1 and over 1,500 of those candidates are undergoing clinical trials.2 At this rate, it has been estimated that, by 2022, half of the top-selling 100 drug products will be biologics, and they will account for approximately 30% of the value of the prescription drug market.3 Consequently, the value of the global biopharmaceutical market is thought to be expanding at an annual growth rate ranging from 8%–14% and is predicted to reach a value of $400 to $500 billion by 2024–2025.4–7
Contributing significantly to this growth are next-generation, highly targeted but complex biopharmaceuticals, including bi- and multispecific antibodies, antibody–drug conjugates, viral vectors and plasmid DNA, RNA-based treatments, and cell and gene therapies. The global market for next-generation antibodies is predicted to reach $17 billion by 2023,8 while the global market for viral vector and plasmid DNA products is believed to be expanding at a CAGR of over 20% and could surpass $1 billion in value by 2023.9
The global market for cell and gene therapies, meanwhile, is expected to be valued at more than $6.6 billion by 202410 and nearly $9 billion by 2025.11 That translates to an absolute value of growth of approximately 270% over the forecast period and will be due to the approval of 10–20 new products each year through 2025.10 The U.S. FDA alone is anticipating more than 200 IND applications for cell and gene therapies over the next few years. The Alliance for Regenerative Medicine indicated in its State of the Industry 2020 Report that companies active in gene and cell therapies and other regenerative medicines raised more than $9.8 billion in global financing in 2019. There were 1,066 clinical trials underway worldwide at the close of the third quarter of 2019.
Many aspects of the production and distribution of these next-generation medicines present challenges for the biopharmaceutical industry. For cell and gene therapies in particular, specialized equipment and analytical methodologies that make commercial production practical have not yet been developed. Manufacturers are using technologies developed for more traditional biologics that are not optimized for next-generation processes, leading to low yields. In many cases, they are working with lab-scale systems that are difficult to scale and labor-intensive, and thus quite expensive.
Critical bottlenecks, in addition to scale-up, include cell isolation from patient samples; cell engineering/modification, including cargo loading/transfection; cell expansion and enrichment; downstream purification; fill=finish of final products; and supply chain management, from cold-chain issues to rapid delivery of personalized products to the right patients. For complex biologics, low protein expression levels are often an issue. Many of these bottlenecks present challenges from both safety and cost perspectives and impact many different therapeutic areas. Addressing them will be key to making complex biologics and cell and gene therapies more accessible.
Solving these problems will require changes in manufacturing paradigms and novel supply chain management. Overall, new technologies and tools are needed to reduce the time it takes to convert starting materials — whether they are patient samples of new protein or viral vector expression systems — into drug products.
Key needs include automated and closed systems that minimize human intervention, better tools for characterization, and enhanced methods for delivery of next-generation medicines to patients. Innovation in downstream processing solutions that are single-use, and easy to implement, and afford greater efficiency will be paramount. Tools that enable in-process control data solutions that enable rapid validation, improved reliability and reproducibility, and simpler product release will have a large impact. Practical, reliable and accurate real-time analytics (e.g., embedded sensors, microsensors) are essential to realizing “Biopharma 4.0.”
We believe that a significant amount of innovation is coming, but in the biopharmaceutical industry, it takes time to integrate new technologies into manufacturing processes. Regulatory authorities must first approve and embrace innovative solutions, which creates challenges in getting new tools and technologies accepted. In addition, biopharma companies do not generally want to implement technologies that no one else is using — they prefer to employ solutions that have been widely adopted in the marketplace.
Fortunately, the biopharma industry, including drug developers and contract development and manufacturing organizations (CDMOs), recognize the crucial role that new technologies will play in advancing complex biologic therapies through the clinic and into the marketplace. There is much greater willingness, often through in-house tech innovation teams, to explore new enabling technologies, particularly those with the potential to become platform solutions.
This is increasingly driving interest in codevelopment programs. Sharing costs with an entrepreneurial industrial life science technology company provides biopharma companies with earlier access to that technology, as well as guidance into the product development. Such a long-term commitment also gives the often small, start-up firm the opportunity to prove their concept quickly and in applications that provide growth potential. In some cases, biopharma firms and CDMOs are also providing additional financing to ensure that the technology developer will be in a position to succeed.
Identifying the right companies to partner with is another challenge. Large biopharma companies and CDMOs have business development teams focused on generating new business for their firms and/or identifying potential therapeutic assets for licensing and acquisition. They recognize the importance of life science industrial solutions to innovate along their supply chains and in their manufacturing operations, but lack the resources or time to search for the right partners.
Increasingly, these forward-thinking companies have turned to third parties that have experience in the biopharmaceutical industry and broad knowledge about developments occurring in the industrial life science technology space. Such firms provide technology scouting services, helping to find the optimal, purpose-built tools and technologies that address their bottlenecks.
Entrepreneurial companies developing novel industrial life science technology solutions have many challenges as well. They need to convince regulators that their products are deserving of approval and convince biopharma manufacturers and CDMOs to adopt their new technologies. To do so, they need to develop a commercialization strategy, manage their manufacturing operations, build products that can achieve GMP compliance, establish a secure supply chain, and select the best financing option.
Large biopharma companies and CDMOs want the benefit of these new technologies. Many also want to invest in them, but don’t have the time to provide the advice and coaching that start-up technology companies need to ensure their success. This situation creates a dichotomy, because drug manufacturers need to be assured that any technology they use in the production processes will be available for the lifetime of the drug product.
The optimal deal for entrepreneurial industrial technology innovators is a licensing deal in which they receive the value of partnering with a larger strategic player, but retain the ability to commercialize their products in some form in order to generate revenues and grow the company.
Dynamk was established to address the funding gap in the industrial life science technology landscape — a gap that became apparent to us through personal experience. We have worked in the industry developing new tools and technology and know that even start-ups with paradigm-shifting technologies often struggle to get the funding they need and have to bootstrap their businesses.
We partner with entrepreneurs, innovators and spinout companies developing disruptive technologies, tools, and services that enable the full biopharma continuum across discovery, development, and manufacturing of therapeutics, providing not just capital, but guidance, support, and access to our customer and talent networks. As the only venture and growth equity fund focused on the life science industry space, we bring a great understanding of the business, the key players, and fill strategic gaps for these innovators.
We leverage our network of domain and subject matter experts to cultivate collaborative partnerships and develop exit pathways. Our focus on life sciences tools and technologies allows us to span start-up, early, growth, and later-stage companies, and where our experience can be leveraged to provide a significant positive impact in business development, operations, and commercialization.
For many top biopharma companies and CDMOs, Dynamk partners closely with them to understand their key needs, areas of interests, and opportunities for growth. Our deep industry expertise and broad visibility allows us to see and evaluate many promising start-ups. We can quickly identify key technologies critical to our biopharma partners’ needs and surface the most relevant start-ups in this space. By investing, guiding, and supporting these earlier-stage companies, we provide our partners with a front row seat to critical technological developments while greatly improving the likelihood that these start-ups find commercial traction, develop GMP-grade solutions, and become attractive businesses in their own right.
Dynamk invests in companies enabling the future of biotechnology, immunotherapy and life sciences. One such firm is Envisagenics, Inc., for which we led a seed funding round (November 2017). This biotechnology company applies artificial intelligence and machine learning to reduce the complexity of biomedical data and accelerate the development of innovative therapeutic solutions. SpliceCore™, its proprietary discovery platform, can identify new ribonucleic acid (RNA) targets and design new drugs to correct RNA splicing errors in cancer and genetic diseases.
RoosterBio is accelerating the field of regenerative medicine and disrupting the market by radically simplifying human mesenchymal stem/stromal cell (hMSC) biomanufacturing and supply. The company is using its recent Series B funding (August 2019) to expand and scale its team as its customer base continues to grow internationally, while bolstering research and development for its transformative next-generation cell and gene therapy solutions.
Our most recent investment (January 2020) was in CellFE, Inc., an innovative start-up developing a microfluidics-based device to deliver gene-editing molecules. CellFE is using the funds to fuel its progress in enabling the engineering of next-generation cell therapies at lower cost. Rather than rely on viral vectors, which are limited by the size of the gene-editing molecules they can deliver to cells, CellFE’s patent-protected microfluidic technology can deliver large molecules into cells efficiently, with high throughput and at a fraction of the cost, while preserving cell function and viability.
FloDesign Sonics is an example of a company that Dynamk led to a successful exit. Its acoustic cell processing platform for the industrialization of cell and gene therapy manufacturing is unique, disruptive, and broad-based. MilliporeSigma acquired FloDesign Sonics in October 2019 in order to leverage the acoustic technology for industrialization of the manufacturing of autologous cell therapies, allowing these types of potentially life-saving treatments to reach more patients, faster.
There is an exciting convergence happening in the biopharma industry around complex biologics and industrial technologies. With the tools and techniques available today, the sector is not prepared to meet the manufacturing needs presented by the large numbers of next-generation antibody and cell and gene therapies rapidly advancing through the clinic towards commercialization.
Many entrepreneurial companies are developing novel enabling technologies — from tools for cell selection to bioanalytical methods and software solutions. We are seeing enabling innovation around bioprocessing, efficiency, and changing business models. There is also the step change occurring as the industry moves from autologous to allogeneic cell therapies.
More broadly, the underlying technologies are receiving much more attention in the industry than ever before. There is real recognition on the part of complex biologics players that, in order to develop and manufacture their products efficiently, a convergence and advancement of technology must occur.
As a result, it is a great time to be involved in the life science industrials space. These tools and technologies are fundamental to the success of next-generation medicines, and all activities — whether related to discovery, process development, manufacturing, or packaging — will be impacted.
At Dynamk, we are passionate about being part of that convergence and helping to create the future of biotech and life sciences. We believe that innovative services, tools, and technologies are crucial to enabling the discovery, development, and production of life-saving therapies, delivering lower costs and increasing access to medicines globally. It is critical that we empower scientists to get innovative products to the market more efficiently in order to develop life-saving cures.
Dynamk Capital is focused on partnering with life sciences visionaries to make that happen, and by doing so accelerate the growth and adoption of disruptive solutions and services.
Biopharmaceuticals Contract Manufacturing Market Analysis Report by Source, by Service (Process Development, Analytical & QC Studies), by Product (Biologics, Biosimilars), and Segment Forecasts, 2018 – 2025. Rep. Grand View Research. Sep. 2018. Web.
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Biopharmaceuticals Market – Growth, Trends, and Forecast (2020–2025). Rep. Mordor Intelligence. 2019. Web.
Biopharmaceuticals Market By Type (Monoclonal Antibody, Interferon, Insulin, Growth & Coagulation Factor, Erythropoietin, Vaccine, Hormone, and, Others) and Application (Oncology, Blood Disorder, Metabolic Disease, Infectious Disease, Cardiovascular Disease, Neurological Disease, Immunology, and Others) - Global Opportunity Analysis And Industry Forecast, 2018–2025. Rep. Allied Market Research. Jul. 2019. Web.
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Global Next-Generation Antibody Therapies Market Forecast 2018–2028. Visiongain. 26 Sep. 2018. Web.
Viral Vector and Plasmid DNA Manufacturing Market by Product (Viral Vectors, Plasmid DNA, and Non-viral Vectors) and Application (Cancer, Inherited Disorders, Viral Infections, and Others) - Global Opportunity Analysis and Industry Forecast, 2017–2023. Rep. Allied Market Research. Nov. 2017. Web.
The Cell and Gene Therapy Market to Reach Revenues of Over $6.6 billion by 2024 - Market Research by Arizton. Arizton. 13 Nov. 13, 2019. Web.
Global Cell and Gene Therapy Market to Reach $11.96 Billion by 2025. BIS Research. 6 Aug. 2019. Web.
Lambert, Janet. State of the Industry Briefing 2020. The Alliance for Regenerative Medicine. JPM Conference. 13 Jan. 2020. Web.
Daniella Kranjac is Founding Partner & Managing Director of Dynamk Capital, LLC, founded in 2017 to support early and growth stage life science companies. Ms. Kranjac co-founded Wave Biotech ultimately leading the group to an acquisition by GE Healthcare in 2007. She holds a bachelor’s degree in chemical engineering from Stevens Institute of Technology, an Executive MBA from NYU Stern School of Business and a Private Equity and VC Certification from Harvard Business School Executive Program.
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