Two weeks ago, in a sixth-floor room in San Francisco’s Four Seasons Hotel overlooking Market Street, Tony Coles, Susan Lindquist, and Kenneth Rhodes met with one financier after another in a campaign to raise money for their new Cambridge, MA-based startup, Yumanity Therapeutics.
Their pitch centered around yeast. “[Yeast] is where statins were first identified,” Coles said, pointing to a slide Yumanity was showing to investors.
He’s referring to the landmark cholesterol-lowering drugs, like atorvastatin (Lipitor), which changed cardiovascular care and became some of the best-selling drugs of all time. They were discovered decades ago by a Japanese researcher who saw that statins were being secreted by fungi to kill other fungi.
Yeast is a simple organism, but Yumanity is putting it at the heart of an extremely complex undertaking, even by biotech standards.
The new company is using yeast to build a process Coles (pictured above) boldly contends has the potential to “transform” the way drugs are discovered. It’s souping up an old screening method with genetic tools and stem cell technology, with an exceedingly tough goal in mind: finding treatments for neurodegenerative disorders like Parkinson’s, Alzheimer’s, and amyotrophic lateral sclerosis (ALS).
These diseases aren’t well understood biologically. They’ve bedeviled scientists and pharmaceutical companies alike for decades. Billions of dollars have been spent discovering and testing therapies for them, and most have come up empty. Yumanity thinks it’s found a method that might help crack the code, to find new angles to attack these devastating diseases and increase its odds of success.
“This is as good as it gets at the earliest stage,” Coles said of the company’s approach.
What’s more, Yumanity’s leading trio is bucking the traditional venture-backed biotech model. Building the team is first, funding the company is second; Coles and Lindquist used their own money to seed Yumanity, brought in Rhodes, and launched the company in December without a venture investor or a big round of cash. They were at the J.P. Morgan Healthcare Conference earlier this month looking for that round, which Coles wants to close by the end of March.
Coles also wants enough funding to get the company through “several key milestones.” He won’t say how much Yumanity is looking for, or what those milestones are. But he was clear that he wants Yumanity to be set for a long period of time.
“We don’t want to raise money every 12 to 15 months,” he said.
It’s an atypical way to start a life sciences company. But Yumanity has unusual star power behind it. Coles is a wildly successful biotech executive who most recently steered Onyx Pharmaceuticals to a $10 billion buyout in 2013. Lindquist is a National Medal of Science winner and a member and former director of the Whitehead Institute. And Rhodes is a former Biogen Idec (NASDAQ: BIIB) neurology executive.
They’re making a complicated and tantalizing pitch to investors that entails enormous upside and risk, and a potentially long wait for any data in human beings—the real proof point for any drug developer. Coles isn’t disclosing how long he thinks it’ll be, for instance, until Yumanity gets to its first clinical trial.
But it’s an investment that’s more likely to happen these days, when dollars are pouring into early-stage biotechs. Moderna Therapeutics, for instance, just raised $450 million and is still anywhere from one to two years away from its first clinical trials. Juno Therapeutics (NASDAQ: JUNO) raised more than $300 million and went public in less than a year. Coles points to both companies, specifically, as non-traditional investment examples that came to mind when he first discussed how to build Yumanity with Lindquist in May.
“They just did it a different way,” he said of Moderna and Juno. “And given the size of this opportunity and the enormity of the challenge in neurodegenerative diseases, this seemed like the one that, as we were chatting, deserved a special approach.”
We’ll soon see what that approach is. A mega-financing round? A small one accompanied by a large deal with a pharmaceutical company for non-dilutive cash? Coles will only say the company is exploring all options, and that it’s too early to turn any of them down. Several outside observers I spoke with were confident that even with the questions surrounding Yumanity, Coles’s track record alone—between restructuring NPS Pharmaceuticals (just sold to Shire for $5.2 billion) and turning around Onyx—would be enough to bring investors to the table.
“Tony has been so successful that he’s likely to attract the right kind of funding for the first few years,” said Elliott Sigal, the former R&D chief at Bristol-Myers Squibb, where Coles worked many years ago. (Sigal has no ties to Yumanity.) “But the important questions for him are what is the time to clinic? And what’s the human validation that they’re going to end up with [from] these targets?”
Lindquist said she chose to build a biotech in this atypical way because of her past experience with FoldRx Pharmaceuticals, the first company to come out of her work. Lindquist is a pioneer in the field of protein misfolding—a common biological mistake that occurs when long linear chains of amino acids morph into three-dimensional proteins. To function properly, proteins have to fold precisely.
When they misfold, they can cause “cascades of destruction” and “wreak havoc” on a cell, as Lindquist put it. They can accumulate into clumps or plaques, for instance, like amyloid beta in the brains of people with Alzheimer’s, or so-called Lewy bodies in Parkinson’s patients.
Lindquist has won a number of honors for her work on this complex origami, how it might come into play in a variety of diseases, and what it might take to “straighten out” these misfolded proteins. Among the honors are the Sigma XI William Procter Prize for Scientific Achievement in 2006 and the National Medal of Science in 2010.
In 2004 she co-founded FoldRx with The Scripps Research Institute’s Jeff Kelly. That company, Lindquist said, consisted of two things: “near-term chemistry” from Kelly that led to the drug tafamidis (Vyndaqel) for a protein folding disease called familial amyloid polyneuropathy (FAP); and a “very early-stage [drug] discovery platform” Lindquist was developing, which she described as a “primitive, earlier incarnation” of the process Yumanity is using today.
The company raised $90 million from Alta Partners, Fidelity Biosciences, and others, but the Great Recession derailed … Next Page »