San Antonio — For early stage researchers at universities and other institutions, the idea of finding enough money to bring a drug or medical device to market can seem daunting, if not entirely hopeless.
Grants and angel networks can cover some preclinical funding, and big venture capital firms are there to pour tens of millions into platform technologies like CRISPR and immunotherapy. But as for smaller biotech companies looking to finance clinical trials? Investment money is hard to come by—which is one reason why Chris Garabedian, the former CEO of Sarepta Therapeutics, said he is targeting that group with Xontogeny, a Boston-based biotech startup accelerator he formed in 2016.
Garabedian spoke to a group of scientists and researchers at the University of Texas Health Science Center in San Antonio last week about his work at Xontogeny, which aims to help young biotechs progress experimental programs from preclinical research through proof-of-concept studies. As chairman and CEO of Xontogeny, Garabedian serves as a mentor and advisor to companies that join the accelerator.
Xontogeny announced in September that Blacksburg, VA-based Landos Biopharma, which is developing drugs for inflammatory bowel disease, would be the first startup to join the accelerator, and that the biotech received a $10 million Series A round from New York life sciences investment firm Perceptive Advisors. Perceptive was Xontogeny’s only investor when it raised a $25 million round earlier in 2017 and acts as Garabedian’s partner in the accelerator, he says.
Now, Garabedian is looking for more companies to join—part of the reason he was in San Antonio and speaking to researchers and scientists. UT Health San Antonio hosted him as a part of a recurring speaking event that the university’s commercialization office hosts, part of an effort to try to translate research at the school into commercialized products. UT Health has plenty of ongoing research in various fields, from cancer to brain damage to diabetes, much of which is now working toward commercialization as a business.
Rapamycin Holdings raised a $3.5 million round of funding last year for its drug targeting prostate cancer (the formulation was developed at UT Health). Similarly, BioAffinity added a $4 million Series A for its cancer diagnostic, and much of the ongoing research has happened at UT Health. Earlier work takes place at the school too, such as Syner-III’s gene therapy for diabetes or Astrocyte Pharmaceuticals‘ treatment for stroke and traumatic brain injury. And each year, scientists pitch the university on their early stage work for grants of up to $25,000, which could help them in establishing their businesses.
“What he’s doing is definitely in alignment with what we’re doing and what a lot of universities are doing,” said John Gebhard, assistant vice president for the office of technology commercialization.
The work at universities and other institutions is often too early for Xontogeny—only about 10 to 15 percent might be ready for the accelerator, Garabedian said. Still, Xontogeny is targeting drugs that previously have made clinical progress because of only early funding, such as from grants, and often where a lead candidate has already been identified, Garabedian told a crowd of a few dozen Wednesday night. The accelerator may eventually seek to bring in as many as 10 companies, Garabedian said.
Garabedian also wants to hire staffers who work directly for Xontongeny, in areas such as regulatory affairs, so that those individuals can handle the load for all the Xontogeny companies, rather than each business having a big staff of C-suite executives, he said. Instead of spending money on executive hires, Garabedian said he believes spending on areas such as clinical trial design and drug formulation will limit drug failure rates and increase value.
“I believe the majority of failure can be explained by the choices that are made in design, and not paying enough attention to that in the early stages,” he said. “Value creation lies in the key decision points around design that drive development and regulatory strategy.”
By designing a business model where Xontogeny can handle much of the administrative work, and the researchers and scientists can focus on the work they’re good at, Garabedian said he believes he can help fund more middle market companies looking for smaller early-stage rounds, such as the $10 million Xontogeny helped Landos raise. Xontogeny has spoken to companies targeting drugs for various types of conditions, though the most common treatments have targeted neurological and central nervous system disorders, oncology, and cardiovascular disease, according to a slideshow Garabedian presented.
Xontogeny is looking for companies that could file an investigational new drug application within two years, Garabedian said. The accelerator will consider things such as how strong of a signal a company’s drug candidate has, and whether there are other similar drugs that have succeeded. The design of the clinical trials for a drug candidate is something Xontogeny will obsess over, Garabedian said.
“We’re picking technologies right, and we’re obsessing over that design in early development,” Garabedian said. “Our goal is to increase the success rates that the industry has seen. We’re not aiming to bat 10 percent or 20 percent—we want to be 50-plus percent.”
Garabedian himself has an extensive history in the biotech world. A former dealmaker at Gilead Sciences (NASDAQ: GILD) and Celgene (NASDAQ: CELG), Garabedian eventually took over the CEO role of Sarepta Therapeutics (NASDAQ: SRPT), a Cambridge, MA-based biotech known for developing a drug for Duchenne muscular dystrophy. Garabedian had his share of ups-and-downs during four years as CEO of Sarepta—made rocky by regulatory delays, and conflict both internally at Sarepta and at the FDA over the size of a the company’s clinical trial—that ended in 2015 after he resigned and was replaced by Edward Kaye, the company’s chief medical officer. (Kaye also left Sarepta in 2017.)
Sarepta’s drug, eteplirsen (Exondys 51), eventually won approval in 2016, making it the first-ever FDA approved treatment for Duchenne, a progressive and fatal genetic disease. Even though Garabedian did not see the Duchenne drug win approval during his tenure at Sarepta, he said navigating the drug through the regulatory process has proven to be valuable background for his work at Xontogeny.
“I wouldn’t trade that experience. I probably have one of the most extensive experiences as a biotech CEO of sitting down in guidance meetings with the FDA, with the entire hierarchy attending those meetings,” Garabedian told the San Antonio audience. “Watching the FDA—how they make decisions, how they make tradeoffs—has been invaluable and continues to be to this day.”
—Frank Vinluan and Ben Fidler contributed to this report.