The biopharmaceutical landscape is undergoing a transformative shift, driven by the emergence of platform biotech companies that are redefining the traditional approach to drug discovery, development, and commercialization. These innovative firms leverage cutting-edge technologies and novel business models, offering a promising solution to the challenges faced by conventional biopharma companies.
Platform biotech companies are distinguished by their reliance on a unified, proprietary technology platform that enables the discovery, development, and production of various products across multiple disease areas. These platforms can be based on diverse technologies, such as gene editing (CRISPR), RNA interference (RNAi), protein engineering, or artificial intelligence (AI)-driven drug discovery.
Unlike traditional biopharma companies that focus on a specific therapeutic area or a handful of drug candidates using small molecules, platform biotech firms leverage their versatile technology platforms to explore a wide range of disease targets and generate a diverse pipeline of potential products.
Categories of Platform Biotech: Platform biotech companies can be broadly categorized into two subcategories:
- Discovery-as-a-Service (DaaS) Platforms/Product Platfoms: These companies work on discovery as a service (DaaS) with pharmaceutical partners, who handle post-discovery development efforts. Examples include moderna they partnered up with Merck, Vertex, AstraZeneca to create mRNA vaccines, Selecta Biosciences they have a platform for antigen-specific tolerogenic therapies selecta partnered up with Sanofi, Takeda, and Genentech
- DaaS with Internal Development Pipelines/Insight platformsInsight Platforms are biotech companies that generate and capitalize on novel insights into disease biology, pathways, targets, and their relationships to various diseases.They can be broadly be divided into two categories some text
- Platforms that provide insights into pathways, targets, and disease relationships, for example pepetris that we have invested recently is a broad spectrum insight platform.
- Companies with deep disease-specific biology and translational research expertise for example immunoact from IIT bombay who is making CAR-T based therapy for B lynmphoma cancer
- Platforms that provide insights into pathways, targets, and disease relationships, for example pepetris that we have invested recently is a broad spectrum insight platform.
Challenges in Traditional Biopharma
Traditional biopharmaceutical companies face significant challenges that impede their ability to develop and commercialize new drugs efficiently. According to a Deloitte study, one of the most significant hurdles is the lengthy and costly drug development process, often spanning more than a decade and costing billions of dollars. Additionally, the high failure rates in clinical trials, with only a small percentage of drug candidates gaining regulatory approval, further exacerbate the financial burden.
Moreover, the internal rate of return (IRR) from R&D investments is declining year-over-year, with the exception of 2021 due to COVID-19 assets. In 2022, the top 20 biopharma companies spent a total of $139 billion on R&D, a 2% decrease in expenditure compared to 2021, yet yielded lower returns than previous years.
The Promise of Platform Biotech
Platform biotech companies offer a compelling solution to the challenges faced by traditional biopharma firms. By leveraging their versatile technology platforms, these companies can generate a diverse pipeline of drug candidates targeting various disease areas, mitigating the risk associated with traditional drug development, where the potential failure of a single candidate can significantly impact the overall pipeline.
Additionally, platform biotech companies often have a more cost-effective and efficient drug discovery and development process. Their technology platforms enable rapid screening and optimization of drug candidates, potentially reducing the time and resources required for preclinical and clinical development.
Furthermore, platform biotech companies have the ability to explore new therapeutic modalities and target previously undruggable disease mechanisms. By harnessing cutting-edge technologies like gene editing, RNAi, or AI, these companies can unlock novel therapeutic approaches and expand the boundaries of what is possible in drug development. Recently Immunoact a CAR-T based company from IIT Bombay made NexCAR19. This is currently a commercially approved drug in India for the treatment of B-lymphomas and B-Acute Lymphoblastic Leukaemia.
Current Trends and Investment Opportunities
The platform biotech sector has attracted significant attention from investors and pharmaceutical companies due to its potential to revolutionize the drug development landscape. Here are some notable trends and investment opportunities:
- Gene Editing and CRISPR Technologies: Companies leveraging CRISPR-Cas9 and CRISPR-Cas13 gene-editing technologies are at the forefront of platform biotech. These technologies offer precise genetic modifications, opening up possibilities for treating genetic disorders and developing novel therapies. Companies like Intellia Therapeutics, Editas Medicine, and CRISPR Therapeutics are leading the charge in this field.
- RNA Therapeutics: RNA-based therapies, including small interfering RNA (siRNA), antisense oligonucleotides, and messenger RNA (mRNA), are gaining traction as promising therapeutic modalities. Platform biotech companies like Alnylam Pharmaceuticals, Ionis Pharmaceutics, and Moderna are pioneers in this space, developing treatments for various diseases by targeting specific RNA molecules.
- AI and Machine Learning in Drug Discovery: The integration of AI and ML technologies into drug discovery processes has the potential to revolutionize therapeutic identification and development. Platform biotech companies like Atomwise, Recursion Pharmaceuticals, and Insitro are leveraging these technologies to accelerate drug discovery, optimize candidate selection, and identify novel therapeutic targets.
- Delivery and Targeting Technologies: Effective delivery and targeted distribution of therapeutic agents remain significant challenges. Platform biotech companies like Dyno Therapeutics (engineering viral vectors for gene therapy delivery) and Sail Bio (targeted nanoparticle delivery platforms) are developing innovative solutions to overcome these hurdles.
Investments in Platform Biotech
The platform biotech sector has witnessed a surge in investments from venture capitalists and pharmaceutical companies alike. According to a McKinsey report, from 2019 to 2021, over $52 billion in venture capital funding went to biotech startups globally, with two-thirds focused on platform technologies enabling next-generation cell and gene therapies, precision medicine, AI/ML-driven drug discovery, and novel delivery platforms.
Furthermore, large pharmaceutical companies have increasingly focused on investing in therapeutic platform companies across various modalities, driven by internal development, collaborations, licensing deals, and acquisitions related to platform technologies.
Evaluating Platform Biotech Investment Opportunities Investing in platform biotech companies offers the potential for significant returns, as these firms have the capability to disrupt the biopharmaceutical industry and unlock new frontiers in drug development. However, it is crucial for investors to carefully evaluate several factors when assessing investment opportunities in this space:
- Technology Platforms: Evaluate the robustness, novelty, and scalability of the core technology platforms, as well as their potential to address previously undruggable targets or therapeutic areas.
- Intellectual Property: Assess the strength of the company's intellectual property portfolio, including patents, trade secrets, and other proprietary technologies, to ensure long-term competitive advantages.
- Strategic Partnerships: Consider the company's existing partnerships with pharmaceutical companies or academic institutions, as well as its ability to secure future collaborations that can drive revenue and accelerate drug development.
- Management Team: Examine the experience and expertise of the management team, particularly in areas such as drug discovery, clinical development, regulatory affairs, and commercialization.
- Financial Metrics: Analyze the company's financial performance, including revenue streams from partnerships, service offerings, and potential product sales, as well as its cash runway and funding requirements.
The rise of platform biotech represents a transformative era in the biopharmaceutical industry, driven by cutting-edge technologies and innovative business models. As this sector continues to evolve, platform biotech firms are ready to shape the future of medicine, offering hope to patients worldwide and presenting exciting investment opportunities for those willing to embrace this transformative approach.
