Venture Capital Investing in Biotech and Therapeutics

Christina Ansted: 

Thank you for having us. 

Michael Janes: 

Hey Elana, thanks very much. 

Elana Margulies-Snyderman: 

Absolutely. So, to kick off the conversation, tell us a little about the firm and how you both got to where you are today. 

Christina Ansted: 

Absolutely. So, we come from, my personally come from the biotech background and industry and together we founded RCP, which is Rapid Commercialization Partners and RCP's focus is to work with clinical stage left sciences companies to optimize commercialization. And our primary model is driven by a private markets practice, which is led by Michael. And as part of that practice, we often found ourselves making natural introductions between some of our earlier stage clients and our private market partners who were looking for investment, but quickly discovered that there was rather large chasm between the amount of risk that some of these earlier stage companies represented and the amount of capital that our private market partners would need to deploy, and which created a sense of where these, what were very valuable companies, that are very valuable companies, weren't getting the adequate funding that they required and they were stuck in what we call the “valley of death” where they needed data to get the money and money to get the data. 

And no one really had a good answer to this question and started to evolve for us to say we are in a really unique position where we're identifying high value assets with strong leadership teams and we're in a position to make investments. We could be in a position to make investments at a smaller scale that really serve as a bridge to what eventually we hope would be higher level funding. And that really is what set the foundation for RCP Venture Capital. 

Michael Janes: 

And it really is a very unique opportunity to become more of a value creation investor than just the pure financial play. And with that proximity of Rapid Commercialization Partners to the fund itself, allows for all kinds of resources across the multiple stages of commercialization. So, we're really excited about what we're building. 

Elana Margulies-Snyderman: 

And as a follow-up Christina and Michael, given your focus on investing in biotech and therapeutics, would love to hear your overall high-level outlook for those spaces. 

Christina Ansted: 

Sure, it's a great question. I certainly I think anyone that's been in or around the industry over the last three, four years understands how challenging it has been for emerging companies, for fundraising, for investment, and we have been seeing that that's starting to soften a bit. So, I think we're moving in a more positive direction. We're probably not at pre-pandemic levels quite yet, but it certainly seems to be going in the right direction. Although I would say still maintaining cautious optimism as we move forward where there's going to be a large focus, a continuous focus, on data, on doing more with less capital, which is going to drive the need for temperate growth as we head into 2025. But I think probably it's going to be, my suspicion will be somewhere between Q2 and Q3 2025 before we really start to see that much desired momentum in the industry. 

Michael Janes: 

And it's really created a unique opportunity where there are companies across the space that may not have been available for investment as they were three or four years ago, and to be able to engage with these companies at a level where we can truly add value and engage with them is, again, creating a unique opportunity where some might say it's maybe not the best time to start a fund. We believe it actually creates a lot of opportunity. 

Elana Margulies-Snyderman: 

And as a follow-up Michael, Christina, I'd love for you to touch on some of the specific greatest opportunities you see in your spaces and why. 

Christina Ansted: 

That's a great question. I think there's lots of places that you can go. I think most commonly we're starting to see, obviously there's a large focus now on obesity, where again, three years ago that wasn't a market that had a lot of interest, it was very difficult to enter, but obesity. There is maintaining an interest in rare disease. I think in terms of areas for investment, cell and gene therapy. It's specifically like next-gen gene therapies. Certainly, AI machine learning is going to play a role from a perspective of discovery, but also precision medicine and in diagnostics, allowing us to perhaps identify what were previously considered undruggable targets. But also thinking about from a treatment perspective, the right patient for the right drug as an example and that's an area that we have particular focus in. As well as, I think, the area of immunology and looking at how do we modify the body's response to certain therapies to increase efficacy. Looking at how can you dose higher and decrease the risk for immunogenicity. 

Michael Janes: 

Maybe the only other comment I'd make is around AI. So, we consistently see this focus around artificial intelligence, and I think we're going to continue to see that trend. But it's been interesting as we've engaged with targets, there's been a lot of discussions about it. And then the real question is how do you integrate that into the current model? How do you train the current model? And I think it'll be exciting to see what happens over the next 12-to-18 months as that segment evolves. 

Elana Margulies-Snyderman: 

On the other hand, Christina and Michael, I would love for you to address some of the greatest challenges you face in your space and why. 

Christina Ansted: 

I think some of the challenges that continue to exist, certainly for earlier stage companies, is the continuous competition for funding. Even though we hope that the market will start to improve, there are a lot of companies that are all vying for the same funding. And so, it's going to be important that companies really are looking at their data, have a core focus on data. Seeing previous years, we saw an overindulgence in investing that was more conceptual in nature, and now investors have pulled way back from that and are looking for more proof of concept, Phase II or later. And so, it creates a challenge for companies because they need data to get the money, they need money to get the data, which speaks to what we're trying to accomplish with RCP Venture Capital. 

I think the other part of that is doing more with less, as I mentioned earlier. Remaining capitally efficient. So, thinking about how and when you grow as a company and thinking about having answers to difficult questions earlier than is typically done in the industry around things like pricing and path to reimbursement that can really help drive value as companies are talking to investors trying to go through the process of fundraising. 

Michael Janes: 

And I think the challenges that funds are facing in terms of a capital raise are very similar to individual organizations. It's been a tough fundraising environment over the last couple of years as Christina had mentioned. And it really is those activity levels focused on identifying the different sources of capital that align with your fund thesis, So, it's I think easily overcome, but we're facing that similar challenge. 

Elana Margulies-Snyderman: 

To shift gears a bit, ESG and DEI have been prominent topics in the investment industry, and I would love to hear your thoughts on how you both are addressing these topics. 

Christina Ansted: 

Sure, absolutely. Well, certainly as a women-led firm, RCP Venture Capital is sensitive to companies that are women and minority led. But as a investment thesis, we are very much focused on the data, on the science, on the market opportunity, and that's what leads our decision-making. But it's certainly something that we pay attention to and are thoughtful of when we're looking at the leadership of companies. But ultimately our decisions are based on the benefit, the thoroughness of the data and the market opportunity. And that's what guides us. 

Elana Margulies-Snyderman: 

We've covered a lot of ground today and wanted to see what your future plans are for the firm. 

Christina Ansted: 

Our future plans are certainly a Fund II and ultimately a Fund III as well. We want to continue with our value-based partnership, so providing value beyond the deployment of capital, through leveraging commercialization expertise via RCP, but also within our network. And the continued investment in companies that are really poised to have an impact on the human condition, either in changing the healthcare landscape through better diagnostics, precision medicine, and better therapeutics. And we're real excited for what the future holds and ultimately, hopefully, our ability to be able to invest in more companies and make higher level investments. 

Michael Janes: 

And certainly, there is a tremendous opportunity to expand the value creation activities that we're providing to our portfolio companies, certainly through Rapid Commercialization Partners, but also through our industry partners as well as we build out that playbook. And then the other thing I would say is as we continue to expand our relationships within the private equity and venture capital space, to be able to position our portfolio companies to those partners for larger incrementals levels of funding that will allow them to move their program forward. So again, we're very excited about what we're building. 

Elana Margulies-Snyderman: 

Well, Christina and Michael and I want to thank you both so much for sharing your perspective with our listeners. 

Christina Ansted: 

Thank you so much. It was a pleasure, and we look forward to continuing the conversation. 

Michael Janes: 

Yeah, thanks very much Elana. We appreciate the time. 

Elana Margulies-Snyderman: 

And thank you for listening to the EisnerAmper podcast series. Visit eisneramper.com for more information on this and a host of other topics. And join us for our next EisnerAmper podcast when we get down to business. 

Transcribed by rev.com.