LaunchBio’s Invest in Cures Forum Shines Light on the Rise Of Impact Investing
Impact investing is on the rise, and local pharmaceutical industry insiders say it’s already paying off.
Roughly six months after a Raleigh-based nonprofit subsidiary of the Foundation Fighting Blindness (FFB) launched its own gene therapy spinout, Opus Genetics, backed by $19 million in seed funding, one of the fund’s top managers touted its progress.
“It’s one of our most exciting investments,” said Rusty Kelley, FFB’s senior vice president of investments & alliances, presenting as part of a “who’s who” speaker lineup on the Triangle’s life sciences scene at LaunchBio’s recent Invest in Cures forum.
“We're able to leverage our network of experts and, as they continue to innovate, bring in the talent and move these difficult technologies forward,” said Kelley.
The partnership is yet another sign of a growing shift in strategy among disease foundations, both in the Triangle and globally. Where nonprofits once provided grants for basic science to further their mission, many are now establishing venture arms and investing directly in startups to spur commercialization. Another uptake: the chance to reinvest returns into the mission.
Even amid the COVID-19 pandemic, impact investments reached $2.3 trillion in 2020, according to the most recent report from the International Finance Group.
Since launching in 2018, the Raleigh-based Retinal Degeneration Fund (RD Fund) has raised $115 million and deployed “most of it” with 12 investments, Kelley told the 100-strong crowd gathered at the North Carolina Biotechnology Center last Thursday.
That includes Opus Genetics, a Raleigh-based gene therapy startup that is tackling manufacturing obstacles for ultra-rare blinding conditions. After launching last September, it has now opened its third preclinical program from Massachusetts Eye and Ear, the primary teaching hospital at Harvard Ophthalmology.
Ashwath (Ash) Jayagopal, Opus’ chief scientific officer, who appeared alongside Kelly on the panel discussing the specifics of their partnership, said the aim is to create a sustainable manufacturing pipeline to tackle inherited retinal diseases “one by one” by making “small, high-quality batches of ocular gene therapies.”
“The revenue from that can fund additional disease indications,” he said. “The sustainability is very attractive at Opus and FFB. The patients and founders are all aligned toward this goal.”
Here are some of the forum’s other takeaways:
Successful partnerships take time
While impact investing is a small but growing niche, collaborations among non-profits and startups don’t happen overnight.
For Opus’ Jayagopal, it took more than a decade of working closely with FFB before securing the joint venture, he said.
“As a young college professor at Vanderbilt [University], I didn't know any of the aspects of drug development for ophthalmology,” he said. “But I did get to review a lot of grant proposals for the foundation.”
Over the years, he said, he got to know their network of clinicians and scientists. He learned what kinds of investments they were looking for, as well as the unmet needs.
“As that relationship grew, I was able to grow in my career, but it took time. Now we can seamlessly communicate because we understand each other's needs, gaps, and limitations.”
John Taylor, chief executive officer at Aceragen, reiterated this point.
“It’s definitely not easy or fast,” said Taylor, speaking as part of a panel focused on innovation in rare disease.
His comments come less than four months after the RTP-based biopharmaceutical company, founded in 2021 and backed by NovaQuest Capital Management, acquired Arrevus, a clinical-stage, rare-disease- focused biotech company also based in Raleigh, for an undisclosed sum.
Its portfolio now includes therapies targeting Farber disease, Cystic fibrosis, and orphan infectious diseases.
“The asset that we acquired from Arrevus I'd actually been watching over the last 12 years,” he said. “We knew it when it was at Mount Sinai [Hospital]. Our team had tried to license it at that time, but we went a different direction. When it became available, we had to grab it.”
Affordable lab space and undiluted funding are crucial
Biotech executive Anil Goyal is no stranger to scaling companies. Over the last 25 years, he’s raised some $200 million from investors for companies like Heat Biologics, Ascletis, Qualiber, and Ribometrix. He also completed more than $1 billion in pharma deals and led several exits, including Millennium (acquired by Takeda), Serenex (acquired by Pfizer) and Optherion (acquired by Sequenom).
Yet even with this resume, he told forum attendees, he found himself launching his latest venture, IMMvention Therapeutix, which targets rare and prevalent inflammatory diseases, from his garage four years ago. The reason: the lack of lab space.
Thankfully, it was short-lived. He quickly moved into the co-working hub BioLabs after it opened its doors in Durham in 2017.
“The shared lab model is absolutely the most important thing that happened to me,” he said. “I wouldn't have been able to run the company and bring in investors [if I didn’t] have access to all of these resources.”
With demand for lab space continuing to spike in the Triangle, he also lauded current projects in the pipeline. They include a $1 billion, 109-acre, mixed-use life sciences campus slated for Morrisville called Spark LS, and a similar project for the neighboring suburb Holly Springs, a 200-acre biosciences campus called The Yield.
“In the last eight years, we have changed the landscape in North Carolina,” Goyal added. “People now come here and say, ‘Oh, I can work here.’”
Meanwhile, Niraj Vasisht, president and CEO at Avior Bio, stressed the importance of non-diluted funding.
Like Goyal, he said he started his latest venture from his garage before relocating to BioLabs in Durham during the pandemic.
Avior Bio is a clinical-stage pharmaceutical company developing drugs for distressed neurological conditions.
To date, Avior has raised $2.5 million through two small pre-Series A rounds and non-dilutive funding from the National Institutes of Health (NIH) Small Business Innovation Research program.
The North Carolina Biotechnology Center has also provided a $250,000 loan.
“Thanks to the [Center], we could set up a manufacturing research and development site in Cary. Now we have a 3,000-square-foot facility all GMP-approved and FDA inspected,” he said. “We're making some great progress in the last year and a half to proceed with our pipeline.”
Equity and diversity are top of mind
Whether it’s impact investing to address health disparities or shining a light on the lack of diversity among VCs, it’s clear that promoting diversity is a priority for both investors and innovators alike.
Sheila Mikhail, CEO and co-founder of gene therapy firm AskBio, appearing on the panel discussing social investing’s future, called out the inequality of capital allocation.
“Less than 5% of venture-backed companies are run by women, less than 3% are run by a person of color,” she said.
That discrepancy, she argued, curtailed potentially worthwhile investments, specifically in the space of rare genetic diseases that often present in marginalized communities.
“For a long time, gene therapy was in a holding box. It didn't have the opportunity to prove itself,” said Mikhail, who negotiated a $4 billion buyout deal with drug giant Bayer in 2020.
“If it wasn't for social investors, a lot of these technologies would never get the opportunity to [show] they have any viability. There must be a more even distribution of allocation of capital.”