Watch a replay of the live session here or read our top takeaways below…
Seasoned industry commentator Mike Ward, Head of Thought Leadership, Clarivate hosted a fireside Chat with biotech Investment guru Francesco de Rubertis, Co-Founder & Partner at Medicxi and Chair of Centessa Pharmaceuticals, at Optimum’s 13th Annual Healthcare Investor Conference.
The biotech investment landscape is shifting
New funds that have entered the life sciences scene have benefited entrepreneurs. There is a lot more flexibility around raising capital as more options have become available. However, the landscape is a lot more volatile. In the past decade healthcare investment experienced a bull market with distinct and predictable stages: investment, follow up round at a higher valuation, then an IPO. At the moment, investment outcomes are a lot more volatile and are affected by macro cycles amongst other factors as well as a trend for early stage M&A with big biopharma companies swooping in to grab novel assets.
High valuations need the substance to go with them
It is great to see large amounts of capital being invested in biotech and healthcare companies, including by non-specialist investors. These investors need to focus on understanding the core mission of a company and the venture’s probability of success before committing to a large ticket value.
The single asset investment model with a twist
Francesco is the architect and Chair of Centessa, a novel asset-centric pharmaceutical company designed and built to advance a portfolio of highly validated programs. Centessa’s asset-centric R&D model applied at scale has assembled best-in-class or first-in-class assets, each of which is led by specialised teams committed to accelerating development and reshaping the traditional drug development process.
Francesco and the Medicxi team have practiced an asset-centric model of investing for the past 20 years and were the pioneers of the asset-centric approach to life sciences investing.
When asked about the rationale of creating Centessa, Francesco spoke about seeing the company as a logical but still a ground-breaking step in the evolution of the asset centric model. Bundling single asset companies together without compromising their products has many benefits:
- Access to stellar management: Centessa gives each of the bundled companies access to a fantastic management team, which none of the individual companies would be able to hire individually.
- Access to liquidity and other strategic resources: Bundled companies have access to a larger amount of funds compared to standalone single asset companies. This provides greater flexibility for the companies.
- Laser focus on the single asset strategy with less risk: The umbrella company allows founders to focus on their product’s success while reducing the risk of the asset failing, by hedging a potential failure, and loss of capital, with the remaining assets of the umbrella company.
You don’t have to be born a venture capitalist, you can become one
Francesco is a scientist by training who started out with big dreams to discover novel therapeutics. During his postdoc at MIT he was introduced to influential VC investors including Jean-Francois Formela and Stelios Papadopoulos and this fuelled his goal of becoming an investor himself.
Biotech business strategy is very similar to a game of rugby
Mike pointed out what a successful year Italy has had – winning the Euro football championship and the 100m Olympic gold medal, amongst others. Talking about sport, the question arose – ‘what makes a high performing team?’
Many may not know that Francesco played competitive rugby from a young age. Due to his involvement with the sport, he draws parallels between biotech business strategy and a game of rugby.
Like rugby, different players bring different strengths and make the team strong as a whole. Going for a try (5 points in a rugby game), is a big win and can be attractive but harder to achieve. Ultimately, scoring incremental wins, with kicks, is a more profitable long-term strategy. Investing in breakthrough technologies has resulted in some very big exits (e.g. Genmab) but our role as venture capitalists is to invest in more pragmatic product ideas that solve great unmet medical needs and are too risky for biopharma.