New Models For New Technologies

WITH NEW DRUG APPROVALS at their lowest level in 24 years, the late-stage pipeline looking anemic, and development costs soaring, pharmaceutical companies are looking high and low for ways to improve their odds of success. One recently launched collaboration, Enlight Biosciences, even has three drug companies working together toward that goal. The Boston-based company combines the investment prowess of the life sciences fund PureTech Ventures with the financial backing of Merck & Co., Eli Lilly & Co., and Pfizer.

The strategic collaboration, started this summer with a $39 million pool from the pharma companies, is focused on funding "enabling technologies"—those scientific breakthroughs that fundamentally change the way research is done. Just as the polymerase chain reaction democratized genetics research by enabling any scientist to quickly and cheaply amplify a piece of DNA, Enlight is looking for ideas—often developed outside the walls of big pharma—that would transform drug development. Specifically, the company aims to find ways to reduce the level of ambiguity regarding a molecule's safety and efficacy when it is finally tested in humans.

Enlight has its roots in a conversation between Daphne Zohar, a founder and managing partner at PureTech, and Mervyn Turner, Merck's senior vice president of worldwide licensing and external development. While chatting about the need for new and better tools for drug discovery, as well as validation technologies, such as biomarkers, Turner bemoaned the lack of conventional venture funding for research tool companies, says Reid J. Leonard, Merck's executive director of licensing and external research.

"It was a kind of blue-sky discussion around, 'Gee, wouldn't it be great if there was a way to spur innovation in this space,' " Leonard explains. "The problem is that many things that could be incredibly impactful within pharma aren't being developed because of structural reasons within the venture capital community," adds David Steinberg, founding chief executive officer of and board member at Enlight.

Meanwhile, with fewer new drugs reaching patients each year, not to mention some of the problems with safety that have emerged after drugs have been approved, big pharma is in desperate need of new tools to improve its R&D efforts. "It is an understatement to say there are some underlying issues with the way pharma R&D is being done right now," Steinberg says. "Things have to change, but no one is sure how yet."

In recent years drug companies have tried a number of creative approaches to tackling this problem, such as internal business incubators, internal venture funds, and entrepreneurial funds. Yet each approach has a built-in hurdle: the ability of the pharma company to operate entrepreneurially, Steinberg notes. In the case of internal incubators, for example, a project may run into the many layers of bureaucracy that already hinder research within pharma.

An idea came out of that discussion between Zohar and Turner: What if the primary customers—the stakeholders in cutting-edge technology—became strategic investors in a collaboration with the goal of getting those technologies out of academic labs and into development? "At the core it's a pretty simple concept of distributing the cost of investing in these technologies among the people who would be most likely to benefit from their commercialization," Leonard says.

And as Steinberg points out, big pharma doesn't have to do the "entrepreneurial heavy lifting" but can still have a tremendous influence over which projects get funded.

Thus, Enlight was born. The management of Enlight, composed primarily of PureTech executives, handles the nitty-gritty details of each investment. This group identifies promising technology within academia, evaluates whether the technology meets Enlight's criteria, works up proposals, and handles intellectual property issues. The ultimate goal is to form a spin-off company that Enlight helps set up with a leadership team. Alternatively, Enlight could financially nurture a new technology to a point that it is mature enough for a third party, like an instrument maker, to buy and commercialize.

The pharma partners, meanwhile, can influence the focus of investments and receive frequent updates on new opportunities to ensure that they fit into the overall model. When Enlight makes an investment, the pharma partners have the option to participate at various points in the venture. Not all of the companies have to be on board in order to get the venture rolling, but the goal is to find projects that benefit everyone.

SOME BROAD AREAS of interest for Enlight include imaging technologies; novel or improved technologies for the identification and validation of biomarkers; and new approaches to discovering, formulating, and delivering biotherapeutics such as proteins and peptides, monoclonal antibodies, and RNA-based drugs. "We're looking for technology that we really feel can be transformational to the industry," Steinberg says.

The sweet spot for Enlight is an idea that shows promise through early proof-of-principle work but would quickly benefit from funds to capture that next critical piece of validating data. "We are looking for enabling technology platforms that allow for quick hits, as well as big ideas," says PureTech Associate Jonathan Behr, who is also involved in Enlight.

That short time horizon doesn't have to be a commercial product, Behr says. Rather, he explains, pharma companies could benefit from a lot of different stages of product development, such as beta-testing a product or establishing a partnership to evaluate a platform technology.

Although its goal sounds ambitious—finding a project ready to be tested in the lab within just two years—the team seems confident in its ability to uncover promising technology and, as often as is needed, combine it with other intellectual property to help advance the work.

In fact, Enlight's first investment adheres to those principles. Endra, spun off this summer, is a molecular imaging company that was pieced together from the assets of a smaller company and technology from three universities. "We've brought together four or five pieces of IP under one umbrella to get this company started. It's something we've become good at," Steinberg notes.

The creation of Endra made sense on several fronts, the Enlight partners say. First, a critical unmet need exists in imaging, Steinberg says. "There's no real magic bullet," he says, noting that current instrumentation is good at one or two key aspects of imaging, but the ability to create real-time, high-resolution, high-contrast images deep in the body is lacking. Endra, meanwhile, has technology that will enable a tabletop small-animal imager to be rolled out sometime next year. The longer term "big idea," as Steinberg calls it, would be to advance the technology into human clinical applications.

Furthermore, Endra's technology is exactly the kind of tool that would be useful for drug development, but doesn't make sense for a pharma company to develop in-house. "This isn't the sort of thing Merck would be prepared to invest our own research dollars into because we're not in the instrument manufacturing business," Leonard says. But this partnership "allows us to put significant scientific input into the process and thereby materially impact the usability of the technology, and in a way where we're not diverting attention internally from our core mission."

Going forward, Enlight plans to start one to two projects per year, and the pharma partners have all signed on for a five-year stint. Enlight's management is also considering bringing one or two additional partners into the venture, which would benefit from the additional cash and perspective.