A startup known for conducting research on behalf of pharmaceutical companies such as Pfizer Inc. and Novartis AG now aims to compete with them by making drugs itself.
New York-based TrialSpark Inc. will fund its move into drug development with a $ 156 million funding round that closed earlier this year and values the company at more than $ 1 billion. That money will be used largely to purchase new drug candidates, as well as for recruitment.
The company is betting that its technology-enabled approach to clinical trials will allow it not only to successfully develop new drugs, but also to price them more competitively.
“If we can run these trials cheaper and faster, we can also start offering drugs at lower prices,” said CEO Ben Liu.
The business of developing new drugs is notoriously risky, expensive, and time-consuming. That has prompted a number of efforts to find new models, including EQRx Inc., which launched last year with the promise of lowering drug prices in areas like cancer.
Acquisition of drugs
TrialSpark, which was founded in 2016 by Liu and others, grew out of his work as a graduate student in computational biology and psychiatry.
Liu and his colleagues had discovered what looked like promising new drug candidates, and were excited to showcase his work to pharmaceutical executives. But they were told that the companies already had more good options than they could afford to pursue, Liu said.
The company now says it is able to accelerate the pace of clinical trials and reduce costs with a software platform that helps sites like hospitals manage trials and collect and analyze data. It also uses data sources like social media to find doctors and patients to participate.
“Their focus is running clinical trials like a tech company would, and then absorbing biopharmaceuticals into that,” said Sam Altman, former president of startup accelerator Y Combinator and a new investor who led the latest round. “And I think that resonates a lot with investors in technology. A technology company that is making biopharmaceuticals, not a biopharmaceutical company that makes technology.”
TrialSpark has been launching the movement to make drugs since its early days. The company’s Series C funding was backed by a group of investors known primarily for their focus on the tech sector, including Sequoia Capital, which was an early investor, and Thrive Capital, along with names from healthcare and science. of life as Anne Wojcicki from 23AndMe and Section 32.
More than $ 120 million of the $ 156 million that TrialSpark raised this year will be used to purchase biologics and small molecule drugs, with the remainder being used to increase the size of the team of 100 people in 50 new roles in business development, licensing and engineering.
The startup will spend around $ 10 million to $ 20 million per drug and is initially looking to acquire three to six experimental drugs over the next two years. It could also take a minority stake in a company and help it run trials, Liu said.
TrialSpark is in talks about a number of pipeline assets, according to Liu, but declined to say which ones. A wide range of therapeutic areas are of interest, especially subgroups of patients who have certain biological markers in conditions such as Parkinson’s disease and schizophrenia.
The company could also follow competitors in the market with drugs that use similar pathways to treat disease, a similar approach to EQRx that may allow for some of the steepest price discounts. The startup projects that it may be able to offer drugs at prices that are 10% to 60% lower than those of the competition, a spokesperson said.
Don DeGolyer, a former CEO of Novartis’ Sandoz unit, and Jay Parikh, a former Facebook vice president of engineering, will also serve as advisers to the company.