Research Firm for Pfizer, Novartis Morphs Into Low-Cost Rival
(Bloomberg) -- A startup known for conducting research on behalf of pharmaceutical companies like Pfizer Inc. and Novartis AG now aims to compete with them by making medications itself.
New York-based TrialSpark Inc. will fund its move into drug development with a $156 million financing round that closed earlier this year and values the company at more than $1 billion. That money will be used largely to buy new drug candidates, as well as for hiring.
The company is betting that its tech-enabled approach to clinical trials will allow it to not only successfully develop new drugs but also to price them more competitively.
“If we can run these trials cheaper and faster, we can also begin to offer drugs at lower prices,” said Chief Executive Officer Ben Liu.
The business of developing new drugs is notoriously risky, costly and time-intensive. That’s prompted a number of efforts to find new models, including EQRx Inc., which launched last year with a vow to lower drug prices in areas like cancer.
TrialSpark, which was founded in 2016 by Liu and others, came 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 show their work to pharmaceutical executives. But they were told companies already had more good options than they could afford to pursue, Liu said.
The company now says it’s able to accelerate the pace of clinical trials and bring down 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 approach is to run clinical trials like a tech company would, and then absorb biopharma into that,” said Sam Altman, former president of the startup accelerator Y Combinator and a new investor who led the latest round. “And I think that resonates a lot with tech investors. A tech company that’s doing biopharma, not a biopharma company doing tech.”
TrialSpark has been pitching the move into making drugs since its early days. The company’s Series C funding was backed by a group of investors mostly known for their focus on the tech sector, including Sequoia Capital, which was an early investor, and Thrive Capital, along with health-care and life-sciences names like Anne Wojcicki of 23AndMe and Section 32.
More than $120 million of the $156 million that TrialSpark raised this year will be used to acquire biologic and small-molecule drugs, with the rest used to increase the size of the 100-person team by 50 new roles across 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 medications in the next two years. It could also take a minority stake in a company and help it to run trials, Liu said.
TrialSpark is in discussions about a number of pipeline assets, according to Liu, but he declined to say which ones. A broad range of therapeutic areas are of interest, especially subgroups of patients who have certain biological markers in conditions like Parkinson’s disease and schizophrenia.
The company could also follow competitors to market with medications that use similar pathways to treat disease, an approach similar 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 competitors, a spokesman said.
Don DeGolyer, a former chief executive of Novartis’s Sandoz unit, and Jay Parikh, a former vice president of engineering at Facebook, will also serve as advisers to the company.
(Willett Advisors LLC, which invests Michael Bloomberg’s personal and philanthropic assets, is also an investor in TrialSpark. Bloomberg is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News.)
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