May 26, 2025 • 56 mins
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On this week's episode, Yaniv Sneor, founder of the Mid Atlantic Bio Angels and CEO at Native State Therapeutics, explains how life science angel investors evaluate biotech startups, and offers tips for young drug developers in search of funding. Our conversation covers how to create a successful pitch, red flags for potential investors, the importance of angel investing syndicates, the sweet spots for exit timelines and funding amounts, and why it still makes sense to invest in biotech over other industry sectors.
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Episode Transcript
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Ben Comer (00:00):
This episode of the Business of Biotech is brought
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Welcome back to the Business ofBiotech.
(00:46):
I'm your host, Ben Comer, chiefeditor at Life Science Leader,
and today we're speaking withYaniv Sneor, founder of the Mid
Atlantic Bio Angels, an angelinvestor group formed in 2012
with a current portfolio ofapproximately 20 life sciences
companies.
As we do, we'll get to knowYaniv a little better at the top
(01:06):
of our conversation, and thenwe'll dive into why, despite a
challenging market at the moment, it still makes sense to bet on
biopharma over other industries.
We'll talk about the role smallinvestors play in life sciences
, the importance of exitplanning for startups and
early-stage companies, andbehavioral best practices for
(01:26):
biotech leaders and companies insearch of funding.
Yaniv is also the CEO of NativeState Therapeutics, and we'll
learn a little bit more aboutthat company as well.
Yaniv, thank you so much forbeing here.
Thank you so much for having me.
Thank you so much for having me.
To the getting to know youpiece, Yaniv, how and when did
(01:47):
you first become interested inthe life sciences industry and
life science investing inparticular?
Yaniv Sneor (01:55):
So I studied physics in college.
I always had an affinity for thesciences and at some point,
after selling a company, Ibecame interested in investing
and angel investing in general,and after reviewing how the
process is done in multipleplaces, I, along with two other
(02:17):
partners who have since retiredwe thought that in order to
properly invest in life scienceopportunities, you need a lot of
very specific expertise.
It's a very complex type ofindustry to diligence and we
felt that if we are going to goahead and invest in this type of
asset class, we need to somehowfind a way to bring together a
(02:41):
lot of expertise around thetable to properly diligence way
to bring together a lot ofexpertise around the table to
properly diligence.
And so we decided to focus onlife sciences, which allowed us
to attract a membership that isprimarily from within the
industry.
So, life science well, angelinvestors in general usually
have a day job and then theymeet to get together at off
(03:02):
hours or otherwise to investtheir money, to get together at
off hours or otherwise to investtheir money.
So most of our members have dayjobs within the industry pharma
device companies, theirconsultants in regulatory,
commercial, their MDs soeverybody has an affinity and
usually a big involvement in thelife science industry in their
life.
Ben Comer (03:23):
How did you go out and find those experts and then
bring them in to Mid AtlanticBio Angels?
Were you looking for peoplekind of like yourself who maybe
were working in industry but hadan investing interest?
I'm just curious about how youidentified those and then
brought them into the group.
Yaniv Sneor (03:41):
So we started off as three founders, as I
mentioned.
Two of them have since retired.
We each had our own network ofpeople.
We brought them in.
They brought in their networkof people.
Being a life science angelinvestor group is actually
something unique.
There aren't many of us aroundthe world.
There are many wonderful angelgroups out there, but most of
(04:03):
them generalize in terms oftheir investment strategy and
very few of us specialize inlife sciences.
So people who are looking toinvest in this asset class,
people who are looking to sharediligence with people who have
this expertise, find us.
We're out there in conferences,we talk to a lot of different
people and our members introduceother members.
(04:25):
So we're always obviouslylooking for additional members,
but there's a lot of.
It is by referral.
Ben Comer (04:32):
Okay, and you just mentioned there aren't a lot of
angel investment groups outthere.
I mean, is that part of thereason that you wanted to
initially found Mid Atlantic BioAngels in 2012?
Yaniv Sneor (04:46):
There are quite a few, as I mentioned, wonderful
angel groups out there.
Most of them are generalists,so there are very few that
invest exclusively in lifescience.
So we're one of a handfulreally around the world who just
look at life science, and eachone of us is unique in our own
way.
We all have our own specialinvestment criteria.
(05:06):
Some of them are geographic,some of them have to do with
evaluation.
You know, every every groupevolves based on the personality
, the character of its membersand what and what we want to do
as a group.
Ben Comer (05:19):
Yeah, yeah, well, you , I, I mentioned the group was
founded in 2012.
Here we are, you know, let me,let me do the math.
13 years later, what?
What have you learned sincethen?
You know, what kinds ofaccomplishments are you most
proud of?
Yaniv Sneor (05:36):
I'm sure there were some learnings that happened
during that period All the time,and so that's actually one of
the first things that I'm proudof.
I mean, obviously, the firstthing is the membership that
we've been able to attract.
They're wonderful people,really intelligent, really
engaging, and people that youenjoy spending time with.
So it's wonderful on multiplelevels, very proud of the
(06:00):
evolution of it to your point.
We started off as people whowrite our own checks and then we
said, hey, how about we createan internal fund that we call a
pool, that we all vote in anopen vote on how we invest our
money, and every time we vote,we actually have to post a
statement that says why we voteda certain way, and it creates a
very engaged mechanism withinthe group.
(06:23):
It creates a very engagedmechanism within the group, and
then you know the expertise thatwe built and the ability to
bring all of that expertise tobear.
When you're doing diligence andour investment record, you know
we happen to be very picky.
Despite multiple internalarguments that we should be
investing more, etc.
Ultimately the group behaves ina fairly consistent manner in
(06:45):
the way that it likes to invest.
I think that we make greatinvestment decisions, very
thoughtful investment decisions,and so I'm also very proud of
our track record as well.
Ben Comer (06:57):
Yeah, well, let's dig into that a little bit.
If you could take me throughthe process that Mid Atlantic
Bio Angels uses when consideringwhether or not to provide a
given company with funding.
Yaniv Sneor (07:12):
Sure.
So it begins with theapplication process and the way
that we present ourselves to theworld.
We wanted to make it asdemocratized as possible, so we
didn't want it to be abouthaving to have a referral to get
to know our group.
We wanted to make sure thatanybody with a reasonable,
hopefully good idea in the lifesciences would be able to
(07:34):
approach us.
So we put our investmentcriteria on our site for
everybody to see and everybodycan self-select the first round,
basically, and see if they meetthose criterias and, based on
that, submit an application tothe group.
We screen on a monthly basis,except for the summer, and we
review every application, evencompanies that I meet at
(07:58):
conferences.
I tell them that I'm there tomeet with them, to help them
understand and help guide themas to whether they should apply
to the group, because ratherthan just pitching to me by
applying to the group, they havethe attention of 10 or 15
people who are screening, whohave much more expertise than
any one individual like myselfcould have and would get a much
(08:21):
better viewing and discussionabout the potential of their
opportunity.
And then what we're reallytrying to do in that screening
call is to decide, not whetherit's a good or bad opportunity,
but whether it's a rightopportunity for us as whether we
think that our group would beinterested in seeing, in
potentially investing in it, andwhether we as angel investors
(08:42):
could potentially be makingmoney there.
So of the 100 applications thatcome in, we invite
approximately 20 of those topresent in person and the 80
that we say no to, we tell themin general terms why not Leaving
the door for them to apply tous in the future if things
change, if they're able toaddress things?
(09:03):
Sometimes we just tellcompanies you're too early, so
we're happy to see them in thefuture if things change, if
they're able to address things.
Sometimes we just tellcompanies you're too early, so
we're happy to see them in thefuture.
So sometimes the issues couldbe a little bit more difficult
to address.
But if they're able to oraddress for us, if they're able
to, we're happy to review themagain in the future, and we have
reviewed multiple companiesmultiple times.
Of the 20 or so companies thatdo make it through screening,
(09:25):
approximately 10 or so move intodiligence and we do have a
certain threshold of the numberof members committed to
participating in a diligencebefore we decide to go into that
diligence just so that we canmake sure that there is actually
an engaged effort.
That happens once we go intothere and within a week of the
(09:49):
company presenting to us,they'll usually receive a first
set of questions and those arethe gating questions.
We want to start with the hardquestions first, the ones that
would cause us to quit thediligence early on.
We don't want to waste ourmembers' time, we don't want to
waste the company's time as well.
So we start with thosequestions and then we might have
(10:10):
calls with a company which werecord for internal use.
We may have internaldiscussions.
We'll go back and forth withcommunications between us and
that company until we eitherdecide not to, in most cases to
invest or if there still is apositive sentiment about that
opportunity.
(10:31):
We will bring in the remainderof the members who are members
of our internal fund, what wecall a pool.
We'll bring them into thediligence room and ask them to
review all the information sofar, which we will lightly
summarize, basically to addresswhat we've hit on and what we've
touched etc.
And then we'll ask them to sayif there are any additional
(10:55):
questions, if we want to doadditional internal discussions,
if we want to have anotherdiscussion with the company,
whatever is required of them,because there's a positive
sentiment, which means we wantto bring it to a vote for the
pool.
So whatever open questionsthere are, whatever additional
(11:17):
information there is, pleaseprovide it, and et cetera.
So at that point we get throughthat and then we open the pool.
The votes to open it to a poolvote.
The vote to open it to a poolvote.
Pool vote remains open formultiple days.
Everybody knows how everybodyvotes and whenever somebody
votes, we ask them to post astatement that says why they
voted the way they did.
It engages everybody to beinvolved with the diligence, to
(11:40):
be thoughtful, think about whatthe best outcome for our
investment should be.
And then we leave the vote openfor over a number of days so
people have a chance toparticipate over a weekend, et
cetera, and review all thematerial and if anybody says,
hey, I need more time we'llextend the vote and at that
point after that, we'd make adecision.
Based on that everybody'sdiscussion, We'd make a decision
(12:03):
as to whether to invest or not.
So all of those 100 companiesthat started at the top of that
funnel fewer than one and a halfwould receive funding at this
point.
So, pre-pandemic, we werecloser to three, we're closer to
1.5 now, or even lower thanthat.
There are a number of reasonsthat may have contributed to
(12:27):
where we are today, but it iswhat it is.
We're in a scientific andnumbers business and we just
said all we could do is followwith that.
And when we do make aninvestment decision, we have a
co-investment sidecar fund,which is a fund for people who
either don't have the time orexpertise to be members of the
(12:49):
group but somehow want to investwith us.
So that sidecar fundautomatically co-invests with us
if the pool decides to investas well.
So we want to be able to bringto bear as much funding as
possible funding as possible.
Ben Comer (13:06):
I wonder if you could give me an example or two of
some of those initial hardquestions that help you screen
out the candidates that youdon't want to invest in.
Yaniv Sneor (13:16):
A lot of times the issue of adoption will be a
crucial issue for us.
You know, will it be used, willit be incorporated in the
standard of care is often agating question for us.
Also, another gating questioncould be scientific challenges
(13:40):
that we need to understand more.
I mean, if you are a companypitching to us, you want to
pitch to us that in fact there'sa great opportunity here.
But we'll get to this maybelater in our discussion.
We don't want to just hear ascientific discussion all the
time.
We want to see that there is areasonable scientific basis and
make us want to go intodiligence and learn more, and
(14:00):
make us want to go intodiligence and learn more.
So, as we learn more, we wantto see that that scientific
basis in fact can bear out in away that would lead to an exit.
And so, because many of ourmembers work in the industry,
(14:24):
they have an understanding ofwhat acquirers potentially would
be looking for in a companybefore they acquire them, what
kind of data we would be lookingat, et cetera.
And so we need to understandthat and we need to understand
that it makes sense for usfinancially.
Because of our investmentcriteria, we try to avoid
companies that will requirelarge investment rounds in the
(14:44):
future.
We can talk about the role ofour type of investors, perhaps
in this ecosystem, but we needto make sure that the data is
there, or could potentially bethere, and that it could be
reached with angel-friendlyrounds, with rounds that we
could participate in and makemoney in as well.
(15:06):
So there are a lot of differentcriteria.
So those happen to be the twobig ones.
The management team is alwaysnumber one criteria.
We tell companies we have dayjobs, we don't want your day job
.
We are trusting you with ourmoney to know what to do with it
and to bring this company tosuccessful commercial conclusion
(15:30):
.
So with that, we need peoplewho understand the commercial
process, who understand how tomonetize an opportunity and not
just discuss with us thescientific merits around the
opportunity, but how and whythey will have a wonderful exit
and what are the comps that willacquire them and why and what
(15:51):
stage.
And we need to understand andbuy into that.
Ben Comer (15:55):
Yeah, and can you kind of ascertain that ability
in leadership, or are youlooking primarily at past
experiences, or is a combinationof both?
Yaniv Sneor (16:07):
Past experience helps a lot, but if we only went
on past experience, then you'dask me a follow up question what
about all these new CEOs?
That might be great, and so youknow, if you are able to speak
to us lucidly and explain theprocess of how you're going to
monetize this opportunity, youcan show us comps, you can tell
(16:30):
us about the discussions thatyou've had with potential
acquirers and show us whatthey're looking for, which we
can confirm as well internally,and we can see a clear path to
an exit that makes sense to us,based on our own evaluation,
then that's a credible plan andthat's a credible person that
(16:50):
provided us with that plan thatwe can buy into.
And that's the whole idea,right.
I mean, it has to be areasonable story.
It'll obviously change, becausenothing is totally predictable,
right, but it needs to makesense at the outset in terms of
the plan for this company andhow they plan to get to an exit,
(17:11):
and we always believe that youneed to start with that exit and
work your way backwards, right?
What do these acquirers want tosee in you before they buy you?
How much data at what stage?
And so what are the trialsgoing to look like what's your
clinical and preclinical pathwaygoing to look like?
How much time and money to getthere?
(17:33):
And then you begin to create astory and if their story makes
sense to us and our backgroundand understanding, based on our
members understanding from theirexperience all jive, for lack
of a better word then it's agood story that we can buy into.
Ben Comer (17:54):
Do you encounter companies that come to you
hoping to obtain funding anddon't have an exit plan at all?
I mean, do most companies thatare progressing up through your
filter have that kind of frontand center, or at least have
given it some thought?
Yaniv Sneor (18:13):
We do encounter, every once in a while, companies
of all types.
Ben Comer (18:17):
Okay.
Yaniv Sneor (18:18):
We do try in the discussions that we have with
our companies.
As I mentioned to you, we go tomany conferences et cetera, and
our goal is to help guide thecompanies, to make them decide
if it makes sense for them toapply, and usually one of the
first questions is how muchmoney and time and effort do you
think it will take to reach anexit?
(18:38):
And that focuses the discussionwith those kind of companies
that we need and want to seethat An experienced management
team who pitches to us willalready know that we're looking
for that, because you're notpitching to scientists, you're
pitching to investors, andinvestors want to see a return
on their investment, and thatwould come from an exit,
(19:00):
preferably from an M&Atransaction or an IPO.
Ben Comer (19:12):
Right, okay, I want to broaden the aperture here in
just a second and ask somebigger questions about biotech
and life sciences investing.
But before I do, just to getmaybe a better sense of what
you're up to, is there aspecific dollar amount that
you're typically providing in agiven investment for a company
once it's progressed all the wayup through the funnel
successfully, and is there alsoa specific timeline that you're
(19:35):
looking for in terms of an exit?
Yaniv Sneor (19:38):
So I'll start with the second first.
So we look to invest incompanies that would have a
potential exit within five toseven years.
It often happens that it takeslonger than that right, because
that's the way life happens.
But if you look for a timelinethat's 10 years or longer,
there's so many moreuncertainties that are brought
into that equation that it'sdifficult to make a decision in
(20:03):
terms of a company, and we'dusually tell them you may be too
early for us, but for othercompanies that come to us, we
believe that the exit horizoncould reasonably be within a
five to seven year period.
We would first consider aninvestment in them.
When we have thatcommercial-minded person on
board leading the effort, thatwould be the first time that we
(20:24):
would consider making aninvestment, and then we would
hope to participate in all therounds, all the successive
rounds, before they reach anexit, because the kind of
opportunities that we want toinvest in will not require
future follow-on large VC ramps.
So whenever an opportunityrequires $30, $50, $100 million
(20:45):
in the future, that's an area wedon't play well in, because
we'll be diluted very heavilyand the large rounds in those
future will provide theirinvestors with preferred seats
ahead of us in the bus, so tospeak, when there's an exit and
will also dilute us very, veryheavily.
(21:06):
So the kind of opportunitieswe're looking to invest in will
require maybe no more than $25or $30 million in totals before
they reach an exit, and thosecan be raised in multiple
syndicated rounds.
So a syndicated round is wheremultiple angel groups and
perhaps smaller VCs all gettogether and put money into a
(21:29):
round.
We would typically invest abouta quarter million to a million
dollars in a round.
We have invested more, we haveinvested less, and then the
company takes that money, goesback to the lab, hits milestones
and comes back to us in a yearor two and raise another round,
hopefully because they've donewell with their milestones and
we'll be happy to invest in themagain, possibly probably in a
(21:52):
higher valuation, but it showsprogress and everybody's happy.
That way nobody incurssignificant dilutions and you
can do anywhere from two to fiveof these syndicated rounds and
raise $5 to $10 million at eachone of these rounds and all of
the investors remain very happy,supposedly, and the company
(22:15):
usually retains control of thecompany.
They don't end up giving upcontrol of the company, which
they would in a VC roundtypically.
So those are the kind ofinvestments that we believe we
can participate in and makemoney in as well make money in
an exceedingly challengingmarket right now for biotech for
(22:38):
a number of reasons.
Ben Comer (22:40):
From an investor's perspective, what case would you
make for investing in biotechright now versus other
industries?
Yaniv Sneor (22:52):
So, first of all, don't take all of your money and
put it in biotech, please,Right?
So I think it's smart to havediversification and allocation,
but I think it's great to haveexposure to this unique asset
class, high risk, potentiallyhigh reward.
If you think about biotech andanything in the medical
community, there's always goingto be a need.
(23:13):
There's always going to be.
You know, there are so manydiseases for which we have
absolutely no treatment andthere are so many diseases for
which we can provide bettertreatments, better standing of
care, so there's always going tobe a need.
The other reason is you can dogood as you do well.
(23:36):
You know and do well as you dogood.
So that's a great thing.
We think that not only can youbenefit as an investor, but the
patient's lives will be, youknow, well impacted.
And the other interesting aspectis you can't start a biotech
company with enough pizza andbeer over a weekend.
(23:58):
You know there's a certainbuilt-in maturity into the
company because of all the datathat you're required to create,
because of all of the otherthings that you have to by
virtue of being a life sciencecompany.
You have to do certain thingsand that imposes a certain
maturity on you as anentrepreneur, on you as a
(24:21):
company and, by the way, alsothey are investors.
There's a certain maturity inthe room, so we don't get these
fly-by-night opportunities.
We get things that have abaked-in maturity already in
them and that elevates a levelof discussion that we have.
Ben Comer (24:43):
Right.
You've described yourwell-assembled funnel for
evaluating companies and makingdecisions about them.
I wonder what you might sayabout companies that maybe don't
shape up or are missing keypieces, and I don't know if it's
organizational or relational orwhat, but maybe what are some
(25:08):
of your pet peeves?
Yaniv Sneor (25:09):
I guess, as an investor who is actively looking
at a whole lot of companiesworking in life sciences
actively, looking at a whole lotof companies working in life
sciences, so there are a lot ofpet fees, but a few of them.
For instance, there arecompanies that we call it spray
and pray.
They just send the generic typeof here, this is our company,
(25:31):
so-and-so we're doing this, andthey just send it to the website
.
Our investment criteria on thewebsite.
Take a minute.
Read our investment criteria.
See if you are actually a fit.
If you spray and pray.
First of all, half of them arenot even life science companies,
(25:53):
so we don't respond to them.
But if you are in life science,our response will be our
investment criteria on the site.
Take a look at them.
If you think you're a match, byall means please apply.
Another pet peeve is peoplepitch to us a scientific pitch.
They think it's a posterpresentation.
But what you really need topitch to us is an opportunity
(26:17):
for us to make money.
You have to pitch the exit,pitch what we're likely to make
from this and why what you haveis likely to be a good
investment opportunity becauseyou have the right expertise and
the right science and the rightmarket, need right, and all of
those things coming togetherright now make us want to go
(26:38):
into diligence, to learn more,instead of giving us a 10-minute
scientific presentation whichmost people fall into.
Another pet peeve, which is sortof on a different tangent,
related founders.
Whether it's a husband and wife, or parent and child, et cetera
(27:02):
.
In my opinion, you will alwaysput your familiar relationship
first and your businessrelationships second.
But when we invest, we want tomake sure that the company is,
first and foremost, right.
I don't want to have to worryabout what your Thanksgiving
(27:23):
table is going to look like andhow tense that discussion will
be if you think that your spouseor child isn't doing a good
enough job or something in thecompany, or whether you'll even
feel comfortable telling themthat they're not good doing a
good enough job.
Certain things have to be donein a company and you have to be
able to hire and manage peoplewho are accountable for those
things.
(27:43):
Um, and it's easier to do thatwhen those people are not
related.
So that's another one of thoseyeah, I uh.
Ben Comer (27:52):
There's a Pittsburgh-based company called
Krystal Biotech that is led by ahusband and wife in the CEO and
chief scientific officer role.
They got a product approved thefirst topical gene therapy ever
approved, actually.
But I remember thinking howdifficult maybe a Thanksgiving
might be.
It's tough to mix business andpleasure.
(28:13):
It's a cardinal rule, so that'sinteresting might be, you know,
and it's it's tough to mix, youknow, business and pleasure.
You know it's it's a cardinalrule, so that's that's
interesting.
I also wanted to pick up onsomething you said previously
which strikes me as analogous tosomething I encounter as a, as
an editor and writer, which is,you know, I get a lot of pitches
(28:34):
hundreds a day fromcommunications and PR.
I work closely with them.
I really appreciate them ascolleagues, but there are always
a few that are just, you know,here's the phase two data
readout, here's someone we addedto our scientific advisory
board and that's kind of it.
And you know, perhapsexpectedly, a lot of those I
(28:58):
don't respond to or don't followup on.
Instead of a strictlyscientific presentation, what
should companies think about?
How can they kind of bring youin and engage you in a way that
makes you want to learn more?
Yaniv Sneor (29:13):
It has to be a good story and it has to be a
financial story and it has to beabout how and why this company
and its product and whatever ithas are going to be an exciting
opportunity for us to invest in,why it's going to be a large
exit, why those acquirers aregoing to want to buy this
(29:35):
company, why they are uniquelypositioned to do that, why their
science is so different thananybody else, why will they be
successful where others may havefailed?
And that includes both thescience and the management team
and the timing and theopportunity.
And that's what they reallyneed to tell us.
And really you need to hook us.
(29:58):
You just need to excite usenough when you present to us
for us to, as I said before,want to dive in, want to go into
diligence, want to find outmore about the science and the
team and the opportunity andwhether really there could be an
exit with this amount of moneyand whether there really is this
kind of interest in thisspecific market from potential
(30:20):
acquirers.
Ben Comer (30:22):
Right, what can you say, Yaniv, about the role and
importance of small investors,like Angel Investors or other
small investors as well, inbiotech?
And then maybe, if you couldmention some of the limitations
you know, perhaps other thanbeing able to contribute, you
know, $100 million.
Yaniv Sneor (30:43):
Yeah, I think that when you look at if you're a
company, you look at where yourexit is and then you begin to
work backwards and you createthat story that becomes a
financial story.
When you attach numbers to thattimeline and to those trials
and to everything else that youneed to go through, you end up
with a dollar amount at the end.
(31:05):
Right, I mean your first exitpoint, your second exit point.
But you realize that, given theamount of data and the size and
the timing of the clinicaltrials and everything else that
you may need to do to reach anexit, if you're not from a
single company, you're going toneed to have traction.
If you are a device company oryou're working, as you know, if
you're doing a diagnostics ordigital health company, there's
(31:33):
going to have to be sometraction within the industry.
Diagnostics or digital healthcompany, there's going to have
to be some traction within theindustry.
So all of those require time toshow and prove adoption in
those cases.
So you end up with that numberand that number means that you
have now a set of potentialinvestors and if that number is
the 30, 50, 100 million dollars,in my opinion we are not part
(31:57):
of that investor communitybecause, as I mentioned, we're
going to be diluted very heavilyin the future.
We can't put up the numbersthat the VCs can and it's really
not a game that we cansuccessfully play in.
And, by the way, if you're acompany that needs that, you're
going to end up losing controlof your company.
(32:18):
You're going to have to give upat least 51% in the very first
large VC rounds and then more insubsequent rounds.
But if you are able to raisesmaller amounts and you're able
to do that in perhaps in smallerrounds, you could appeal to
smaller investors.
(32:39):
There were these small VCs andangel groups that put in maybe
up to a million or two or three.
I've worked with VCs that putin maybe up to $5 million in
total into a company overmultiple rounds, et cetera, or
even more, and then you often domaintain control over the
company.
It's a different kind of arelationship.
(33:00):
It's often more supportive ofthe management team because we,
as I mentioned, we have our dayjobs.
We don't want the CEO's day job, we want those CEOs to be
successful.
We're happy to lend guidancewhenever we possibly can and
open our network and provideexpertise, which we see is good
obviously as well, but we do sowith a main goal of helping that
(33:27):
CEO and that company becomesuccessful.
So it's a different kind ofraise the limitations for us.
Obviously we can't play in thosebig rounds kind of raise.
You know the limitations for us, obviously we can't play in
those big rounds.
And you know we don't have astable of people waiting to take
the CEO's job.
We're not set up like that.
No, we are more set up tosupport and nourish as much as
(33:48):
possible the existing managementteam and help them become
successful.
Which is why it's veryimportant for us that when we do
make that investment decision,that we believe that the team
has at least the basis forbecoming successful.
Maybe they don't have all thepeople in place, but they have a
plan as to how to hire theright people they'll need in the
future.
Maybe it makes sense for themnot to have them in place right
(34:10):
now because it's too muchoverhead et cetera, but we want
to understand that they have aplan that includes them later on
when they are needed, makessense.
Ben Comer (34:20):
Yeah, and you don't necessarily need $100 million to
start up a biotech company.
But I wonder if there is a kindof difference in kind between a
company that can successfullystart up at a lower dollar
amount versus someone who, outof the gate, is going to need
that really large investment,and maybe you could just answer
(34:46):
that one.
Yaniv Sneor (34:46):
But if there's something unique that you like
about those companies that arenot asking for a huge amount of
money to get started, you know,there are a variety of fields in
life sciences that are going torequire large trials, lengthy
trials, and, by definition,that's not for us to be able to
(35:10):
fund.
You're going to need, whetherright off the bat or in the
future, those large sums ofmoney and that's just the
reality of it in order to exit,either through acquisition or
through an IPO.
There are areas where,especially if you're going after
an orphan designation, andespecially if, once you do have
(35:31):
a successful orphan designatedproduct drug, you can then
perhaps expand the indicationbecause there is a commonality
in terms of the mechanism ofaction, where it could apply for
one disease to multiple,perhaps more highly prevalent
diseases.
Those are paths that could bemore efficient in terms of time
(35:56):
and money for investors toparticipate in.
There are other areas that welike to invest in where the area
is so exciting for lack of abetter word for current pharma
or device companies that if youshow them enough traction and or
enough data, they will acquirethe company and show them enough
there, there, because it's anarea they want to get into, an
(36:20):
area they believe there's apotential, and if you can give
them all the signals thatthey're looking for internally,
they'll acquire you early, andthat's another very good
investment opportunity for us aswell.
Ben Comer (36:34):
Yeah, so do you help companies get prepared to be
acquired and I'm asking this inpart because I've heard a lot
from people about the pendingpatent cliff and the supposed
large stocks of dry powdersitting at big pharma.
I think there's an expectationthat M&A is going to pick up.
(36:55):
We'll see, but is thatsomething that you're helping
companies think through oryou're expecting them to kind of
already have that in mind?
Yaniv Sneor (37:05):
We are really there to help, but we can't drive,
you know we.
So when we do make aninvestment in the company, we
try to create a number ofliaisons within the group to
engage with the company on aregular basis.
So, rather than just sittingpassively and waiting for a
quarterly report, we would likethese folks to reach out to the
(37:28):
company on a monthly orquarterly basis and ask them how
they're doing or what kind ofchallenges they have, what kind
of issues are they seeing, andthen either using their own
expertise or going back to ourgroup and saying who here has
the ability to open these doors?
Who has expertise in thefollowing things?
Et cetera, et cetera.
(37:48):
So we try to do that more andmore on an active basis.
But we won't drive an exit.
We're not there to do that.
We want to see that managementhas the capabilities and has the
understanding and has theability to either have in place
or to bring into the team theright people who can create that
(38:10):
exit.
Ben Comer (38:13):
Right.
I wonder what your opinion ison an early stage or startup
company choosing to include apipeline drug that is buzzy, is
something that the industry isfocused on at the moment CNS,
other therapeutic areas that arepopular or are very much in the
(38:40):
news and an area of focus forthe industry.
Is that a ticket kind of for acompany that's successful to
include a drug, let's say aGLP-1 inhibitor, in their
pipeline?
What do you think about that?
Yaniv Sneor (38:59):
There is no golden ticket.
I haven't found one yet, butI'll let you know if I do right.
Yeah let me know if you do.
Yeah, we're still looking forit.
The question is if you have aGLP-1 drug, for instance, right
now or actually in development,if you're pitching it to us, the
question is, when will thatdrug be ready or have enough
(39:22):
data to be acquired?
So what will that market looklike, not now, but potentially?
What will it look like in fiveto seven years, which is usually
that development plan, thecommercial as well as the
regulatory and everything elsebefore that asset will be ready
for acquisition and in somecases we might think that it's
(39:46):
an overcrowded market.
I mean, I remember during COVID, everybody was applying to us
and saying we have a cohort withit and we're like we're not
interested in COVID.
Ben Comer (39:54):
Yeah, hundreds of COVID assets.
Yaniv Sneor (39:57):
That ship, for us, has sailed.
Even in the beginning of COVIDit was already a non-issue for
us because by the time theywould end up trying to sell
themselves which would be now orin a few years the interest is
obviously a lot lower.
Interest is obviously a lotlower.
(40:20):
So the question is whatrelating to GLP-1 or what
relating to CNS are you doingand how does that fit with the
development that we're seeing inthe marketplace?
And if you're going into apotentially hot field, it also
means it's potentially a crowdedfield, especially from an IP
perspective.
And when companies do acquireyou, they're looking at your
patent estate, they're lookingat what your moats are and what
(40:43):
you actually own, and thereneeds to be robust enough,
especially if you want to changea standard of care.
So we have to look at all ofthat when making a consideration
.
If it's very easy to get aroundwhat you're doing because
you're in such a crowded space,it may not be a big exit, if an
exit at all.
Ben Comer (41:04):
Do you think the obesity therapeutic area is
overcrowded at this point?
I mean, I know that there areimprovements that can be made on
the existing products on themarket right now, but there are
a whole lot of drugs in thepipeline targeting obesity.
Has that reached a kind ofovercrowding tipping point?
(41:24):
Do you think?
Yaniv Sneor (41:26):
I don't know if it's reached that tipping point
as well.
Also, there is new learningthat's happening now in the
industry as these drugs arebeing prescribed and there are
side effects and there arewanted and unwanted effects of
those drugs.
Those wanted and unwantedeffects create new opportunities
(41:49):
that you are now beginning tosee, perhaps in some of the
other applications of companiestrying to avoid these or trying
to base what they're doing onsome of these effects, and so I
think it's an emerging,continuously emerging markets
that we're going to see newopportunities in relating to and
(42:13):
growing, you know, and a marketthat didn't really exist a few
years ago.
right, I've seen a lot ofpitches in the past for people
trying to go at it in differentways until finally some major
pharmas achieved somesignificant success there.
So the reality is thateverything is going to evolve
(42:35):
from here, and everyevolutionary step is going to be
a new branch, and each branchwill create new opportunities
and challenges more kind ofabout the composition, or
composition rather of asyndicate that you might
participate in and what's maybeunique about a small investor
(43:01):
syndicate.
So the interesting thing aboutbeing a small investor is that
you can rarely fill in a roundon your own.
If we put it in between aquarter million dollars to a
million dollars in a round andthe round is five to seven
million dollars, we need otherpartners in that round,
(43:27):
companies well enoughcapitalized so that we want to
see that those partners arethere.
So we are very happy to workwith other syndicate partners
and to be on the receiving endas well as on the syndication
end.
So we often work with otherangel groups.
We work with small VCs whospecialize in the life sciences
and we refer deals back andforth to each other when we see
(43:52):
opportunities.
We used to when we were young,we would syndicate everything
that went into diligence andthen we often fell out of
diligence.
So we changed the way that wesyndicate and now we only reach
out to our syndicate partnerswhen we actually made the
investment decision.
We can say, hey, we looked atthis company, we diligence them,
(44:13):
we're putting money into it.
That's the best kind ofendorsing that you can provide.
And sometimes we get companiesthat say, hey, can you recommend
other people we should talk toand we tell them it's not a good
idea for us to do that, becausethe first thing the other
groups will ask us is did youinvest?
And if we say, here's thiscompany, but we didn't invest in
(44:35):
them, that doesn't actuallywork well for you.
You're better off going therewithout us.
Ben Comer (44:40):
Right, yeah, absolutely, and I was looking
through the Mid Atlantic BioAngels portfolio.
You've got companies from allover the United States.
You've got a company based inFrance, so you're clearly, I
think, agnostic about companylocation.
As far as syndicate partners,is there anything that you would
(45:01):
say, I guess, about where themoney comes from and maybe you
know, maybe, what comes with it?
You know, are American dollarsinvestment dollars different
from European investment dollars, different from dollars from
Asia?
Yaniv Sneor (45:16):
So traditionally, what was a small VC in the US is
a large VC in Europe or inother parts of Asia.
And when we do work withsyndicate partners in Europe and
(45:36):
Asia, usually they want us toinvest in their opportunities,
but they rarely want to investin our opportunities.
The environment for startups,the talent for running companies
, is different between Asia andEurope and the US, and tolerance
(45:56):
for failure is also differentbetween these markets.
Look at a company's role asthey raise money and they think
of if it's a great company fromthe get-go, they'll go to the US
to raise money right from thestart.
(46:17):
If it's a fledgling companythat needs a little bit more
before they have enough data,etc.
Maybe we, the Europeans can geta chance to invest in them in
that first round before, whenthey're successful, they go to
the US to raise the larger andthe bigger and the additional
monies that they need.
(46:39):
We certainly look for anunderstanding from the
management team of the US market.
We believe that you need to beable to commercialize in the US
or understand how to monetize inthe US in order to reach an
exit.
The US is often at least 50% ofthe world when it comes to
certain diseases or indications.
(47:00):
So we want to make sure thatthe management even though they
may have started in theirbackyard somewhere in Europe or
Asia, et cetera stillunderstands the commercial
uniqueness of our US market interms of payers.
You know it's very difficult toget things adopted in the US in
(47:20):
terms of who pays and how itgoes into the standard of care,
and you need to understand thatand to work towards that in any
kind of solution that you wantto bring in.
So we'd like to see thatunderstanding and management.
And then in our discussionswith our foreign syndicate
partners, we often see more ofthe parade of their companies as
(47:44):
opposed to them beinginterested in ours.
Ben Comer (47:46):
Right.
So if a company is too early intheir development for you,
perhaps they should go to Europe, is what you're saying.
Yaniv Sneor (47:56):
Well, I think that they have a better chance to get
money in Europe if they startedin Europe.
I think it would be moredifficult for a non-European
company to get funding in Europe, more difficult for a
non-European company to getfunding in Europe.
So I think it needs to startthere.
But it may be too early for usand there may be an appetite for
(48:16):
a European investor to putmoney into them before we are
ready for them.
And I want to also make surethat I state this at some point
just because we don't think it'sa good investment decision, it
means that we don't think it'sthe right thing for us, but it
doesn't mean that it's not agood opportunity.
There have been and will beopportunities for very
successful companies that we'dsay no to because we think it
(48:41):
may be too expensive or tooearly or too risky or whatever
it is.
But it just means it's notright for us.
It doesn't mean it's not rightfor the world.
It's not a good opportunity.
You're trying to look for thatmatch between the appetite of a
specific group and a veryspecific type of company.
Ben Comer (48:58):
Right, right, let's talk about your day job for a
minute, which is not MidAtlantic Bio Angels.
You're the CEO of Native StateTherapeutics.
Can you give us a sense of, ormaybe just a company overview
and a little bit about, yourcompany strategy and exit plan?
Yaniv Sneor (49:17):
So you know, with all that said, Mid Atlantic Bio
Angels does consume the majorityof my time.
It's a very jealous mistressand every available minute that
I have does go towards thisendeavor.
It's a passion project.
So, by all means, it'ssomething that I've been doing
for many years and enjoy doing.
(49:38):
But in terms of my companywhich is too early for my own
group, right.
So I can tell you that at leastI understand my own investment
criteria.
So I can tell you that at leastI understand my own investment
criteria.
We are going afterneurodegenerative diseases and
in that sector, we're goingafter protein misfolding
diseases.
There are a number of diseaseswhere the believed mechanism of
(50:02):
action is that some proteinslose their function and shape,
for whatever reason, and thoseproteins make other proteins
lose their function and shapeand once they accumulate into
secondary structures they canbecome toxic.
(50:22):
That that kind of mechanism isprevalent in Parkinson's and
potentially Alzheimer's as well,as well as other diseases that
are more unique, which are priondiseases or frontotemporal
dementias and others, and so ourapproach is to go after a very
(50:46):
well.
So our approach is to go afteran orphan disease path where, as
I mentioned before, it is aless expensive and less
time-consuming path to get tomarket and hope to be able to
show that the assets that we aredeveloping in fact could be
translatable to other, broaderindications.
(51:10):
We're still at the very earlystage and have been for a while,
unfortunately because of someresearch challenges that we've
been dealing with, but that isthe current approach.
Ben Comer (51:23):
Hey, that's how research goes, and so I think
what you're saying is yourstrategy is you would start off
with this orphan indication,smaller indication, reach an
exit with that, before you wouldkind of build it out into
potentially larger Alzheimer'sor Parkinson's disease
indication, which would maybe bedone by someone else at that
(51:45):
point.
Is that correct?
Yaniv Sneor (51:47):
So we hope to get to an approved drug on the
orphan indication and during itsdevelopment we are already
trying to show that in thosedisease models that our approach
translates so that by the timewe do end up with an approved
asset we can go and talk tolarger pharmas and say here is
(52:12):
obviously an approved asset foran indication for which there
are currently no treatments.
In addition to that, themechanism of action we think
translates because of thefollowing data and all the
research we've already done inyour model as in these specific
models, and then hopefully thatwould allow us to partner and to
exit.
Ben Comer (52:33):
Got it.
Investors, life sciencescompanies no one is operating in
a vacuum.
There are a myriad externalfactors that influence funds
flow, all sorts of things, andso, to wrap our conversation and
take a look forward, I wantedto ask about maybe one of those
(52:56):
external factors, which is whatare the risks and opportunities
that you're monitoring amid theshakeup at NIH or FDA?
Yaniv Sneor (53:08):
Yeah.
So you know, our investmentprocess has so many
uncertainties built into it andwhat we try to do is to make
investments into things thatwill reduce uncertainty and
bring the opportunity forward inthat kind of way.
(53:28):
There are currently a lot ofuncertainties.
You know, what we're lookingfor are certainties or
stabilities in terms oftimelines.
Are the reviews going to be thesame timelines?
Is the quality of the data andthe standard of review and of
approval going to be the same?
How will the changing ofpersonnel, the lack of personnel
(53:55):
, whatever affect thosetimelines, et cetera?
And how will pharma react tothat?
And how will ultimately theadoption marketplace adopt to
that?
I mean, will there be a slowingin the approval of drugs and, if
so, what happens in themarketplace?
(54:15):
How will people be treated?
Will pharma go back into moreof the R as opposed to the D?
And so it's very difficult toascertain because there are so
many moving parts right now andwe don't know what will happen.
And our investments and ourprocesses are multi-year
(54:37):
processes that we are looking atand our approval of certain
things take time and we havecertain expectations.
So it's going to be verydifficult for us right now to
figure out what it is, but weare keeping a very you know an
eye out on everything and tryingto figure out how and if it
(54:58):
will affect us in any way.
Ben Comer (55:01):
Right, excellent.
Well, we will leave it there.
We've been speaking with YanivSneor, CEO of Native State
Therapeutics and founder of theMid Atlantic Bio Angels
investment group.
I'm Ben Comer and you've justlistened to the Business of
Biotech.
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com for more information.
Welcome back to the Business ofBiotech.
(00:46):
I'm your host, Ben Comer, chiefeditor at Life Science Leader,
and today we're speaking withYaniv Sneor, founder of the Mid
Atlantic Bio Angels, an angelinvestor group formed in 2012
with a current portfolio ofapproximately 20 life sciences
companies.
As we do, we'll get to knowYaniv a little better at the top
(01:06):
of our conversation, and thenwe'll dive into why, despite a
challenging market at the moment, it still makes sense to bet on
biopharma over other industries.
We'll talk about the role smallinvestors play in life sciences
, the importance of exitplanning for startups and
early-stage companies, andbehavioral best practices for
(01:26):
biotech leaders and companies insearch of funding.
Yaniv is also the CEO of NativeState Therapeutics, and we'll
learn a little bit more aboutthat company as well.
Yaniv, thank you so much forbeing here.
Thank you so much for having me.
Thank you so much for having me.
To the getting to know youpiece, Yaniv, how and when did
(01:47):
you first become interested inthe life sciences industry and
life science investing inparticular?
Yaniv Sneor (01:55):
So I studied physics in college.
I always had an affinity for thesciences and at some point,
after selling a company, Ibecame interested in investing
and angel investing in general,and after reviewing how the
process is done in multipleplaces, I, along with two other
(02:17):
partners who have since retiredwe thought that in order to
properly invest in life scienceopportunities, you need a lot of
very specific expertise.
It's a very complex type ofindustry to diligence and we
felt that if we are going to goahead and invest in this type of
asset class, we need to somehowfind a way to bring together a
(02:41):
lot of expertise around thetable to properly diligence way
to bring together a lot ofexpertise around the table to
properly diligence.
And so we decided to focus onlife sciences, which allowed us
to attract a membership that isprimarily from within the
industry.
So, life science well, angelinvestors in general usually
have a day job and then theymeet to get together at off
(03:02):
hours or otherwise to investtheir money, to get together at
off hours or otherwise to investtheir money.
So most of our members have dayjobs within the industry pharma
device companies, theirconsultants in regulatory,
commercial, their MDs soeverybody has an affinity and
usually a big involvement in thelife science industry in their
life.
Ben Comer (03:23):
How did you go out and find those experts and then
bring them in to Mid AtlanticBio Angels?
Were you looking for peoplekind of like yourself who maybe
were working in industry but hadan investing interest?
I'm just curious about how youidentified those and then
brought them into the group.
Yaniv Sneor (03:41):
So we started off as three founders, as I
mentioned.
Two of them have since retired.
We each had our own network ofpeople.
We brought them in.
They brought in their networkof people.
Being a life science angelinvestor group is actually
something unique.
There aren't many of us aroundthe world.
There are many wonderful angelgroups out there, but most of
(04:03):
them generalize in terms oftheir investment strategy and
very few of us specialize inlife sciences.
So people who are looking toinvest in this asset class,
people who are looking to sharediligence with people who have
this expertise, find us.
We're out there in conferences,we talk to a lot of different
people and our members introduceother members.
(04:25):
So we're always obviouslylooking for additional members,
but there's a lot of.
It is by referral.
Ben Comer (04:32):
Okay, and you just mentioned there aren't a lot of
angel investment groups outthere.
I mean, is that part of thereason that you wanted to
initially found Mid Atlantic BioAngels in 2012?
Yaniv Sneor (04:46):
There are quite a few, as I mentioned, wonderful
angel groups out there.
Most of them are generalists,so there are very few that
invest exclusively in lifescience.
So we're one of a handfulreally around the world who just
look at life science, and eachone of us is unique in our own
way.
We all have our own specialinvestment criteria.
(05:06):
Some of them are geographic,some of them have to do with
evaluation.
You know, every every groupevolves based on the personality
, the character of its membersand what and what we want to do
as a group.
Ben Comer (05:19):
Yeah, yeah, well, you , I, I mentioned the group was
founded in 2012.
Here we are, you know, let me,let me do the math.
13 years later, what?
What have you learned sincethen?
You know, what kinds ofaccomplishments are you most
proud of?
Yaniv Sneor (05:36):
I'm sure there were some learnings that happened
during that period All the time,and so that's actually one of
the first things that I'm proudof.
I mean, obviously, the firstthing is the membership that
we've been able to attract.
They're wonderful people,really intelligent, really
engaging, and people that youenjoy spending time with.
So it's wonderful on multiplelevels, very proud of the
(06:00):
evolution of it to your point.
We started off as people whowrite our own checks and then we
said, hey, how about we createan internal fund that we call a
pool, that we all vote in anopen vote on how we invest our
money, and every time we vote,we actually have to post a
statement that says why we voteda certain way, and it creates a
very engaged mechanism withinthe group.
(06:23):
It creates a very engagedmechanism within the group, and
then you know the expertise thatwe built and the ability to
bring all of that expertise tobear.
When you're doing diligence andour investment record, you know
we happen to be very picky.
Despite multiple internalarguments that we should be
investing more, etc.
Ultimately the group behaves ina fairly consistent manner in
(06:45):
the way that it likes to invest.
I think that we make greatinvestment decisions, very
thoughtful investment decisions,and so I'm also very proud of
our track record as well.
Ben Comer (06:57):
Yeah, well, let's dig into that a little bit.
If you could take me throughthe process that Mid Atlantic
Bio Angels uses when consideringwhether or not to provide a
given company with funding.
Yaniv Sneor (07:12):
Sure.
So it begins with theapplication process and the way
that we present ourselves to theworld.
We wanted to make it asdemocratized as possible, so we
didn't want it to be abouthaving to have a referral to get
to know our group.
We wanted to make sure thatanybody with a reasonable,
hopefully good idea in the lifesciences would be able to
(07:34):
approach us.
So we put our investmentcriteria on our site for
everybody to see and everybodycan self-select the first round,
basically, and see if they meetthose criterias and, based on
that, submit an application tothe group.
We screen on a monthly basis,except for the summer, and we
review every application, evencompanies that I meet at
(07:58):
conferences.
I tell them that I'm there tomeet with them, to help them
understand and help guide themas to whether they should apply
to the group, because ratherthan just pitching to me by
applying to the group, they havethe attention of 10 or 15
people who are screening, whohave much more expertise than
any one individual like myselfcould have and would get a much
(08:21):
better viewing and discussionabout the potential of their
opportunity.
And then what we're reallytrying to do in that screening
call is to decide, not whetherit's a good or bad opportunity,
but whether it's a rightopportunity for us as whether we
think that our group would beinterested in seeing, in
potentially investing in it, andwhether we as angel investors
(08:42):
could potentially be makingmoney there.
So of the 100 applications thatcome in, we invite
approximately 20 of those topresent in person and the 80
that we say no to, we tell themin general terms why not Leaving
the door for them to apply tous in the future if things
change, if they're able toaddress things?
(09:03):
Sometimes we just tellcompanies you're too early, so
we're happy to see them in thefuture if things change, if
they're able to address things.
Sometimes we just tellcompanies you're too early, so
we're happy to see them in thefuture.
So sometimes the issues couldbe a little bit more difficult
to address.
But if they're able to oraddress for us, if they're able
to, we're happy to review themagain in the future, and we have
reviewed multiple companiesmultiple times.
Of the 20 or so companies thatdo make it through screening,
(09:25):
approximately 10 or so move intodiligence and we do have a
certain threshold of the numberof members committed to
participating in a diligencebefore we decide to go into that
diligence just so that we canmake sure that there is actually
an engaged effort.
That happens once we go intothere and within a week of the
(09:49):
company presenting to us,they'll usually receive a first
set of questions and those arethe gating questions.
We want to start with the hardquestions first, the ones that
would cause us to quit thediligence early on.
We don't want to waste ourmembers' time, we don't want to
waste the company's time as well.
So we start with thosequestions and then we might have
(10:10):
calls with a company which werecord for internal use.
We may have internaldiscussions.
We'll go back and forth withcommunications between us and
that company until we eitherdecide not to, in most cases to
invest or if there still is apositive sentiment about that
opportunity.
(10:31):
We will bring in the remainderof the members who are members
of our internal fund, what wecall a pool.
We'll bring them into thediligence room and ask them to
review all the information sofar, which we will lightly
summarize, basically to addresswhat we've hit on and what we've
touched etc.
And then we'll ask them to sayif there are any additional
(10:55):
questions, if we want to doadditional internal discussions,
if we want to have anotherdiscussion with the company,
whatever is required of them,because there's a positive
sentiment, which means we wantto bring it to a vote for the
pool.
So whatever open questionsthere are, whatever additional
(11:17):
information there is, pleaseprovide it, and et cetera.
So at that point we get throughthat and then we open the pool.
The votes to open it to a poolvote.
The vote to open it to a poolvote.
Pool vote remains open formultiple days.
Everybody knows how everybodyvotes and whenever somebody
votes, we ask them to post astatement that says why they
voted the way they did.
It engages everybody to beinvolved with the diligence, to
(11:40):
be thoughtful, think about whatthe best outcome for our
investment should be.
And then we leave the vote openfor over a number of days so
people have a chance toparticipate over a weekend, et
cetera, and review all thematerial and if anybody says,
hey, I need more time we'llextend the vote and at that
point after that, we'd make adecision.
Based on that everybody'sdiscussion, We'd make a decision
(12:03):
as to whether to invest or not.
So all of those 100 companiesthat started at the top of that
funnel fewer than one and a halfwould receive funding at this
point.
So, pre-pandemic, we werecloser to three, we're closer to
1.5 now, or even lower thanthat.
There are a number of reasonsthat may have contributed to
(12:27):
where we are today, but it iswhat it is.
We're in a scientific andnumbers business and we just
said all we could do is followwith that.
And when we do make aninvestment decision, we have a
co-investment sidecar fund,which is a fund for people who
either don't have the time orexpertise to be members of the
(12:49):
group but somehow want to investwith us.
So that sidecar fundautomatically co-invests with us
if the pool decides to investas well.
So we want to be able to bringto bear as much funding as
possible funding as possible.
Ben Comer (13:06):
I wonder if you could give me an example or two of
some of those initial hardquestions that help you screen
out the candidates that youdon't want to invest in.
Yaniv Sneor (13:16):
A lot of times the issue of adoption will be a
crucial issue for us.
You know, will it be used, willit be incorporated in the
standard of care is often agating question for us.
Also, another gating questioncould be scientific challenges
(13:40):
that we need to understand more.
I mean, if you are a companypitching to us, you want to
pitch to us that in fact there'sa great opportunity here.
But we'll get to this maybelater in our discussion.
We don't want to just hear ascientific discussion all the
time.
We want to see that there is areasonable scientific basis and
make us want to go intodiligence and learn more, and
(14:00):
make us want to go intodiligence and learn more.
So, as we learn more, we wantto see that that scientific
basis in fact can bear out in away that would lead to an exit.
And so, because many of ourmembers work in the industry,
(14:24):
they have an understanding ofwhat acquirers potentially would
be looking for in a companybefore they acquire them, what
kind of data we would be lookingat, et cetera.
And so we need to understandthat and we need to understand
that it makes sense for usfinancially.
Because of our investmentcriteria, we try to avoid
companies that will requirelarge investment rounds in the
(14:44):
future.
We can talk about the role ofour type of investors, perhaps
in this ecosystem, but we needto make sure that the data is
there, or could potentially bethere, and that it could be
reached with angel-friendlyrounds, with rounds that we
could participate in and makemoney in as well.
(15:06):
So there are a lot of differentcriteria.
So those happen to be the twobig ones.
The management team is alwaysnumber one criteria.
We tell companies we have dayjobs, we don't want your day job
.
We are trusting you with ourmoney to know what to do with it
and to bring this company tosuccessful commercial conclusion
(15:30):
.
So with that, we need peoplewho understand the commercial
process, who understand how tomonetize an opportunity and not
just discuss with us thescientific merits around the
opportunity, but how and whythey will have a wonderful exit
and what are the comps that willacquire them and why and what
(15:51):
stage.
And we need to understand andbuy into that.
Ben Comer (15:55):
Yeah, and can you kind of ascertain that ability
in leadership, or are youlooking primarily at past
experiences, or is a combinationof both?
Yaniv Sneor (16:07):
Past experience helps a lot, but if we only went
on past experience, then you'dask me a follow up question what
about all these new CEOs?
That might be great, and so youknow, if you are able to speak
to us lucidly and explain theprocess of how you're going to
monetize this opportunity, youcan show us comps, you can tell
(16:30):
us about the discussions thatyou've had with potential
acquirers and show us whatthey're looking for, which we
can confirm as well internally,and we can see a clear path to
an exit that makes sense to us,based on our own evaluation,
then that's a credible plan andthat's a credible person that
(16:50):
provided us with that plan thatwe can buy into.
And that's the whole idea,right.
I mean, it has to be areasonable story.
It'll obviously change, becausenothing is totally predictable,
right, but it needs to makesense at the outset in terms of
the plan for this company andhow they plan to get to an exit,
(17:11):
and we always believe that youneed to start with that exit and
work your way backwards, right?
What do these acquirers want tosee in you before they buy you?
How much data at what stage?
And so what are the trialsgoing to look like what's your
clinical and preclinical pathwaygoing to look like?
How much time and money to getthere?
(17:33):
And then you begin to create astory and if their story makes
sense to us and our backgroundand understanding, based on our
members understanding from theirexperience all jive, for lack
of a better word then it's agood story that we can buy into.
Ben Comer (17:54):
Do you encounter companies that come to you
hoping to obtain funding anddon't have an exit plan at all?
I mean, do most companies thatare progressing up through your
filter have that kind of frontand center, or at least have
given it some thought?
Yaniv Sneor (18:13):
We do encounter, every once in a while, companies
of all types.
Ben Comer (18:17):
Okay.
Yaniv Sneor (18:18):
We do try in the discussions that we have with
our companies.
As I mentioned to you, we go tomany conferences et cetera, and
our goal is to help guide thecompanies, to make them decide
if it makes sense for them toapply, and usually one of the
first questions is how muchmoney and time and effort do you
think it will take to reach anexit?
(18:38):
And that focuses the discussionwith those kind of companies
that we need and want to seethat An experienced management
team who pitches to us willalready know that we're looking
for that, because you're notpitching to scientists, you're
pitching to investors, andinvestors want to see a return
on their investment, and thatwould come from an exit,
(19:00):
preferably from an M&Atransaction or an IPO.
Ben Comer (19:12):
Right, okay, I want to broaden the aperture here in
just a second and ask somebigger questions about biotech
and life sciences investing.
But before I do, just to getmaybe a better sense of what
you're up to, is there aspecific dollar amount that
you're typically providing in agiven investment for a company
once it's progressed all the wayup through the funnel
successfully, and is there alsoa specific timeline that you're
(19:35):
looking for in terms of an exit?
Yaniv Sneor (19:38):
So I'll start with the second first.
So we look to invest incompanies that would have a
potential exit within five toseven years.
It often happens that it takeslonger than that right, because
that's the way life happens.
But if you look for a timelinethat's 10 years or longer,
there's so many moreuncertainties that are brought
into that equation that it'sdifficult to make a decision in
(20:03):
terms of a company, and we'dusually tell them you may be too
early for us, but for othercompanies that come to us, we
believe that the exit horizoncould reasonably be within a
five to seven year period.
We would first consider aninvestment in them.
When we have thatcommercial-minded person on
board leading the effort, thatwould be the first time that we
(20:24):
would consider making aninvestment, and then we would
hope to participate in all therounds, all the successive
rounds, before they reach anexit, because the kind of
opportunities that we want toinvest in will not require
future follow-on large VC ramps.
So whenever an opportunityrequires $30, $50, $100 million
(20:45):
in the future, that's an area wedon't play well in, because
we'll be diluted very heavilyand the large rounds in those
future will provide theirinvestors with preferred seats
ahead of us in the bus, so tospeak, when there's an exit and
will also dilute us very, veryheavily.
(21:06):
So the kind of opportunitieswe're looking to invest in will
require maybe no more than $25or $30 million in totals before
they reach an exit, and thosecan be raised in multiple
syndicated rounds.
So a syndicated round is wheremultiple angel groups and
perhaps smaller VCs all gettogether and put money into a
(21:29):
round.
We would typically invest abouta quarter million to a million
dollars in a round.
We have invested more, we haveinvested less, and then the
company takes that money, goesback to the lab, hits milestones
and comes back to us in a yearor two and raise another round,
hopefully because they've donewell with their milestones and
we'll be happy to invest in themagain, possibly probably in a
(21:52):
higher valuation, but it showsprogress and everybody's happy.
That way nobody incurssignificant dilutions and you
can do anywhere from two to fiveof these syndicated rounds and
raise $5 to $10 million at eachone of these rounds and all of
the investors remain very happy,supposedly, and the company
(22:15):
usually retains control of thecompany.
They don't end up giving upcontrol of the company, which
they would in a VC roundtypically.
So those are the kind ofinvestments that we believe we
can participate in and makemoney in as well make money in
an exceedingly challengingmarket right now for biotech for
(22:38):
a number of reasons.
Ben Comer (22:40):
From an investor's perspective, what case would you
make for investing in biotechright now versus other
industries?
Yaniv Sneor (22:52):
So, first of all, don't take all of your money and
put it in biotech, please,Right?
So I think it's smart to havediversification and allocation,
but I think it's great to haveexposure to this unique asset
class, high risk, potentiallyhigh reward.
If you think about biotech andanything in the medical
community, there's always goingto be a need.
(23:13):
There's always going to be.
You know, there are so manydiseases for which we have
absolutely no treatment andthere are so many diseases for
which we can provide bettertreatments, better standing of
care, so there's always going tobe a need.
The other reason is you can dogood as you do well.
(23:36):
You know and do well as you dogood.
So that's a great thing.
We think that not only can youbenefit as an investor, but the
patient's lives will be, youknow, well impacted.
And the other interesting aspectis you can't start a biotech
company with enough pizza andbeer over a weekend.
(23:58):
You know there's a certainbuilt-in maturity into the
company because of all the datathat you're required to create,
because of all of the otherthings that you have to by
virtue of being a life sciencecompany.
You have to do certain thingsand that imposes a certain
maturity on you as anentrepreneur, on you as a
(24:21):
company and, by the way, alsothey are investors.
There's a certain maturity inthe room, so we don't get these
fly-by-night opportunities.
We get things that have abaked-in maturity already in
them and that elevates a levelof discussion that we have.
Ben Comer (24:43):
Right.
You've described yourwell-assembled funnel for
evaluating companies and makingdecisions about them.
I wonder what you might sayabout companies that maybe don't
shape up or are missing keypieces, and I don't know if it's
organizational or relational orwhat, but maybe what are some
(25:08):
of your pet peeves?
Yaniv Sneor (25:09):
I guess, as an investor who is actively looking
at a whole lot of companiesworking in life sciences
actively, looking at a whole lotof companies working in life
sciences, so there are a lot ofpet fees, but a few of them.
For instance, there arecompanies that we call it spray
and pray.
They just send the generic typeof here, this is our company,
(25:31):
so-and-so we're doing this, andthey just send it to the website
.
Our investment criteria on thewebsite.
Take a minute.
Read our investment criteria.
See if you are actually a fit.
If you spray and pray.
First of all, half of them arenot even life science companies,
(25:53):
so we don't respond to them.
But if you are in life science,our response will be our
investment criteria on the site.
Take a look at them.
If you think you're a match, byall means please apply.
Another pet peeve is peoplepitch to us a scientific pitch.
They think it's a posterpresentation.
But what you really need topitch to us is an opportunity
(26:17):
for us to make money.
You have to pitch the exit,pitch what we're likely to make
from this and why what you haveis likely to be a good
investment opportunity becauseyou have the right expertise and
the right science and the rightmarket, need right, and all of
those things coming togetherright now make us want to go
(26:38):
into diligence, to learn more,instead of giving us a 10-minute
scientific presentation whichmost people fall into.
Another pet peeve, which is sortof on a different tangent,
related founders.
Whether it's a husband and wife, or parent and child, et cetera
(27:02):
.
In my opinion, you will alwaysput your familiar relationship
first and your businessrelationships second.
But when we invest, we want tomake sure that the company is,
first and foremost, right.
I don't want to have to worryabout what your Thanksgiving
(27:23):
table is going to look like andhow tense that discussion will
be if you think that your spouseor child isn't doing a good
enough job or something in thecompany, or whether you'll even
feel comfortable telling themthat they're not good doing a
good enough job.
Certain things have to be donein a company and you have to be
able to hire and manage peoplewho are accountable for those
things.
(27:43):
Um, and it's easier to do thatwhen those people are not
related.
So that's another one of thoseyeah, I uh.
Ben Comer (27:52):
There's a Pittsburgh-based company called
Krystal Biotech that is led by ahusband and wife in the CEO and
chief scientific officer role.
They got a product approved thefirst topical gene therapy ever
approved, actually.
But I remember thinking howdifficult maybe a Thanksgiving
might be.
It's tough to mix business andpleasure.
(28:13):
It's a cardinal rule, so that'sinteresting might be, you know,
and it's it's tough to mix, youknow, business and pleasure.
You know it's it's a cardinalrule, so that's that's
interesting.
I also wanted to pick up onsomething you said previously
which strikes me as analogous tosomething I encounter as a, as
an editor and writer, which is,you know, I get a lot of pitches
(28:34):
hundreds a day fromcommunications and PR.
I work closely with them.
I really appreciate them ascolleagues, but there are always
a few that are just, you know,here's the phase two data
readout, here's someone we addedto our scientific advisory
board and that's kind of it.
And you know, perhapsexpectedly, a lot of those I
(28:58):
don't respond to or don't followup on.
Instead of a strictlyscientific presentation, what
should companies think about?
How can they kind of bring youin and engage you in a way that
makes you want to learn more?
Yaniv Sneor (29:13):
It has to be a good story and it has to be a
financial story and it has to beabout how and why this company
and its product and whatever ithas are going to be an exciting
opportunity for us to invest in,why it's going to be a large
exit, why those acquirers aregoing to want to buy this
(29:35):
company, why they are uniquelypositioned to do that, why their
science is so different thananybody else, why will they be
successful where others may havefailed?
And that includes both thescience and the management team
and the timing and theopportunity.
And that's what they reallyneed to tell us.
And really you need to hook us.
(29:58):
You just need to excite usenough when you present to us
for us to, as I said before,want to dive in, want to go into
diligence, want to find outmore about the science and the
team and the opportunity andwhether really there could be an
exit with this amount of moneyand whether there really is this
kind of interest in thisspecific market from potential
(30:20):
acquirers.
Ben Comer (30:22):
Right, what can you say, Yaniv, about the role and
importance of small investors,like Angel Investors or other
small investors as well, inbiotech?
And then maybe, if you couldmention some of the limitations
you know, perhaps other thanbeing able to contribute, you
know, $100 million.
Yaniv Sneor (30:43):
Yeah, I think that when you look at if you're a
company, you look at where yourexit is and then you begin to
work backwards and you createthat story that becomes a
financial story.
When you attach numbers to thattimeline and to those trials
and to everything else that youneed to go through, you end up
with a dollar amount at the end.
(31:05):
Right, I mean your first exitpoint, your second exit point.
But you realize that, given theamount of data and the size and
the timing of the clinicaltrials and everything else that
you may need to do to reach anexit, if you're not from a
single company, you're going toneed to have traction.
If you are a device company oryou're working, as you know, if
you're doing a diagnostics ordigital health company, there's
(31:33):
going to have to be sometraction within the industry.
Diagnostics or digital healthcompany, there's going to have
to be some traction within theindustry.
So all of those require time toshow and prove adoption in
those cases.
So you end up with that numberand that number means that you
have now a set of potentialinvestors and if that number is
the 30, 50, 100 million dollars,in my opinion we are not part
(31:57):
of that investor communitybecause, as I mentioned, we're
going to be diluted very heavilyin the future.
We can't put up the numbersthat the VCs can and it's really
not a game that we cansuccessfully play in.
And, by the way, if you're acompany that needs that, you're
going to end up losing controlof your company.
(32:18):
You're going to have to give upat least 51% in the very first
large VC rounds and then more insubsequent rounds.
But if you are able to raisesmaller amounts and you're able
to do that in perhaps in smallerrounds, you could appeal to
smaller investors.
(32:39):
There were these small VCs andangel groups that put in maybe
up to a million or two or three.
I've worked with VCs that putin maybe up to $5 million in
total into a company overmultiple rounds, et cetera, or
even more, and then you often domaintain control over the
company.
It's a different kind of arelationship.
(33:00):
It's often more supportive ofthe management team because we,
as I mentioned, we have our dayjobs.
We don't want the CEO's day job, we want those CEOs to be
successful.
We're happy to lend guidancewhenever we possibly can and
open our network and provideexpertise, which we see is good
obviously as well, but we do sowith a main goal of helping that
(33:27):
CEO and that company becomesuccessful.
So it's a different kind ofraise the limitations for us.
Obviously we can't play in thosebig rounds kind of raise.
You know the limitations for us, obviously we can't play in
those big rounds.
And you know we don't have astable of people waiting to take
the CEO's job.
We're not set up like that.
No, we are more set up tosupport and nourish as much as
(33:48):
possible the existing managementteam and help them become
successful.
Which is why it's veryimportant for us that when we do
make that investment decision,that we believe that the team
has at least the basis forbecoming successful.
Maybe they don't have all thepeople in place, but they have a
plan as to how to hire theright people they'll need in the
future.
Maybe it makes sense for themnot to have them in place right
(34:10):
now because it's too muchoverhead et cetera, but we want
to understand that they have aplan that includes them later on
when they are needed, makessense.
Ben Comer (34:20):
Yeah, and you don't necessarily need $100 million to
start up a biotech company.
But I wonder if there is a kindof difference in kind between a
company that can successfullystart up at a lower dollar
amount versus someone who, outof the gate, is going to need
that really large investment,and maybe you could just answer
(34:46):
that one.
Yaniv Sneor (34:46):
But if there's something unique that you like
about those companies that arenot asking for a huge amount of
money to get started, you know,there are a variety of fields in
life sciences that are going torequire large trials, lengthy
trials, and, by definition,that's not for us to be able to
(35:10):
fund.
You're going to need, whetherright off the bat or in the
future, those large sums ofmoney and that's just the
reality of it in order to exit,either through acquisition or
through an IPO.
There are areas where,especially if you're going after
an orphan designation, andespecially if, once you do have
(35:31):
a successful orphan designatedproduct drug, you can then
perhaps expand the indicationbecause there is a commonality
in terms of the mechanism ofaction, where it could apply for
one disease to multiple,perhaps more highly prevalent
diseases.
Those are paths that could bemore efficient in terms of time
(35:56):
and money for investors toparticipate in.
There are other areas that welike to invest in where the area
is so exciting for lack of abetter word for current pharma
or device companies that if youshow them enough traction and or
enough data, they will acquirethe company and show them enough
there, there, because it's anarea they want to get into, an
(36:20):
area they believe there's apotential, and if you can give
them all the signals thatthey're looking for internally,
they'll acquire you early, andthat's another very good
investment opportunity for us aswell.
Ben Comer (36:34):
Yeah, so do you help companies get prepared to be
acquired and I'm asking this inpart because I've heard a lot
from people about the pendingpatent cliff and the supposed
large stocks of dry powdersitting at big pharma.
I think there's an expectationthat M&A is going to pick up.
(36:55):
We'll see, but is thatsomething that you're helping
companies think through oryou're expecting them to kind of
already have that in mind?
Yaniv Sneor (37:05):
We are really there to help, but we can't drive,
you know we.
So when we do make aninvestment in the company, we
try to create a number ofliaisons within the group to
engage with the company on aregular basis.
So, rather than just sittingpassively and waiting for a
quarterly report, we would likethese folks to reach out to the
(37:28):
company on a monthly orquarterly basis and ask them how
they're doing or what kind ofchallenges they have, what kind
of issues are they seeing, andthen either using their own
expertise or going back to ourgroup and saying who here has
the ability to open these doors?
Who has expertise in thefollowing things?
Et cetera, et cetera.
(37:48):
So we try to do that more andmore on an active basis.
But we won't drive an exit.
We're not there to do that.
We want to see that managementhas the capabilities and has the
understanding and has theability to either have in place
or to bring into the team theright people who can create that
(38:10):
exit.
Ben Comer (38:13):
Right.
I wonder what your opinion ison an early stage or startup
company choosing to include apipeline drug that is buzzy, is
something that the industry isfocused on at the moment CNS,
other therapeutic areas that arepopular or are very much in the
(38:40):
news and an area of focus forthe industry.
Is that a ticket kind of for acompany that's successful to
include a drug, let's say aGLP-1 inhibitor, in their
pipeline?
What do you think about that?
Yaniv Sneor (38:59):
There is no golden ticket.
I haven't found one yet, butI'll let you know if I do right.
Yeah let me know if you do.
Yeah, we're still looking forit.
The question is if you have aGLP-1 drug, for instance, right
now or actually in development,if you're pitching it to us, the
question is, when will thatdrug be ready or have enough
(39:22):
data to be acquired?
So what will that market looklike, not now, but potentially?
What will it look like in fiveto seven years, which is usually
that development plan, thecommercial as well as the
regulatory and everything elsebefore that asset will be ready
for acquisition and in somecases we might think that it's
(39:46):
an overcrowded market.
I mean, I remember during COVID, everybody was applying to us
and saying we have a cohort withit and we're like we're not
interested in COVID.
Ben Comer (39:54):
Yeah, hundreds of COVID assets.
Yaniv Sneor (39:57):
That ship, for us, has sailed.
Even in the beginning of COVIDit was already a non-issue for
us because by the time theywould end up trying to sell
themselves which would be now orin a few years the interest is
obviously a lot lower.
Interest is obviously a lotlower.
(40:20):
So the question is whatrelating to GLP-1 or what
relating to CNS are you doingand how does that fit with the
development that we're seeing inthe marketplace?
And if you're going into apotentially hot field, it also
means it's potentially a crowdedfield, especially from an IP
perspective.
And when companies do acquireyou, they're looking at your
patent estate, they're lookingat what your moats are and what
(40:43):
you actually own, and thereneeds to be robust enough,
especially if you want to changea standard of care.
So we have to look at all ofthat when making a consideration
.
If it's very easy to get aroundwhat you're doing because
you're in such a crowded space,it may not be a big exit, if an
exit at all.
Ben Comer (41:04):
Do you think the obesity therapeutic area is
overcrowded at this point?
I mean, I know that there areimprovements that can be made on
the existing products on themarket right now, but there are
a whole lot of drugs in thepipeline targeting obesity.
Has that reached a kind ofovercrowding tipping point?
(41:24):
Do you think?
Yaniv Sneor (41:26):
I don't know if it's reached that tipping point
as well.
Also, there is new learningthat's happening now in the
industry as these drugs arebeing prescribed and there are
side effects and there arewanted and unwanted effects of
those drugs.
Those wanted and unwantedeffects create new opportunities
(41:49):
that you are now beginning tosee, perhaps in some of the
other applications of companiestrying to avoid these or trying
to base what they're doing onsome of these effects, and so I
think it's an emerging,continuously emerging markets
that we're going to see newopportunities in relating to and
(42:13):
growing, you know, and a marketthat didn't really exist a few
years ago.
right, I've seen a lot ofpitches in the past for people
trying to go at it in differentways until finally some major
pharmas achieved somesignificant success there.
So the reality is thateverything is going to evolve
(42:35):
from here, and everyevolutionary step is going to be
a new branch, and each branchwill create new opportunities
and challenges more kind ofabout the composition, or
composition rather of asyndicate that you might
participate in and what's maybeunique about a small investor
(43:01):
syndicate.
So the interesting thing aboutbeing a small investor is that
you can rarely fill in a roundon your own.
If we put it in between aquarter million dollars to a
million dollars in a round andthe round is five to seven
million dollars, we need otherpartners in that round,
(43:27):
companies well enoughcapitalized so that we want to
see that those partners arethere.
So we are very happy to workwith other syndicate partners
and to be on the receiving endas well as on the syndication
end.
So we often work with otherangel groups.
We work with small VCs whospecialize in the life sciences
and we refer deals back andforth to each other when we see
(43:52):
opportunities.
We used to when we were young,we would syndicate everything
that went into diligence andthen we often fell out of
diligence.
So we changed the way that wesyndicate and now we only reach
out to our syndicate partnerswhen we actually made the
investment decision.
We can say, hey, we looked atthis company, we diligence them,
(44:13):
we're putting money into it.
That's the best kind ofendorsing that you can provide.
And sometimes we get companiesthat say, hey, can you recommend
other people we should talk toand we tell them it's not a good
idea for us to do that, becausethe first thing the other
groups will ask us is did youinvest?
And if we say, here's thiscompany, but we didn't invest in
(44:35):
them, that doesn't actuallywork well for you.
You're better off going therewithout us.
Ben Comer (44:40):
Right, yeah, absolutely, and I was looking
through the Mid Atlantic BioAngels portfolio.
You've got companies from allover the United States.
You've got a company based inFrance, so you're clearly, I
think, agnostic about companylocation.
As far as syndicate partners,is there anything that you would
(45:01):
say, I guess, about where themoney comes from and maybe you
know, maybe, what comes with it?
You know, are American dollarsinvestment dollars different
from European investment dollars, different from dollars from
Asia?
Yaniv Sneor (45:16):
So traditionally, what was a small VC in the US is
a large VC in Europe or inother parts of Asia.
And when we do work withsyndicate partners in Europe and
(45:36):
Asia, usually they want us toinvest in their opportunities,
but they rarely want to investin our opportunities.
The environment for startups,the talent for running companies
, is different between Asia andEurope and the US, and tolerance
(45:56):
for failure is also differentbetween these markets.
Look at a company's role asthey raise money and they think
of if it's a great company fromthe get-go, they'll go to the US
to raise money right from thestart.
(46:17):
If it's a fledgling companythat needs a little bit more
before they have enough data,etc.
Maybe we, the Europeans can geta chance to invest in them in
that first round before, whenthey're successful, they go to
the US to raise the larger andthe bigger and the additional
monies that they need.
(46:39):
We certainly look for anunderstanding from the
management team of the US market.
We believe that you need to beable to commercialize in the US
or understand how to monetize inthe US in order to reach an
exit.
The US is often at least 50% ofthe world when it comes to
certain diseases or indications.
(47:00):
So we want to make sure thatthe management even though they
may have started in theirbackyard somewhere in Europe or
Asia, et cetera stillunderstands the commercial
uniqueness of our US market interms of payers.
You know it's very difficult toget things adopted in the US in
(47:20):
terms of who pays and how itgoes into the standard of care,
and you need to understand thatand to work towards that in any
kind of solution that you wantto bring in.
So we'd like to see thatunderstanding and management.
And then in our discussionswith our foreign syndicate
partners, we often see more ofthe parade of their companies as
(47:44):
opposed to them beinginterested in ours.
Ben Comer (47:46):
Right.
So if a company is too early intheir development for you,
perhaps they should go to Europe, is what you're saying.
Yaniv Sneor (47:56):
Well, I think that they have a better chance to get
money in Europe if they startedin Europe.
I think it would be moredifficult for a non-European
company to get funding in Europe, more difficult for a
non-European company to getfunding in Europe.
So I think it needs to startthere.
But it may be too early for usand there may be an appetite for
(48:16):
a European investor to putmoney into them before we are
ready for them.
And I want to also make surethat I state this at some point
just because we don't think it'sa good investment decision, it
means that we don't think it'sthe right thing for us, but it
doesn't mean that it's not agood opportunity.
There have been and will beopportunities for very
successful companies that we'dsay no to because we think it
(48:41):
may be too expensive or tooearly or too risky or whatever
it is.
But it just means it's notright for us.
It doesn't mean it's not rightfor the world.
It's not a good opportunity.
You're trying to look for thatmatch between the appetite of a
specific group and a veryspecific type of company.
Ben Comer (48:58):
Right, right, let's talk about your day job for a
minute, which is not MidAtlantic Bio Angels.
You're the CEO of Native StateTherapeutics.
Can you give us a sense of, ormaybe just a company overview
and a little bit about, yourcompany strategy and exit plan?
Yaniv Sneor (49:17):
So you know, with all that said, Mid Atlantic Bio
Angels does consume the majorityof my time.
It's a very jealous mistressand every available minute that
I have does go towards thisendeavor.
It's a passion project.
So, by all means, it'ssomething that I've been doing
for many years and enjoy doing.
(49:38):
But in terms of my companywhich is too early for my own
group, right.
So I can tell you that at leastI understand my own investment
criteria.
So I can tell you that at leastI understand my own investment
criteria.
We are going afterneurodegenerative diseases and
in that sector, we're goingafter protein misfolding
diseases.
There are a number of diseaseswhere the believed mechanism of
(50:02):
action is that some proteinslose their function and shape,
for whatever reason, and thoseproteins make other proteins
lose their function and shapeand once they accumulate into
secondary structures they canbecome toxic.
(50:22):
That that kind of mechanism isprevalent in Parkinson's and
potentially Alzheimer's as well,as well as other diseases that
are more unique, which are priondiseases or frontotemporal
dementias and others, and so ourapproach is to go after a very
(50:46):
well.
So our approach is to go afteran orphan disease path where, as
I mentioned before, it is aless expensive and less
time-consuming path to get tomarket and hope to be able to
show that the assets that we aredeveloping in fact could be
translatable to other, broaderindications.
(51:10):
We're still at the very earlystage and have been for a while,
unfortunately because of someresearch challenges that we've
been dealing with, but that isthe current approach.
Ben Comer (51:23):
Hey, that's how research goes, and so I think
what you're saying is yourstrategy is you would start off
with this orphan indication,smaller indication, reach an
exit with that, before you wouldkind of build it out into
potentially larger Alzheimer'sor Parkinson's disease
indication, which would maybe bedone by someone else at that
(51:45):
point.
Is that correct?
Yaniv Sneor (51:47):
So we hope to get to an approved drug on the
orphan indication and during itsdevelopment we are already
trying to show that in thosedisease models that our approach
translates so that by the timewe do end up with an approved
asset we can go and talk tolarger pharmas and say here is
(52:12):
obviously an approved asset foran indication for which there
are currently no treatments.
In addition to that, themechanism of action we think
translates because of thefollowing data and all the
research we've already done inyour model as in these specific
models, and then hopefully thatwould allow us to partner and to
exit.
Ben Comer (52:33):
Got it.
Investors, life sciencescompanies no one is operating in
a vacuum.
There are a myriad externalfactors that influence funds
flow, all sorts of things, andso, to wrap our conversation and
take a look forward, I wantedto ask about maybe one of those
(52:56):
external factors, which is whatare the risks and opportunities
that you're monitoring amid theshakeup at NIH or FDA?
Yaniv Sneor (53:08):
Yeah.
So you know, our investmentprocess has so many
uncertainties built into it andwhat we try to do is to make
investments into things thatwill reduce uncertainty and
bring the opportunity forward inthat kind of way.
(53:28):
There are currently a lot ofuncertainties.
You know, what we're lookingfor are certainties or
stabilities in terms oftimelines.
Are the reviews going to be thesame timelines?
Is the quality of the data andthe standard of review and of
approval going to be the same?
How will the changing ofpersonnel, the lack of personnel
(53:55):
, whatever affect thosetimelines, et cetera?
And how will pharma react tothat?
And how will ultimately theadoption marketplace adopt to
that?
I mean, will there be a slowingin the approval of drugs and, if
so, what happens in themarketplace?
(54:15):
How will people be treated?
Will pharma go back into moreof the R as opposed to the D?
And so it's very difficult toascertain because there are so
many moving parts right now andwe don't know what will happen.
And our investments and ourprocesses are multi-year
(54:37):
processes that we are looking atand our approval of certain
things take time and we havecertain expectations.
So it's going to be verydifficult for us right now to
figure out what it is, but weare keeping a very you know an
eye out on everything and tryingto figure out how and if it
(54:58):
will affect us in any way.
Ben Comer (55:01):
Right, excellent.
Well, we will leave it there.
We've been speaking with YanivSneor, CEO of Native State
Therapeutics and founder of theMid Atlantic Bio Angels
investment group.
I'm Ben Comer and you've justlistened to the Business of
Biotech.
Find us and subscribe, anywhereyou listen to podcasts, and be
sure to check out new weeklyvideocasts of these
(55:23):
conversations every Monday underthe Business of Biotech tab at
lifescienceleader.
com.
We'll see you next week andthank you for listening.
Avantor is a leading lifescience tools company and global
provider of mission-criticalproducts and services to the
life sciences and advancedtechnology industries.
Avantor works side-by-side withcustomers at every step of the
(55:47):
scientific journey to enablebreakthroughs in medicine,
healthcare and technology.
Avantor's portfolio is used invirtually every stage of the
most important research,development and production
activities at more than 300,000customer locations in 180
countries.
For more information, visitavantorsciences.
com or find them on LinkedIn, X(formerly Twitter) and Facebook.
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