CFF’s Rapid Fire Deals Prove There is Still a Market for New CF Drugs

The Cystic Fibrosis Foundation has started off the new year with a handful of new investments that suggest the cystic fibrosis market is accelerated, and not decelerating as some had feared.

Not long after Trikafta was approved by the FDA, the world rightly celebrated such an important milestone in the history of biomedical innovation. Cystic fibrosis became, almost overnight, a manageable condition. With Trikafta’s approval, though, there was an underlying sense of dread embedded in our community about the future of novel CF drugs. Would the investments and new drug approvals stop? One article covering the Trikafta news (which has now been amended and is no longer in the public domain) considered cystic fibrosis conquered. The small part of the patient population that is unable to use highly effective modulator therapy was also rightly concerned that the spigot might run dry for capital investments into the industry for drugs that might provide some benefit in ways that Trikafta does not.

A friend with CF said to me back then that she feared venture investors would look elsewhere, while she was still waiting for her breakthrough, especially with Vertex’s commanding hold on the market.

Those were valid concerns, especially since the Foundation’s venture philanthropy vehicle cannot provide nearly enough capital to drive a drug across the finish line alone. The important part about venture philanthropy that is often overlooked is that when the Foundation makes an investment, it’s really a lot like an invitation for big institutions to pile cash on top of whatever the Foundation provides. If a company can survive the Foundation’s scientific gauntlet, then why wouldn’t a venture investor also jump in? The proof lies within the numbers – the CFF can’t provide the same kind of capital towards a small biotech company that a $10 billion hedge fund can: it’s just simple math.

The Foundation’s recent moves provide evidence to me that the market for CF drugs is alive and well.

It started on January 4 with a $5 million investment into phage therapy company BiomX.

Also on January 4, the Foundation invested $4.7 million into antibiotic maker EnBiotix Inc.

The Foundation followed up with an announced investment into SalioGen Therapeutics on January 5.

On January 6, the Foundation piled $3.5 million in Arrevus Inc.

Finally, the Foundation has committed up to $110 million in a “first of a kind deal” with Pioneering Medicines, which is part of Flagship Pioneering (of Moderna fame!).

This last deal has me really excited. It is along the same lines as the Foundation’s dealing with the Longwood Fund and Deep Science Ventures where the Foundation has made a commitment to helping technologies translate from academia to industry while building up companies around them. If you’re not familiar with how the drug development industry works, that’s pretty much jargon for taking an interesting technology and making a drug out of it.

Vertex has proven the CF market for highly effective therapies is a big one, so it should be shocking that instead of other biotech companies abandoning our market, they are trying to outdo Vertex and seize what they can for their own benefit, which in turn, benefits all of us. Success breeds competition, so don’t be so sure that Vertex will forever hold the top spot in the multibillion-dollar CF market. A perfect world would be one where one of these upstart biotech companies puts a little pressure on Vertex to drive innovation even further.

I know this might not be music to everyone’s years – yes biotechnology is a competitive industry. And yes, the Foundation’s sizable endowment and for-profit business model has always been a point of both pride and frustration for our community. I fall squarely into the pride camp given how the Foundation’s for-profit investments weaponize the drug development process for the benefit of the community. Over the last year or so, I’ve started to consider their venture investments a patient-centered investment thesis (someone throw me a TM for that wording!). Of course, it isn’t universally beloved. Drug development is costly, complex and when insurance benefits force some patients to shell out thousands of dollars in copays or deductibles, it can feel like the Foundation is leaving patients hung out to dry whenever they announce the next multimillion dollar investment. I empathize with that position, but in truth I think the anger is misdirected. I don’t think the Foundation’s future potential revenues from drug royalties or equity investments are in the same domain as direly needed insurance reform.

It can also feel like the Foundation, at times, is sitting on a giant pile of cash instead of using it. That used to frustrate me until a friend within the biotech industry tried to walk me back from the ledge on my now seemingly hyperbolic opinion. It would be easy, he cautioned, for the endowment to be blown on a bad investment or two. Instead, there is value for the Foundation to say no to investments they don’t consider worth their time. When the Foundation says no to a new investment opportunity, it protects their credibility and scientific diligence, which is a signal to other investors. He won me over with that argument.

I’m excited about all of this, and I think you should be, too!

Some bonus content: Flagship Pioneering is hosting a panel this Wednesday during the Virtual J.P. Morgan conference that features Mike Boyle, CEO of the CF Foundation, and I’m really looking forward to tuning it. You can, too, it’s virtual and it’s free.