Meet the Investor Segment
Brought to you by the ISCT Business Development & Finance Committee
Jonathan Yeh, PhD
Partner & Co-Founder
Please introduce yourself. What is your background and experience in cell and gene therapy?
My background started as a scientist, completing my PhD work studying adult stem cells prior to moving into the hematopoietic field and conducting post-doctoral studies with Dr. Guy Sauvageau, searching for small molecule regulators of huHSC and leukemic stem cell self-renewal. I still recall one of the first conversations I had with Guy. He outlined the plan from discovery in his lab of a unique HSC expanding molecule, the medicinal chemistry and optimization of the lead candidate - UM171 - toward commercialization through pharmacological studies, and transition into the clinic – all sponsored through the launch of a focused biotech, ExCellThera. At the time, I was excited by this clear path to translation of a foundational discovery, and it is perhaps no surprise that following the conclusion of my CIHR fellowship and post-doctoral work I decided to step away from the bench and supported Guy with the launch of ExCellThera. Around this time, I was admitted into business school and completed my MBA part-time over a three-year span, in part to strengthen my network and knowledge base in market analysis and finance.
Personally, I’ve always been motivated by the optimism and blue-sky possibilities that surround the advancement of foundational discoveries through early-stage biotech. Not surprisingly, I found myself at the cell and gene therapy-focused accelerator, CCRM, leading their early-stage venture investment process and managing the portfolio of investee companies. After several years at CCRM, I moved to lead investment activities at the iPSC-focused biotech company, Healios, culminating in the launch of the venture capital firm, Saisei Ventures.
Tell us about the venture capital fund you co-founded, Saisei Ventures.
Saisei Ventures is a leading venture capital firm dedicated to advancing healthcare innovation in Japan and the United States. Our mission is to invest in transformative science and exceptional people to build great biotechnology companies. We aim to partner with passionate bio-entrepreneurs to develop and implement business strategies that will generate strong proof of concept (POC), clinical validation, and market value. We take a global approach to building value in our portfolio by linking the two important life science markets of Japan and the US and leveraging the respective advantages of each ecosystem. Our first fund’s investment focus is on early-stage cell and gene therapy companies located globally, but with a strong focus on investments in companies located or launching collaborations in Japan.
What is your preferred investment profile (cell-type and stage of financing)?
Our fund invests across the full spectrum of cell and gene therapy modalities with a focus on therapeutic developers. Due to the transformative nature of these technologies to treat a host of rare disorders and patients with otherwise intractable disease, we seek technologies with platform potential and so-called “multiple shots on goal”.
Our fund looks to invest in the early stage, where there is sufficient POC data to discern signal from noise, up to and including early clinical stage assets. Ideally, we are seeking a large, non-controlling stake in any one company, so development stage is often counter balanced by the terms of the financing round and our ability to contribute to the success of the opportunity.
In your opinion, what is the most important type of due diligence to perform when evaluating a new company?
All elements of due diligence are important when assessing any one opportunity. That said, cell and gene therapies are distinctive due to their inherent complexity vs. other modalities; they are complex in their MOA, complex in their manufacturing, and complex in their administration to patients. Therefore, I am of the opinion that the key diligence to perform is first on the scientific merits of the core technology, followed by the manufacturing and commercial feasibility of the approach. Poor science typically translates to poor outcomes from later studies.
Any advice you would give to someone new to investing in the cell and/or gene therapy field?
Despite recent broader market volatility and under performance of publicly traded cell and gene therapy companies, I believe that there are multiple reasons to remain bullish on this sector. Following the first approval of a gene-modified cell therapy in 2017, there are now 14 therapies approved by the FDA. Over 1,000 clinical trials of cell and gene therapies are currently ongoing, and while most of these are early-stage trials, cell and gene therapies represent about 10% of all early-stage clinical activity. Worldwide sales forecasts from Evaluate Pharma project that sales of cell and gene therapies are projected to grow from $4 billion to $45 billion from 2021 to 2026, at a CAGR of 63%. In comparison, small molecule drug sales are projected to grow at a CAGR of 6%, while biologic sales are expected to grow at a CAGR of 5%. Therefore, we are at a point of exponential growth for this sector, creating numerous opportunities for investors.
Optimism aside, it is important for investors to separate hype from true science. Early successes in a modality (e.g., CAR-T) drives further investment and begets copycat companies looking to capitalize on the increased enthusiasm. Remember that this is an emerging sector with multiple attractive opportunities. However, most approaches remain clinically and commercially unproven; thus, this sector still bears a significant amount of risk.
What company/organization do you have your eye on currently, and why?
While I can’t discuss any one company that I am currently tracking, I can instead mention that I have been recently doing some work digging into next generation cell replacement therapies. This remains a challenging space, which I believe creates ample opportunity for disruption, especially in the areas of: 1) novel approaches to differentiate target cells from PSCs, 2) techniques to improve engraftment and replicate the architecture found in more complex tissues, and 3) approaches to engineer transplanted therapies to evade the host immune system.
What is a recent piece of CGT industry news that you found interesting, and why?
Two recent events stand out in my mind. The first was the recent FDA panel review of bluebird bio’s eli-cel. Despite facing serious safety concerns on the gene therapy, the company was able to convince the panel of the drug’s benefit vs. its risks. What was surprising was that despite hearing safety concerns, including a risk of MDS that emerged in 4% of patients treated with the therapy, the panel voted unanimously to recommend the therapy for certain cerebral adrenoleukodystrophy patients. I don’t believe many folks expected a unanimous decision in this case.
The second bit of notable news that I’ve found interesting is the recently announced intent of Vertex Pharmaceuticals to acquire its biggest competition in T1D, ViaCyte, for $320 million. While still technically under the waiting period of anti-trust rules, the deal would effectively clear out their only clinical stage competition in PSC-derived pancreatic replacement therapy and give them access to a large suite of foundational IP held by ViaCyte. The company was clearly encouraged by the recently reported clinical results from their first dosed patients and had brought Dr. Doug Melton on board full-time from Harvard to help refine the product candidate. This recently announced deal further cements their commitment to driving this approach forward.
What are the benefits you’ve gotten from ISCT membership?
There are many benefits that I have received from my ISCT membership such as access to key opinion leading researchers, a view into the latest developments in the cell and gene therapy field, and a place to interact with leaders in the industry.
What was your experience as an investor attending ISCT 2022 San Francisco?
First, it was great being back in-person, being able to meet face-to-face with old colleagues. Secondly, I was able to attend some of the talks, between partnering meetings, and enjoyed catching up on some of the new approaches to common bottlenecks in our sector. Finally, I was able to participate in the ISCT Investigator to Investor (I2I) discussion, which brought key opinion leaders into a round table format with investors, such as myself, to field questions. This was a great event not only for creating new connections, but also for gaining new perspectives across clinical, manufacturing, and commercialization that have impacted my thinking on the direction of the sector and on the attractiveness of investment opportunities in the space.
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