A Guiding Hand For Biotech Start-Ups In Turbulent Times

Rising Leader Therese Liechtenstein is playing an integral part in the creation and financing of multiple companies in the M Ventures portfolio, guiding them towards key value inflection points that a potential partner or acquirer would like to see.

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The biotech bubble bursting has created more affordable options for the corporate venture capital (VC) arms of major pharma companies to provide support to innovative start-ups in need of development know-how, regulatory help and cash. Someone well equipped to give an insight into the process of translating strong scientific ideas into a viable concern is Therese Liechtenstein, investment director in the biotechnology team at M Ventures, the strategic corporate VC fund of Merck KGaA, Darmstadt, Germany and one of In Vivo’s 2022 rising leaders. 

"I've always been interested in the intersection of biology and business," she told In Vivo. Liechtenstein, based in Switzerland, received her PhD in immuno-oncology from University College London (UCL), after gaining an MSc in biomedical sciences from the University of Amsterdam and a BA in biology and business studies from New York University.

Her time at UCL coincided with "the beginning of the IO boom, shortly after Bristol Myers Squibb Company's CTLA-4 inhibitor Yervoy (ipilimumab) was approved, so it was an exciting time in the field. I designed and tested lentiviral vectors for melanoma, so was already back then exposed to new modalities. What I liked about my PhD was that it was very tangible and outcome-oriented, so I decided to move into the industry to be closer to the ultimate goal of biomedical studies and support bringing drugs to patients." 

Liechtenstein moved to Merck's headquarters in Darmstadt, managing strategic projects for the German group's healthcare business. These projects "spanned R&D, regional strategic assessment and strategy design, and change management. I did that for two years, which helped me understand how a pharma organization works," she said.

Find out who else made the list for 2022's top 30 Rising Leaders.

Exciting Entrepreneurial Aspects Mixed With Strong Science

Then came a move into M Ventures in 2018. "What has always attracted me to VC, and what I still enjoy very much, is the intersection of the exciting science, because we're early-stage investors, plus the entrepreneurial and financial aspects. It is very rewarding to build and support companies together with brilliant founders."

Since coming onboard, Liechtenstein has been instrumental in the creation and financing of multiple companies in the M Ventures portfolio, many of them with a focus on oncology. One of them is FoRx Therapeutics AG, which is developing a new generation of cancer drugs focusing on novel DNA replication stress (DRS) pathways.

FoRx is "a good example of a company that we helped create with the scientific founder Thanos Halazonetis from the University of Geneva, and the other syndicate members, both corporate (Novartis Venture Fund and Pfizer Ventures) and institutional (Omega Funds and Life Sciences Partners / EQT)," she said. M Ventures acts not just as a VC but far beyond helping the companies with their development strategies, R&D plans and recruitment " setting them up for the next fundraising round, connecting them with investors who are best suited for the different stages of our growing companies."

Liechtenstein added: "What is also helpful is that we can open doors to provide expertise from our parent organization when and if needed. We hope this helps guide portfolio companies towards key value inflection points that a potential partner or acquirer would like to see."

In terms of interesting therapeutic areas, she expects there to be "continued progress in precision oncology, which is also starting to spill over to other indications like autoimmune diseases, neuroinflammation, and even fertility, where more precision approaches are starting to emerge to tackle the huge unmet need." Still, "oncology is definitely the front runner and the need to better understand responder subpopulations will continue to be a key driver. The IO field has struggled with translational predictability. Thus, a more widespread use of patient materials and emergence of other, more realistic, preclinical models will be very important."

Liechtenstein is also a director on the board of the UK's Theolytics Limited, which was spun out of the University of Oxford in 2017 and has developed breakthrough bioselection systems and proprietary ultra-diverse adenovirus libraries. The company’s internal pipeline development focuses on oncolytic virus therapies, an area she is particularly interested in "because the promise is great. If we can make oncolytic viruses work in the way that they're intended to work, they would be the perfect drug, they are self-perpetuating until the cancer is eliminated, and they have a dual mechanism of action of direct tumor cell lysis while raising an immune response."

Therese Liechtenstein

She said that Theolytics is differentiated in the field since it has developed "a truly systematic oncolytic virus drug discovery approach with a very large adenovirus library, which is screened with models that were developed to select the viruses that can tackle the key challenges that have hampered the oncolytic virus space." Liechtenstein is also interested in the fertility field, a long-term focus for Merck and M Ventures whose recent exits have included Forendo Pharma Oy, which was acquired by fellow women’s health specialist Organon & Co. at the end of last year. "More and more investors and companies have been moving into this space and we continue to be very excited as the assisted reproductive technology market is set to grow further." 

One of the biotechs in her portfolio is the in vitro fertilization (IVF) specialist Future Fertility, founded in 2017. The Toronto, Canada-based group is the first to have come up with a non-invasive artificial intelligence product that can detect features of a human egg that are invisible to the eye and can predict the likelihood of fertilization and embryo (blastocyst) development.

Liechtenstein noted that "of course, IVF has been a revolution, but success rates are still not where we would like them to be." IVF is expensive, costing an average of $20,000 per treatment cycle, and is fraught with low success rates, with only 30% of egg retrievals across all age groups resulting in live births and she noted that the figure is significantly lower in women above 40 years of age. 

"There is a lot of activity in terms of embryo assessment but Future Fertility  has one of the most promising approaches taking this down to the egg level. Its technology enables reproductive endocrinologist decision-making and counselling in the IVF and egg freezing journeys, adding a missing diagnostic parameter to routine sperm and embryo assessment. In the pipeline, they have other fertility solutions addressing additional key decision points in the IVF journey that can improve success rates."

Precious Commodity

Now that the biotech bubble has burst, the support of the likes of M Ventures is a precious commodity for start-ups, especially given the exit of mainstream investors who have disappeared from the sector. However, Liechtenstein insists that for long-term backers, "this is an interesting environment and while the IPO and crossover space is getting tougher, for longer term investors there's an opportunity now to really help build the next generation of successful companies with the outlook on profitability or M&A." 

She added that "while the public market path is less certain now, or at least there needs to be more clinical substance around a company to go down that route, pharma companies currently have quite a lot of firepower for M&A so I think there will still be significant exit opportunities."

Acknowledging that when it comes to financing entrepreneurship, Europe is still lagging behind the US, Liechtenstein believes that the discovery side remains strong and "there's a realization in the US that there is exciting science in Europe and more US investors are starting to invest here." She added that what could be improved is "the whole process of spinning out things from universities. Also, the risk appetite that the European VC industry has for Europe per se is still not the same as in or for the US, but I think we are getting there, although we're not quite there yet."

There are plenty of projects that are hoping to catch the eye of Liechtenstein and her colleagues and she told In Vivo that M Ventures, in the therapeutics space, gets around 1,000 proposals and makes about four to six new investments per year.

It was recently announced that M Ventures, which has been instrumental in developing over 80 companies, is to receive an additional €600m from its parent to increase the number and size of its investments in innovative start-ups.

The additional cash, which represents the third increase in financial commitments by Merck since it created Amsterdam-headquartered M Ventures as a €40m healthcare fund in 2009. The funds will be deployed over the next five years and investments will be made in four areas – healthcare (therapeutics), life sciences, electronics and frontier tech/sustainability – fields which the German major says are in alignment with its strategic interests.

Liechtenstein concluded by saying that the cash " is a good thing to have and very helpful, because given the recent years' increases in round sizes and valuations, we want to remain a meaningful investor with the appropriate ownership in both our current portfolio companies and the multitude of new ones we are looking forward to helping build and progress."