As our Managing Partner’s mentor Bill Ziff used to say: “Language is truth.” In other words, the way we describe things actually alters the nature of the reality around us. Such is the case now in our perspective on deep science bio investing.
Over the past few decades, the label for this area of investment has been “biotech.” This, of course, was a shift from bio, the original monicker for this range of science investment. That shift indicated that tech, especially computer tech, was the central element in bio investment.
Today, that approach has essentially collapsed. Investment pace and value have plummeted. Many biotech funds have pulled back and a few have simply shut their doors. Exits from traditional biotech companies, at least for now, appear nearly impossible.
However, instead of running for the hills, we are holding our ground, but replacing the lens we use to view this terrain. Our new focus here is Techbio. “Techbio” is the direct application of engineering to biology. The focus now becomes the tech, and the area of application is some aspect of bio. That shift, in our view, changes everything.
In Biotech we have to begin with some activity in bioscience and then ask, how are they accomplishing that? In Techbio, we can focus on the engineering–AIs, sensors, new materials, whatever–and then backsolve to where dramatic–human desired–shifts in capabilities might be achieved.
We see unaltered potential in this approach for these reasons:
- TechBio companies, unlike traditional biotech companies, have the potential to generate early revenues, which de-risks investments.
- Rather than focusing on a single therapeutic asset, TechBio companies have high throughput and can develop horizontally and vertically with the potential of generating multiple assets simultaneously. This, too, increases the potential for success.
- TechBio is influenced by advances across multiple fields, including computing, mechanical and electrical engineering, manufacturing, chemistry, and biology. So we are in a target-rich environment.
- Multiple technologies combined can produce incredibly effective biological data transformation, identifying insights that we’ve never seen before. These create Blue Water opportunities in consumer goods, synthetic biology, diagnostics, and therapeutics, all core to the Joyance strategy of investing in companies that cultivate joy through science and tech to improve the way we live.
Three investments we made in 2022 demonstrate this concept: Wayfinder Biosciences, who recently raised $3.5M to program RNA as a detection and therapeutic platform; Nimble Sciences, who just announced their $2.7M raise to collect data from previously inaccessible regions of the small intestine; and Ruby Bio, who uses naturally occurring yeast to convert low-cost sugar into high-value products.
In the coming year, we plan to focus on what we see as these most promising Techbio areas:
- Microbiome Technology, including metagenomics and NGS, open utterly novel pathways to dealing with chronic disease. This area has seen huge advancements in applications in recent years, especially in therapeutics, followed by probiotics, prebiotics, and diagnostic tests. Our primary focus will be on the gut system and treatments for diseases such as C.diff infection, Crohn’s disease, and inflammatory bowel disease. We will also keep an eye out for the transformational treatment of obesity, diabetes, cancer, and other metabolic disorders, including cardiovascular diseases, dermatological diseases, immune-modulated disorders, neurological disorders, and hematological disorders.
- Synthetic Biology (“SynBio”) focuses on living systems and organisms by applying engineering principles to develop new biological parts, devices, and systems, or to redesign existing systems found in nature. With a $63B revenue forecast by 2030, SynBio is opening up to multiple novel industries, research institutes are being funded, and underlying technology is becoming more affordable. Healthcare is the largest sector, but a move towards consumer goods is imminent; over the next five years, SynBio developments in beauty and cultured meat will disrupt those industries. Over the next ten years, SynBio developments in chemistry, textiles, and agriculture will disrupt these areas. This year, we plan to focus on the healthcare, food, consumer, and alternative materials spaces. We will also keep an eye on engineering platforms that can diversify across multiple applications, with specific attention toward synthetic DNA and enzymes.
- Agricultural Biology (“AgBio”) is a $70B market that leverages technology to apply biological insights to cultivating soil, growing crops, and raising livestock. There has recently been increased government funding and regulation, like the Inflation Reduction Act and more stringent deforestation laws in Europe. Production of and access to agricultural commodities have been deeply affected by global crises like the Russia-Ukraine war and the Covid-19 pandemic. Momentous advances are being made in genomic engineering, especially in the ability to edit plant genomes, and consumer spending on more health-conscious, sustainable products is seeing a steep increase. We see the greatest potential in plant breeding for nutrition and taste, novel food products, waste valorization, and soil carbon credits.
We should note that, as investors in individual health and happiness, we don’t invest in traditional pharmaceutical companies or products. At Joyance, we appreciate their purpose, but for us, health is personal and not necessarily pharmaceutical.
Are you applying advanced engineering to biology? Our Techbio team would love to hear from you. Please feel free to reach out.
By Investment Partner Jun Deng