The venture crew at Mubadala are upping their biotech creation game, taking careful aim at a new frontier in drug development

Bioregnum Opinion Column by John Carroll

It started with a cup of coffee and a slow burning desire to go early and long in the biotech creation business.

Wrapping up a 15-year discovery stint at Genentech back in the summer of 2021, Rami Hannoush was treated to a caffeine-fueled review of the latest work UCSF’s Jim Wells had been doing on protein degradation — one of the hottest fields in drug development.

“Jim and I have known each other for the past 15 years through Genentech collaborations. We met over coffee, and he was telling me about this concept of the company that he was thinking of,” says Hannoush. “And I got immediately intrigued by it because I knew that this could open up a big space in terms of adding a new modality in drug discovery that is desperately needed in pharma.”

Out of that came a low-profile effort to incubate a new venture dubbed EpiBiologics, which today is stepping out of stealth into the uncertain light of a new biotech era for upstarts of their like.

Rami Hannoush

You might say, so what if a biotech startup gets a $50 million launch fund to do protein degradation work? It’s not the first time venture teams have mustered tens of millions to back a novel drug development platform out of the lab of a deeply respected scientist. But there are aspects of the deal that lie outside the common path blazed by biotech, which deserve some extra attention as the industry finds its way forward after the two-year roller coaster ride of a boom/bust cycle.

For starters, the Mubadala crew’s decision to take a lead role in creating the company under stealth, with Hannoush — a general partner — helping steer things as first CSO and now interim CEO after seeing the ranks expand to around 20, is something we haven’t seen before — at least to this extent.

In 2021, a more fully developed startup like this would have garnered a megaround of more than $100 million and started out hiring dozens of staffers to man the preclinical work. An IPO would have followed right after a whopping big mezzanine round. Now the IPO window may not be shut, but it’s just barely cracked open. And that means the investors have to play the long game, trying to carefully engineer a relatively quick jump to the clinic — no easy task, but a good example of the real world playing field the VC crowd is working on.

Abu Dhabi fund

This also isn’t some sudden lunge into the unknown. Mubadala Capital — the investment arm of Abu Dhabi’s sovereign wealth fund — is at a crossroads, and it took seven years to get here, seven years of partnering, syndicating and building its ties around the Bay Area. And now they plan on taking more of a leadership role as they also expand Eastward.

Alaa Halawaa, the executive director at Mubadala’s US venture group, says they’re incubating more ideas, putting them in more of a company creator role alongside a syndicate for “Epi” that commands credibility: from longtime player Polaris as co-lead to GV and Vivo Capital.

Says Halawaa:

What we do is we support the venture partner, EIR (executive-in-residence), with our team to go build this idea and bring it to reality. And we don’t do it alone. At least not yet. We really like to partner with a like-minded investor, in this case, Polaris, in Pretzel’s case ARCH, to go and kind of help build this company because, really, for us, it takes a village to build these companies. Where Mubadala is strong is financial discipline, business development discipline, operational discipline and scaling of these organizations, plus the scientific muscle that we bring through an EIR as well as our team that we’re building here on the ground.

The out-of-stealth Epi also may not be the first to try its hand at a development effort in protein degradation 2.0, but it is making a sincere effort to break new ground — with the potential of some old-fashioned pharma partnerships to help establish credibility and help pay for the work.

Jim Wells

The early work at UCSF was highlighted in a published study in Nature Biotechnology, where Wells validated the notion of hitting extracellular targets with a preclinical effort involving some extraordinarily well-defined targets like EGFR and HER2.

As Wells explains it, the body employs two different systems to chop up a protein; the proteasome for intracellular targets and the lysosome for extracellular as well as membrane receptor targets. For the past decade, there’s been a growing movement of drug candidates aimed at intracellular targets that have been headed into the clinic for the ultimate showdown.

‘Wood chipper’

Epi is among a small group of players trying different approaches to creating a new approach — or modality — that offers the potential for expanding the horizons of protein degradation. It’s based on what Wells calls the body’s twin “wood-chipper systems.”

The lysosome “is another wood chipper system,” says Wells. “You have to get it from the outside of the cell to the lysosome. Think of them as the garbage trucks. We basically can co-opt these garbage trucks to carry cargo that they would normally not carry by fusing them genetically, etcetera. Others have done it by using chemical means to link them, but basically linking onto the garbage trucks, the extracellular garbage trucks, so that you direct them into the lysosome for degradation.

“A membrane receptor that’s pathological would be a good target to think about,” he adds. “An extracellular protein would be a good target to think about. Those could be in everything from auto antibodies to amyloids to growth factors that are inappropriately produced, a variety of targets in the soluble form. But there’s also a number of membrane targets to think about, which are themselves pathological in the cancer area, for instance, or in the immunology area.

“What we’re doing at EpiBiologics is we’re using synthetic antibodies, right?” says Hannoush. “Bispecific antibodies, which are the equivalent of nature’s secreted proteins to regulate the levels of disease-causing proteins, in this case on the cell surface. So very simple and elegant technology.”

Amy Liu

“With platforms like Epi’s,” explains Amy Liu, an investor at Mubadala, “what you can do is when you engineer a bispecific antibody, you can leverage a wide variety of different degrading receptors, which can then enable tissue-level specificity. So you can enact specificity and avoid, perhaps, historical off-target effects that have been seen with traditional monoclonal antibodies.”

As Mubadala spreads its wings, Halawaa and his crew are looking beyond the Bay Area and into Beantown, with new relationships being forged with Boston VCs as well as recruiting efforts to build an East Coast team. And Halawaa says he may have another incubation project to unveil later in the year as Mubadala secures a seat of its own at the biotech deal table.

There are much deeper pockets behind him in Abu Dhabi that can be brought into the funding sphere as their startups grow hungry for more operating capital.

“In the case of Epi specifically,” says Alawaa, “we would like to continue to support this company up to a Series B from our ventures platform. Then at the right time we want to bring in our limited partners to go and continue to grow that company. And those limited partners is Mubadala investment company, which is the platform and the sovereign platform, but also our third party LPs that are around this on the ventures side.”

That doesn’t mean that Hannoush is planning to start pumping money into the company at some point. They have some conservative growth expectations — topped by their recruitment of Seagen vet Shyra Gardai as the new CSO.

The Wild West show is over at biotech for now. But this new approach promises to get back to basics in biotech, as learned by some well-known vets and their new allies at Mubadala.

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