Investment Memo — Biotech: Case 1

Disclaimer: An investment memo on Laverock Therapeutics, leverage their own GEiGS platform. This memo is for research purposes and reflects my interest in writing an investment blog. It should not be considered a recommendation for investment. I have no financial interest or gain from the company discussed, which was selected randomly for my series of memos. I plan to write one or two such memos every month.

As this is for research and personal purposes, I do not provide recommendations on investment amounts or deal summaries and hence I have not created exit scenarios analysing different outcomes with multiple probabilities, returns, and the Multiple of Invested Capital (MOIC) as is typical in some investment memos.

Investment Memo: Laverock Therapeutics

Vision: Laverock Therapeutics aims to revolutionize the field of gene and cell therapies by developing programmable, adaptive therapeutics. The company’s innovative GEiGS® (Gene Editing induced Gene Silencing) platform is designed to overcome existing challenges in the industry, ultimately leading to safer and more effective treatments for a range of diseases.

Problem: Current gene and cell therapies face significant hurdles including immune system rejection, tumor microenvironment constraints, and manufacturing complexities. Traditional gene editing methods often result in off-target effects and limited therapeutic efficacy.

Current Challenges

• Immune System Rejection: Traditional therapies often face immune responses that limit their effectiveness.
• Tumor Microenvironment Constraints: Solid tumours present a hostile environment that hinders therapeutic delivery.
• Manufacturing Complexities: Production of gene and cell therapies is often intricate and costly.
• Off-Target Effects: Gene editing and RNAi methods can lead to unintended genetic modifications.
• Transient Silencing: Existing siRNA techniques require repeated administration due to their temporary effects.
• Lack of Control: Conventional methods struggle with precise timing and location of gene silencing.

Differentiate from Existing Solutions: GEiGS: A Novel Approach

1. Integration of RNAi and Gene Editing: GEiGS uniquely combines gene editing technologies with the RNA interference pathway. Traditional RNAi therapies, such as siRNA and shRNA, introduce synthetic RNA molecules to inhibit gene expression transiently and often with off-target effects. In contrast, gene editing technologies like CRISPR directly modify DNA to create permanent changes but can cause unintended mutations. GEiGS merges these approaches to silence genes in a stable, precise, and programmable manner without permanently altering the genome.
2. Utilization of Endogenous miRNA Genes: Unlike traditional methods that introduce exogenous elements (synthetic RNAs or DNA constructs) to mediate gene silencing, GEiGS harnesses endogenous miRNA genes. By editing these native genes to target specific mRNAs, GEiGS maintains physiological RNA levels and minimizes the risks associated with foreign RNA or DNA elements, such as immune responses or toxicity.
3. Programmable and Tunable Gene Silencing: GEiGS technology allows for programmable gene silencing, where silencing can be activated under specific conditions or cell types. This is a significant advancement over traditional gene knockouts that are permanent and uncontrollable. Additionally, the level of silencing can be finely controlled by selecting miRNA genes with different expression levels, providing a tunable system that is more adaptable to therapeutic needs.

Competitive Advantages

1. Reduced Off-Target Effects: By leveraging the cell’s natural RNAi machinery and avoiding the introduction of high concentrations of synthetic molecules, GEiGS significantly reduces the risk of off-target effects, which is a common drawback in conventional RNAi therapies. This improvement enhances safety and therapeutic efficacy.
2. Stable and Long-Term Effects: Since GEiGS integrates silencing sequences into endogenous RNA genes, the effects are stable over time, unlike the transient effects seen with siRNA or the potential for silencing loss with shRNA due to epigenetic modifications. This stability is particularly advantageous for chronic conditions where long-term gene silencing is desirable.
3. Ethical and Regulatory Benefits: By avoiding permanent changes to the DNA and utilizing the body’s own regulatory mechanisms, GEiGS may face fewer ethical and regulatory hurdles compared to traditional gene editing approaches that involve direct modifications to the genome.
4. Versatility and Broad Application Potential: The ability to program and tune the silencing activity makes GEiGS adaptable for a wide range of diseases, including genetic disorders, cancers, and infectious diseases, where precise control over gene expression is crucial.
5. Potential for Reduced Development Costs and Time: The programmable nature of GEiGS could lead to more straightforward and less costly development pathways for new therapies, as it can be tailored quickly to target different genes or conditions without developing entirely new compounds.

Strategic Implications

Laverock’s GEiGS platform represents an advancement in gene therapy, particularly for regenerative medicine and immuno-oncology. The technology’s ability to address key challenges such as stable expression, tunable silencing, and reduced off-target effects positions it as a transformative player in the field. By addressing key challenges, particularly in regenerative medicine and immuno-oncology, Laverock’s approach holds promise for advancing treatments for conditions like Type I Diabetes and solid tumours. The in vitro success underscores the platform’s potential impact, signalling a transformative shift in the landscape of gene therapies and their broader applications in treating complex medical conditions.

Team: The leadership team comprises industry veterans with extensive experience in biotechnology, pharma, and academia:

• David Venables, PhD (CEO): Former President of AskBio Europe, with leadership roles at Synpromics and NightStar Therapeutics.
• Tim Allsopp, PhD (CTO): Former coordinator of the European Stem Cell Bank, with senior roles at Pfizer and Stem Cell Sciences plc.
• Vlad Seitan, PhD (CSO): Former Group Leader at King’s College London, specializing in gene editing and RNAi technology.
• Elsy Boglioli (CSO): Former Partner at BCG and COO at Cellectis, with board roles at Treefrog Therapeutics and Gensight.
• Sandy McDougall, CA (CFO): Former CFO at Synpromics and Craneware, with IPO experience.
• Tom Payne, PhD (COO): Former CSO at Oxgene, with extensive expertise in gene therapy and editing.

Market Overview and Competitive Landscape

The global cell and gene therapy market is experiencing rapid growth, with annual sales surpassing $10 billion. This surge is driven by advancements in gene editing technologies and the increasing demand for innovative treatments for complex diseases. By 2032, the market is projected to approach $100 billion. Currently, there are 4,002 therapies in development, spanning from preclinical to pre-registration stages, with 1,072 RNA therapies in the pipeline (ASGCT).

Gene Therapy Trends:

• Ex Vivo Genetic Modification: Predominantly used in pipeline development.
• CAR-T Cell Therapies: Remain the most common technology in genetically modified cell therapies.
• Focus Areas: Oncology and rare diseases are the top targets for both gene therapy and non-genetically modified cell therapy.

RNA Therapies:

• Preferred Modalities: Messenger RNA (mRNA) and RNA interference (RNAi) dominate research efforts.
• Gene Editing Market: Valued at approximately $7.23 billion in 2023, expected to reach $8.57 billion by 2024, with a CAGR of 18.6%. Growth drivers include new genome editing tools, expanding therapeutic applications, and the integration of AI to enhance accuracy and outcomes.

Some of the Key Competitors:

• Arrowhead Pharmaceuticals
• Alnylam Pharmaceuticals
• Beam Therapeutics
• Caribou Biosciences
• Crispr Therapeutics
• Editas Medicine
• Ionis Pharmaceuticals
• Intellia Therapeutics
• Cellectics Bio
• Precision Biosciences
• Prime Medicine
• Refuge Biotech
• Sana Biotech
• Poseida

Business Model and Strategic Goals

Laverock Therapeutics aims to develop a robust pipeline of GEiGS-enabled therapies, targeting regenerative medicine and oncology. Revenue will be generated through:

1. Licensing and Partnerships: Collaborating with biotech and pharmaceutical companies to apply GEiGS technology.
2. In-House Development: Advancing its therapeutic candidates through pre-clinical and clinical stages, focusing on its current pipeline — Type 1 Diabetes in regenerative medicine and solid tumours in oncology.

Future Strategic Milestones:

• Proof-of-Concept Studies: Further studies to validate GEiGS in a controlled laboratory setting, demonstrating precise and stable gene silencing.
• In Vivo Applications: Focusing on direct gene editing within patients’ cells to overcome delivery complexities and showcase real-world applicability.
• Collaborations: Establishing partnerships with leading biopharmaceutical companies to expand GEiGS® applications across various therapeutic areas. These alliances will secure upfront payments, providing capital for further R&D.
• Early-Phase Clinical Trials: Initiating trials to validate the safety and efficacy of GEiGS-based therapies in human subjects. Successful trials will support regulatory approvals and further development.

Achieving these milestones will position Laverock for the next round of financing and highlight the transformative potential of GEiGS, attracting substantial interest and investment from major pharmaceutical companies.

Financials

Total raised: $17.26M

Stage: Seed Round

Seed round funding: $17.2M

Seed round funding Investors

· Led by Calculus Capital

· Eli-Lilly

· Mercia Ventures

· Maven Capital Partners

· Eos

· UK Innovation & Science Seed Fund

· Tekfen Ventures

Given the strong market growth and Laverock’s unique technology, the estimated revenue exit multiple could be 13.31x , positioning the company for substantial value appreciation. The estimated enterprise valuation is of $80 — $100 million (To know in detail how to perform a valuation of life science company, please check my article in LinkedIn or in Medium)