Chris Garabedian, Chairman and CEO,

XONTOGENY

"People are realizing that our sector may need to be more discerning in deciding which companies are worthy and mature enough to bring to the public markets."

How has the biotech sector been impacted over the past year and how did Xontogeny’s activities evolve?

The past year saw significant pull-back in public valuations. The XBI had one of its worst years on record in 2021, which continued into 2022. This shifted some of the investment focus and emphasis, and investors have started to take a harder look at their strategy over the past six months. After record years of private investment, facilitating crossover rounds and taking companies through IPOs, people are realizing that our sector may need to be more discerning in deciding which companies are worthy and mature enough to bring to the public markets.

As early stage venture capital investors, our model and priorities at Xontogeny have not changed. Knowing that the investment landscape fluctuates, we set out with an early private equity model that would work in any macro-market environment. To create a strategy that would survive market shifts, even if the IPO window completely shuts for a time, we developed our thesis around investing in lead products that focus on specific value creation. Many companies have focused on earlier platform technologies that are years away from having a drug in the clinic; however, it is not clear how sustainable this early stage platform discovery model will be if public equity investors are not supportive of taking the companies public.

Despite the influx of capital into the sector, new companies and entrepreneurs struggle for support. How does Xontogeny help?

Xontogeny’s model is unique in that we are willing to support a first-time entrepreneur, first-time CEO, or scientific founder who does not have decades of industry experience. Very early stage platform discoveries are high risk and require significant capital to be de-risked and taken into the clinic, but they have been sustainable in the past when there was a fertile public market. Many VCs recently raised large funds, and there is substantial money on the sidelines that should sustain the biotech industry for the next several years in terms of supporting startups and early-stage companies.

What advice would you give to entrepreneurs in the biotech sector?

Understanding what you do not know is a really important component of success, and it is critical to find experts to work with in the areas you do not have knowledge in. Xontogeny offers a strategic partnership to an entrepreneur or an early founding team so that equal emphasis is placed on the discipline of drug development and the scientific basis of an idea.

In what ways is Xontogeny innovating?

Xontogeny is focused on staying on top of the most cutting-edge translational medicine models as well as increasing predictive power from pre-clinical tests through innovative clinical trial design. Another area where we aim to remain innovative is regulatory strategy, as it is an area which is constantly changing. Data and access to data have proliferated over the years, and teasing out what is part of the noise and what is the real finding is key.

Can you highlight some upcoming investments Xontogeny is excited about?

We are continuing to incubate companies at Xontogeny and anticipate announcing several new seed investments in this upcoming year. We are of course very excited when these companies receive their Series A funding, often through the Perceptive Xontogeny Venture (PXV) Fund. These funds were created through a strategic relationship between Xontogeny and Perceptive Advisors and are specifically earmarked to continue de-risking early stage life sciences companies. Between our funding mechanisms for Seed and Series A investments, we have a full portfolio of over 20 companies.

How do you see Xontogeny evolving in 2022 and beyond?

Xontogeny encourages researchers, post-docs, and entrepreneurs starting companies to find the right partners and increase their chances of success. We want to create the next generation of biotech leaders not only through financial investment, but also through exposing them to the decades of experience of our team. As our world continues to change and each day brings new challenges, we are excited to adapt along with our entrepreneurs. By working in lockstep with the founding teams and allowing them to see through the lens of our decades of industry experience, these entrepreneurs find success in their current project and bring that experience with them for the rest of their careers.