Perks and Flaws of Biotech-Startups
Author: Winona Fischer
Estimated reading time: 7 min
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The Biotechnology Sector has been on the the fast lane the last couple of years. Experiencing huge growth spurts especially in the past decade, it has developed into a multi-billion dollar industry: In 2018 alone, the German Biotech industry has had a turnover of more than 4.36 Billion Euros (Statista, 2020). Largely accountable for this multi-billion dollar turnover are the results of their research which focuses on diseases like cancer or parkinson (BB Biotech, 2018). Startups, with their potential to innovate and transform are of utmost importance in this sector. On a frequent basis biotech startups enter into the market, revolutionizing and deeply transforming the sector while attracting more and more investors. An impressive number of startups have challenged and reimagined the scene in many different ways: From the improvement of the process of reading a person’s genomes, thereby greatly reducing the costs, to the entire DNA screening process or 3D bioprinting. All in all, the Biotechnology Sector is indeed a thriving industry in which startups take a crucial role. Therefore we wanted to take a deeper dive into the field of biotech startups generally.
Biotech fields of Research
As a starting point one has to to define what Biotechnology is actually referring to: According to the Norwegian University of Science and Technology, Biotechnology is understood as “technology that utilizes biological systems, living organisms or parts of this to develop or create different products.” (NUST, 2020).
Being an umbrella-term, we will split it up into nine sub-fields of research which allows to get a deeper understanding of this growing market. Noteworthy becomes here that startups focus especially on these areas with greatest innovation potential.
First of all also Big Data is a big deal in the scene. Hereby it is usually about the developments in bio sensors and gene sequencing. As huge amounts of data is being collected, it can be used to make short and long term future decisions. Another field is that of Nanomedicine. This is referring to the usage of nanotechnology in order to prevent or treat diseases (Nature, 2020). Hereby especially Nanorobots are of a great importance.
Furthermore there is the field of Synthetic Biology and Metabolic Engineering. It is about designing and constructing biological modules, to give them new abilities. For instance synthetic meat has been quite popular in the past years, because it potentially reduces greenhouse effects and decreases animal mass production.
Apart from this, the Biotech scene is of course influenced by the trends of artificial intelligence and its potential. AI in data analysis is used in order to detect diseases from an early stage or even prevent them all together. The huge amount of data which is generated in the medical health care can therefore be used much more efficient, because AI has the potential to proceed data faster and more effectively than human beings.
Gene Editing is another branch in the Biotechnology scene which has been of a great interest for researchers in the past years. Modification in the genome of specific DNA can also treat and prevent diseases for humans in the long run.
3D-Printing as already mentioned in the introduction, is also crucial to create tissue-like structures layer-by-layer. This technology might ultimately be used in order to replicate human organs. Tissue Engineering here is another important term. It aims at improving and modifying biological tissues.
In addition to that augmented and virtual reality is of interest in the biotech area as well. With 3D model projections either in AR or VR human bodies and organs can be simulated in order to improve precisions and speed of doctors in surgeries. Lastly another great field are the biosensors. With biosensors, biological components are being used to measure a great variety of analytes (Startus-insights, 2020).
Chances and difficulties
There are a couple of other minor innovative research fields in the Biotech area, which have the potential to improve healthcare solutions. Usually startups are often at the forefront concerning many innovative solutions. But great innovation potential in this field is usually intertwined with great risk, especially for its investors.
Usually Biotech startups have a higher risk of failure than “normal” startups and there are a couple of reasons for that. First of all, Biotech startups that develop technology concerning human beings are confronted with the challenge that they cannot simply prototype and market their products within a couple of weeks or months like “normal” startups do. Years and years of testing are usually needed, requiring continued funding. Therefore a different financial strategy is needed and it is something biotech startups have to take much more into considerations when compared to “normal” startups. Biotech startups need to raise a lot more money and need to have a great and reliable financial prediction in order to succeed. Usually it is quite recommendable that biotech startups work with investors who are familiar with the field of their research or business. Along with this fact it is generally very important for biotech startups to have well experienced partners and the appropriate guidance especially in developments of new products, methods or designs.
Thus biotech startups need to convince potential investors with a strong quantitative basis and top this of with immense knowledge in their field. When pitching to potential investors though, it is important to not only make their innovation understandable to the broader audience but to also stress their innovations potential market importance. A solid market analysis, focusing on potential competitors, is needed to convince investors of a potential investment. Ideally, a startup in bio tech comes up with a novel and innovative approach.
Furthermore as already outlined, timing is a crucial aspects for the biotech scene. Not only is it important to take the long duration of all processes into account, but to also make the right decisions at the right time. It is most crucial to drop certain products or research results at a certain time, but also sometimes one has to continue with high potential products despite setbacks. Generally many of these decisions are afterwards seen as “lucky” decisions, but taking the correct data and future predictions into account will help getting the right timing (Fernandez, 2020).
But generally it is also left to say that biotech startup are by themself a very unstable and unpredictable area. Many worst case scenarios will always needed to be taking into account, but most dramatic changes can therefore be not reliably predicted. Talking about this topic, makes us all thing of the one major topic in 2020: Covid-19.
Biotech Startups and Covid-19
With the outbreak of Covid-19 many biotech startups have moved into the focus of especially governments and their respective institutions. If looking at exemplary Germany, which has some of the most crucial players in the field of developing a Covid-19 vaccine, this becomes apparent when turning towards the vast amount of subsidies that have been provided for by the government in order to support biotech companies and their research.
For instance the company Prime Vector has been subsidized with more than 1.3 Million Euros in order to intensify their research regarding a Covid-19 vaccine. The German Ministry of Economics has therefore sponsored the company placed in Tübingen in the south of Germany. Founded in 2019 with origins to the well-known university of Tübingen, the company has several aspects which make them quite unique (Bioregion-Stern, 2020). Most importantly the fact that several amounts of foreign DNA can potentially be integrated into the vaccine for Covid-19, therefore several antigens can be integrated. This has the great advantage indeed that the vaccine would also be useful and protective in case of further virus mutations. In addition to that the Co-founder Ralf Amann wants to stress the fact that, the vaccine will have a broader effect generally, for the purpose of making humans immune to other coronaviruses. Furthermore, the development of the vaccine is of a time intensive process. After the vaccine has been developed it is the testing that takes up most of the time, starting off by testing the vaccine with animals and later on clinical studies with humans are needed. Prime Vector has very high chances to succeed in helping to fight the Coronavirus, but indeed it will still be an intensive and interesting journey with many other players worldwide included.
Apart from this company many other players take on an important role in the research of a Covid-19 vaccine. For instance in Mainz, a company named Biontech is working hand in hand with a Chinese pharmacy company on developing a vaccine. Apparently the German company has been sponsored with up to 120 Million euros by the Chinese partner (Gruenderszene, 2020).
Apart from this example there also is another example to be found in the aforementioned city of Tübingen. A company founded in 2000 named Curevac has been paid much attention, in particular media coverage, especially because of the great interest by the American government concerning this biotech company. Being one of the greatest RNA specialists Curevac is basically aiming for a similar solution set, like Biontech, in order to fight Covid-19. The company has ever since been well sponsored by one of the co-founders of SAP, Dietmar Hopp, whose shares are approximately at about 60% as of today. Just at the end of July 2020, very recently, the company has announced to be listed in the the American technology stock exchange NASDAQ soon (Handelsblatt, 2020).
Another promising company working on the solution for Covid-19 is Atriva therapeutics. Ever since the startup was founded in 2015, they have been working on a drug for influenzas. Right now they are also working on a promising drug which could be used to treat sufferings from Covid-19 infections (KfW, 2020).
Apart from the Corona-virus crisis many other startups in Europe are on the right track to build a success story. Not only in medicine related fields can biotech startups contribute to a solutions-oriented approach in society. Therefore we briefly wanted to give a couple of other examples where biotech startups are attracting huge amounts of investments because of their research and findings. The first example comes from Sweden named Oblique Therapeutics and is dealing with antibody therapeutics. Since 2015 the startup has been successfully focusing on new treatments for advanced cancer diseases and pain treatments. Another great example also originates in Scandinavia and is called Solar Foods. The Finnish startup has “created a protein-rich food made from electricity, air and water laced with bacteria” (EU-Startups, 2020). Their protein powder works in a similar way as wheat flour but is a lot more climate friendly. While the startup is working with the European Space Agency, meaning that astronauts might be the first to try of their food, the company is planning on hitting the consumer market in 2022.
In addition to that another example is Hudson River Biotechnology. The startup from the Netherlands is active in the field of “CRISPR-enabling platform technologies.” CRISPR means Clustered Regularly Interspaced Short Palindromic Repeats and is a form of genome editing (Zeit, 2020). The startups was originally founded in 2015, but is already a huge name in the entire biotech scene.
It will be an interesting journey how well performing biotech startups will find their path in every niche in the industry. Of course these days a greater focus is stressed on biotech startups working towards finding a Covid-19 vaccine or drug treatment. But apart from this biotech startups have and will in future play an even more important role because of technological developments which most importantly can help humans regarding health care problems.
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