Financing repurposed drugs for rare diseases: a case study of Unravel Biosciences
Abstract Background We consider two key challenges that early-stage biotechnology firms face in developing a sustainable financing strategy and a sustainable business model: developing a valuation model for drug compounds, and choosing an appropriate...
| Main Authors: | , , , , , , |
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| Other Authors: | |
| Format: | Article |
| Language: | English |
| Published: |
BioMed Central
2023
|
| Online Access: | https://hdl.handle.net/1721.1/152279 |
| _version_ | 1811091859770966016 |
|---|---|
| author | Abouarab, Bechara Bazarian, Christian Ben Chaouch, Zied Lo, Andrew W. Mourenza Gonzalez, Guillermo Novak, Richard Vigneault, Frederic |
| author2 | Sloan School of Management |
| author_facet | Sloan School of Management Abouarab, Bechara Bazarian, Christian Ben Chaouch, Zied Lo, Andrew W. Mourenza Gonzalez, Guillermo Novak, Richard Vigneault, Frederic |
| author_sort | Abouarab, Bechara |
| collection | MIT |
| description | Abstract
Background
We consider two key challenges that early-stage biotechnology firms face in developing a sustainable financing strategy and a sustainable business model: developing a valuation model for drug compounds, and choosing an appropriate operating model and corporate structure. We use the specific example of Unravel Biosciences—a therapeutics platform company that identifies novel drug targets through off-target mechanisms of existing drugs and then develops optimized new molecules—throughout the paper and explore a specific scenario of drug repurposing for rare genetic diseases.
Results
The first challenge consists of producing a realistic financial valuation of a potential rare disease repurposed drug compound, in this case targeting Rett syndrome. More generally, we develop a framework to value a portfolio of pairwise correlated rare disease compounds in early-stage development and quantify its risk profile. We estimate the probability of a negative return to be
$$80.8\%$$
80.8
%
for a single compound and
$$56.1\%$$
56.1
%
for a portfolio of 8 drugs. The probability of selling the project at a loss decreases from
$$79.2\%$$
79.2
%
(phase 3) for a single compound to
$$55.4\%$$
55.4
%
(phase 3) for the 8-drug portfolio. For the second challenge, we find that the choice of operating model and corporate structure is crucial for early-stage biotech startups and illustrate this point with three concrete examples.
Conclusions
Repurposing existing compounds offers important advantages that could help early-stage biotech startups better align their business and financing issues with their scientific and medical objectives, enter a space that is not occupied by large pharmaceutical companies, and accelerate the validation of their drug development platform. |
| first_indexed | 2024-09-23T15:09:12Z |
| format | Article |
| id | mit-1721.1/152279 |
| institution | Massachusetts Institute of Technology |
| language | English |
| last_indexed | 2024-09-23T15:09:12Z |
| publishDate | 2023 |
| publisher | BioMed Central |
| record_format | dspace |
| spelling | mit-1721.1/1522792024-01-12T18:23:27Z Financing repurposed drugs for rare diseases: a case study of Unravel Biosciences Abouarab, Bechara Bazarian, Christian Ben Chaouch, Zied Lo, Andrew W. Mourenza Gonzalez, Guillermo Novak, Richard Vigneault, Frederic Sloan School of Management Massachusetts Institute of Technology. Department of Electrical Engineering and Computer Science Massachusetts Institute of Technology. Computer Science and Artificial Intelligence Laboratory Sloan School of Management. Laboratory for Financial Engineering Abstract Background We consider two key challenges that early-stage biotechnology firms face in developing a sustainable financing strategy and a sustainable business model: developing a valuation model for drug compounds, and choosing an appropriate operating model and corporate structure. We use the specific example of Unravel Biosciences—a therapeutics platform company that identifies novel drug targets through off-target mechanisms of existing drugs and then develops optimized new molecules—throughout the paper and explore a specific scenario of drug repurposing for rare genetic diseases. Results The first challenge consists of producing a realistic financial valuation of a potential rare disease repurposed drug compound, in this case targeting Rett syndrome. More generally, we develop a framework to value a portfolio of pairwise correlated rare disease compounds in early-stage development and quantify its risk profile. We estimate the probability of a negative return to be $$80.8\%$$ 80.8 % for a single compound and $$56.1\%$$ 56.1 % for a portfolio of 8 drugs. The probability of selling the project at a loss decreases from $$79.2\%$$ 79.2 % (phase 3) for a single compound to $$55.4\%$$ 55.4 % (phase 3) for the 8-drug portfolio. For the second challenge, we find that the choice of operating model and corporate structure is crucial for early-stage biotech startups and illustrate this point with three concrete examples. Conclusions Repurposing existing compounds offers important advantages that could help early-stage biotech startups better align their business and financing issues with their scientific and medical objectives, enter a space that is not occupied by large pharmaceutical companies, and accelerate the validation of their drug development platform. 2023-09-27T18:34:47Z 2023-09-27T18:34:47Z 2023-09-12 2023-09-17T03:10:32Z Article http://purl.org/eprint/type/JournalArticle https://hdl.handle.net/1721.1/152279 Orphanet Journal of Rare Diseases. 2023 Sep 12;18(1):287 PUBLISHER_CC en https://doi.org/10.1186/s13023-023-02753-y Creative Commons Attribution https://creativecommons.org/licenses/by/4.0/ Institut National de la Santé et de la Recherche Médicale (INSERM) application/pdf BioMed Central BioMed Central |
| spellingShingle | Abouarab, Bechara Bazarian, Christian Ben Chaouch, Zied Lo, Andrew W. Mourenza Gonzalez, Guillermo Novak, Richard Vigneault, Frederic Financing repurposed drugs for rare diseases: a case study of Unravel Biosciences |
| title | Financing repurposed drugs for rare diseases: a case study of Unravel Biosciences |
| title_full | Financing repurposed drugs for rare diseases: a case study of Unravel Biosciences |
| title_fullStr | Financing repurposed drugs for rare diseases: a case study of Unravel Biosciences |
| title_full_unstemmed | Financing repurposed drugs for rare diseases: a case study of Unravel Biosciences |
| title_short | Financing repurposed drugs for rare diseases: a case study of Unravel Biosciences |
| title_sort | financing repurposed drugs for rare diseases a case study of unravel biosciences |
| url | https://hdl.handle.net/1721.1/152279 |
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