By Amy Duncan, Goldfish Consulting, Inc.
As part of SDEE Investor Days, SDEE partnered with Takeda Business Development and Takeda Ventures to offer members the opportunity to pitch their business. Selected applicants had one-on-one meetings with Takeda representatives followed by a panel discussion open to all of those who applied. Moderated by Killu Sanborn, PhD, Managing Director, Oxford Finance, the panel was held at the new Takeda R&D site in San Diego and featured David Weitz, Head of Takeda California and Global Research Externalization; Jayson Punwani, PhD, Partner, Takeda Ventures; and Beth Shafer, PhD, Head of Neuroscience Business Development, Takeda Pharmaceuticals.
David opened the panel describing the Takeda of 15 years ago as a “white pill” company working with active excipients squeezed into a white pill. Boosted by its acquisition of Shire in January 2019, Takeda Pharmaceuticals is now among the top 20 pharmaceutical companies in the world with nearly $19 billion in revenue and 50,000 employees. With a focus on gastroenterology, oncology, neuroscience, and rare diseases, they have now expanded into new drug formats such as vaccines and cell therapy. It started with a paradigm shift Takeda made a 5 years ago to pursue external sources to help feed its innovation. Now over 50% of its pipeline is partnered. Whether it’s through partnerships, research collaborations, strategic alliances, in-licensing, or investments, they look for innovative opportunities that solve a problem, get to a near-term deliverable, or advance their pipeline.
Panel left to right: Jayson Punwani, Beth Shafer, Killu Sanborn, and David Weitz
Commitment to Neuroscience
External partnerships help support Takeda’s commitment to neuroscience. With so many recent exits in this space, there are few companies left tackling these tough diseases. Beth emphasized that the difficulty working with the blood brain barrier lends itself to innovative solutions and novel modalities where risk can be afforded. Through their partnering efforts, Beth said they have access to antibody transport vehicles, gene therapy, biologics, and biomarker solutions to help them address neurodegenerative diseases with patient-focused precision medicine.
Cue Takeda Ventures
Takeda Ventures is the strategic investment arm of Takeda Pharmaceuticals. They make equity investments in private companies that are developing platforms or therapeutics that address Takeda’s four therapeutic areas. They operate at the early stages of an asset, idea, new biology or modalities – typically preclinical to phase 1. Jayson said that at this stage, companies don’t necessarily want to transact, they want to continue to build, generate more value, and develop the program further to make it attractive to a pharmaceutical company.
Because Takeda Ventures makes a pure investment without any overhang, they work with the entrepreneur to de-risk the asset and help the opportunity grow. Sometimes this means taking a board seat and helping build the management team. But unlike a typical venture group, Takeda Ventures can leverage the non-economic resources of the pharmaceutical company such as advising on clinical strategy, pharmacology studies, toxicology reports, and scale up.
For highly interesting assets or programs where Takeda doesn’t have the internal capabilities to build value, an equity investment makes sense while they are building capabilities. For example, in the cell therapy space, Takeda Ventures made investments in two CAR-T companies – Arcellx and Obsidian – while Takeda Pharmaceuticals was building the cell therapy group internally. Now that group is up and running and both of those companies have potential for a partnership or acquisition.
Moving to Business Development
Once a program reaches Phase 1 and generates clinical data, it’s ready for a business development discussion with Beth and her colleagues. A business development transaction is more appropriate if IP is seeded and a strategic structure can be defined through direct license or a collaboration framework. Jayson and David both echoed that at Takeda, deals are end-to-end, where they find them, transact them, and live them.
Who’s in the Know
Because Takeda Ventures is a way for Takeda to access innovation, Takeda Ventures works very closely with Takeda R&D to make sure every investment is aligned and has a strategic rationale. Thus, they have strict firewalls and are careful about who gets access to the data room, as Takeda doesn’t want to contaminate its scientists. Before making an investment, Takeda Ventures lets management know who they’re talking to and who is and isn’t in the data room to do due diligence. Once they make the investment, if they take a board seat, they have a fiducial responsibility to the shareholders on the portfolio company to maintain strict confidentiality. They take it very seriously.
A Way to Take Chances and De-Risk
Jayson told a story of how they de-risked a risky investment. One way to access a genetically defined neuroscience disease in the central nervous system (CNS) is through gene therapy delivered by an adeno-associated virus (AAV). Typical CNS gene therapies like Novartis’ Zolgensma deliver very high does through an IV, but only a small portion of the capsids (the protein shell of a virus) transit across the blood brain barrier and transduce the appropriate cells in the brain. While that’s acceptable today, a higher-level transit solution is needed to address the large number of CNS diseases in the future.
Around 2017, before the Shire acquisition, Takeda Ventures scoured the gene therapy space for companies that were developing novel capsids. They found StrideBio in Durham, NC, who were using a structural approach and directed evolution to map the epitopes the AAV capsid that play a key role in tropism and cell entry. They made deep libraries mutagenizing those regions and selected and developed capsids that could be delivered by IV and cross the blood brain barrier for CNS delivery. Because StrideBio had other programs in tissue types such as muscle, heart, and liver, as an investor, it made sense to take a very early risk on a company that had multiple shots on goal, because it was too early for Takeda to do a business development deal.
Takeda Ventures made a small Series A investment to support StrideBio’s efforts. As part of due diligence, they got to work closely with the neuroscience R&D scientists to understand strengths of the company and application of the program, which led to numerous conversations and multiple points of contact between StrideBio and Takeda R&D at the Shire site in Australia. It became clear how everyone can work together – how StrideBIo can benefit their company build and how Takeda can benefit in their product engine moving these assets forward. Ultimately this led to a collaboration licensing agreement that was signed this spring for a series of targets that Takeda is interested in. Now with Shire, Takeda has one of the largest manufacturing capabilities of AAV products.
Beth points out that having Takeda on both the venture side and business development side made the StrideBio deal possible. A CNS capsid program is extremely risky and more suitable for an early investment. Jayson added that now it looks like the program is going to bear fruit and Takeda pharma gets the benefit.