Silicon Valley Bank Failure is Warning Against More RNA Editing Start-Ups

As the collapse of Silicon Valley Bank (SVB) is making the rounds, let's take a step back and ponder what it means for the RNA Editing space.

SVB has been a prominent banking partner for start-ups in tech and biotech, willing to do business where traditional banks did not feel comfortable with the unique risk profiles and needs of such businesses.  Short-term, the failure means that some jobs are at risk as small companies for which SVB was the only banking partner may not be able to make this month’s payroll in time, and 10-20% of uninsured deposits above the $250k FDIC limit may be lost forever. 

SVB’s failure is a crack in the system resulting from rampant inflation and the dramatic rise of interest rates in response.  It’s quite possible that other cracks, also among the more traditional banking sector, emerge soon due to an imbalance of short-term cash demands of bank customers and banking treasuries overweighted in bonds with long maturities that can now only be sold at a loss.   

Too many biotechs!

That SVB, along with a smaller crypto-catering bank (Silvergate), is among the first victims is largely due to biotechnology’s voracious appetite for capital, but an inability to raise more of it in the current environment.  Having too many companies developing the same platforms and targeting the same diseases in parallel, especially in the gene therapy, genome editing, and immune oncology spaces, has only exacerbated the interest rate problem. 

SVB is thus symbolic for the (bio)tech excesses in recent years, culminating with the Covid19 crisis where every little idea was transformed into a start-up with $100M of funding from the get-go housed in glitzy labs and offices in the most expensive hubs, run by entitled executives more focused on ESG issues than bringing their technologies to fruition.   Contrast this to 15 years ago when little biotechs like LNP pioneer Tekmira (Protiva then) did better science, developed platforms more rapidly while fighting off larger rivals, yet spending just $3-4M a quarter.

Take CRISPR genome editing.  It seems like every new Cas enzyme, every new enzyme tethered to Cas9 doing something, anything with DNA or the epigenetics around it needs a new cash-burning start-up.  Instead of for example licensing prime editing to Beam Therapeutics, founded on more advanced base editing technology from the same academic laboratory, the movers and shakers in the VC scene sought to exploit David Liu’s star scientist status to found yet another immature biotech company many years away from a potential product and with even more inexperienced management.  To add insult to injury, this has been taken to the extreme of selling Liu’s* genius to suggest that he has solved nucleic acid delivery where thousands of humble scientists have worked over decades on similar concepts.  Enter Aera Therapeutics with- hold your breath- $193M in start-up funding.  

* correction: the scientific founder behind Aera Therapeutics is another CRISPR researcher from MIT, Feng Zhang, not David Liu.  The message, however, is the same.

Every paper a new biotech it seems. Sorry, and with all due respect to those involved: this type of behavior is unacceptable and comes across as greed and hubris.

 

Not too late for RNA Editing

One of the reasons I like ADAR RNA Editing also as an area of investment is that it is a differentiated technology platform allowing for unique therapeutic approaches and, equally important, where there has not been this hype leading to an overproliferation of companies and inefficient use of capital.

It is also not surprising that the two most advanced companies in the space, ProQR and Wave Life Sciences, are not pure-play startups.  By contrast, the refinement of editing oligonucleotides here happens within companies with a decade of experience in oligonucleotide drug development, and at least in the case of Leiden-based ProQR, at a fraction of the cost of its start-up rivals KorroBio and ADARx based in the Boston and San Diego hubs, respectively.

I am highlighting KorroBio and ADARx because they are the two most prominent start-ups around synthetic oligo-based ADAR RNA Editing that have significantly benefited from the Covid19 boom in biotech financing, but where I fail to understand what they are bringing to the table and thus the point of their existence.  For example, I wrote about my surprise at Korro Bio going with LNP delivery for liver-targeted AATD.  This most likely comes down to their inexperience in oligonucleotide chemistry.

So here is my plea to the ADAR RNA Editing industry: we do not need to repeat the mistakes made in other areas of biotechnology.  Competition, such as the rivalry between Alnylam and Sirna Therapeutics in RNAi, is a good thing as it focuses the mind, but 2 or 3 strong ADAR Editing-based pure-plays are really enough, plus some platform adoptions by larger oligonucleotide therapeutics companies like Ionis, Arrowhead, or Alnylam and disease-specific licensing activities of Big Pharma; and if there are important advances in academia relevant for the space, tech licensing the old style is appropriate.