What’s Ahead for European Biotech Startups After Covid?

With a tumultuous year behind us, 2021 is set out to spell change for many startups in the European biotech ecosystem. 

Following the Covid-19 pandemic and Brexit, the European biotech startup landscape has seen some big changes over the course of the past year. Jason Mellad and Dan Rooke, CEO and COO of the Cambridge-based life sciences accelerator StartCodon, discuss how these changes will influence the trends we’ll see in the biotech ecosystem over the next year, from opportunities created by the pandemic to the most promising technology trends, as well as how Brexit will impact the European startup landscape. 

How did the pandemic impact European biotech startups in 2020?

Jason Mellad: Well, 2020 was such an odd year because of the pandemic, but what I thought was fascinating is that there was an increase in interest from non-healthcare investors to invest in startups in this space. 

The pandemic has basically caused all of us to reconsider the importance of things like early disease detection, health and wellness, anti-infectives, or remote care with telehealth. So biotech startups that could pivot into those spaces, did so. And new opportunities that maybe would have been more challenging to get funding received interest from healthcare investors. The rules have been completely reset in 2020.

Dan Rooke: It’s not just been a case of companies pivoting because they see an opportunity. We’ve also seen a change in focus by funding bodies, such as Innovate UK, preferring Covid-related solutions. So as a result, companies are pivoting, not necessarily just because of an opportunity to pivot but also because they think they can secure funding if they focus on Covid-19. 

Also, we saw quite a lot of companies picking up on health and wellness. Obviously, people haven’t been able to go to hospitals and doctors due to cancellations. So, towards the third quarter of the year in particular, we saw a lot of digital solutions around that problem, allowing patients from different backgrounds to interact with the doctors virtually. Previously people hadn’t really considered the impact of a pandemic and now it’s happened, it’s changed the funding landscape.

How will the focus on Covid-19 impact other indications?

Jason Mellad: It’s fascinating to see how this pandemic has caused so many young entrepreneurs to start up, and how many existing startups are pivoting in new directions. I think the influx of cash towards Covid initiatives probably caused too many companies to pivot toward a Covid solution, and I think that will have a long-standing impact. A number of companies that might have otherwise been developing solutions for other diseases, saw the money available for anything remotely Covid-related and did a hard pivot to focus on that. 

What that means is that we’re going to have a whole smorgasbord of opportunities that have been left at the table, that other biotech startups starting now will have an opportunity to address, whereas the ones that pivoted to Covid will be fighting fierce competition. There’s just not enough room in the market for 500 different rapid diagnostic tests of Covid. We’ve oversaturated the solution space for this pandemic. 

And as much as those efforts were not in vain, because we needed them, we have to ask ourselves how many other diseases are going to be left behind. The companies that can take advantage of that situation will ultimately win long-term. 

In that same vein, with so many patients affected by Covid taking up resources in the healthcare system, what’s going to happen to patients who’ve had their elective surgeries or diagnostic tests or follow-up procedures delayed for months? That’s an opportunity for innovative, disruptive platforms to come to the forefront. There will be a knock-on effect. 

So while pivoting towards Covid-solutions may not have been the wisest decision for some biotech startups, it does create an opportunity for more innovation, and that’s always a good thing in the long run.

Covid-19 aside, what are the most promising technologies you expect to see in 2021?

Jason Mellad: I believe telemedicine and telehealth are going to be important. We’re all working remotely, we’re all stuck at home, we’re all ‘zooming’ and ‘teamsing’ and ‘google meeting’. The pandemic has opened up a whole new market for the distributed care model, for things like point-of-care tests at home and remote monitoring via wearables or smart furniture. 

The important thing is to put in place the infrastructure for reducing the burden upon the healthcare system, by keeping patients at home for longer, where they can recover in their natural environments and actually have better outcomes with the right care pathways in place.

I also know that big data will continue to play a role in everything. One of the things that we do for any company that approaches us, no matter what field – therapeutics, diagnostics, medtech, digital health – they all need to have an informatics strategy that they map out from day one. Because big data, artificial intelligence, and machine learning are more than buzzwords. They’re going to be the bedrock of the biotech industry going forward, and they’re already starting to take over. 

The other trend I’d highlight would be genomics. Before, genomics focused on sequencing your linear four-base DNA code. Now, we’re starting to appreciate the importance of epigenetic modifications and 3D interactions that regulate gene expression. There’s so much more information to be garnered from our genomes which have been historically underutilized. Going forward, we have the tools – both chemistry and informatics – to unlock that information.

Dan Rooke: We’ve definitely also seen a trend towards gene therapy companies and gene-editing companies. We’ve noticed an increase in investor appetite for those kinds of therapies, although they are still very early in terms of the ability to launch such products in the market. 

Jason Mellad: RNA is another trend. We’ve seen what Moderna and Pfizer/BioNTech have been able to accomplish in record time with their mRNA vaccines, and suddenly everybody’s excited to exploit RNA’s full potential. Let’s take another look at RNA silencing, let’s continue to explore therapeutics that can be built off of the back of novel RNA structures, or even the ability to drug RNA directly with small molecules, or use RNA as a new liquid biopsy diagnostic. RNA, increasingly, is going to be at the forefront of biotech innovation and investment.

How will Brexit affect the European biotech startup scene going forward?

Dan Rooke: I think in the UK we’ve got the most active healthcare and life sciences startup scene in Europe. We know the golden triangle – Oxford, Cambridge, and London – creates more biotech startups than most places in the world. So do I think Brexit is going to have an impact on innovation in the short term? No, I don’t think it will. Is it going to have an impact in the medium and longer term? Yes, I think it will. 

For me, the big issue I see from Brexit  – and I see many issues from Brexit  –  is access to talent, particularly on the startup scene. We are reliant to a large degree on foreign talent. And while we’ve got a baseline of foreign talent now, I do think access to talent will become a problem over the coming years. I think we will genuinely see this lack of talent hit the healthcare and life sciences sectors quite hard.

Jason Mellad: I agree, talent is a huge issue because you need outstanding teams in order for a startup or any company to be successful, particularly in the early phases. Building on that, we’ve already experienced the knock-on effects of reduced access to European funding for early-stage academic research. That’s going to have a negative impact on the pipeline of innovations coming through UK universities, and the ability of UK universities to participate in some cross-international consortia. 

But I also think that there’s an opportunity for an upside. It’s no secret that I think Brexit was an unwise decision, but I do think that there’s always room in a chaotic and disruptive environment for innovation and advance. For example, we’ve witnessed increasing investment interest from US and Asian VCs keen to support growth and scale-up in the UK ecosystem. Consequently, the UK will become a much more competitive fundraising landscape, which is always positive in the long run.

Potentially, there might also be an upside for European investors who start to invest more heavily in nurturing budding biotech ecosystems across continental Europe. Cambridge will continue to thrive as the leading biotech hub for Europe and an innovation powerhouse recognized worldwide, but there’s unrealized opportunity across the continent in Spain, Italy,  Germany, France, and beyond. So I’m confident that overall, we’ll see some exciting, net positive changes. It won’t all be doom and gloom.

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