The binary risk of investing in therapeutic companies has needed to be overcome, not only for more impactful R&D investing but also to bring effective therapies faster to patients who need them the most. It can take 17-18 years for therapies to reach the market and cost billions of dollars. The success rate has been abysmal hovering in the low single digit percentages.
We are entering a transformational period where these figures can be changed for the better. With the advent of Artificial Intelligence, more and more is being invested in drug development so the hit-to-lead time is becoming shorter and winners can be picked out at rates better than human diligence. We will always need human interpretation but with the support of AI, we can improve our chances of selecting drugs that will be both safe and effective.
Our unique funding model combines an insurance element and a lending element, that has been launched by Lloyd’s of London and multiple household name institutional lenders. Selection of biotech companies to support must first clear Lloyd’s underwriting which taps into an AI-validation technology developed by GATC Health. Their AI technology was independently and blindly validated by a 3rd party, A third party and double-blind evaluation of this platform has shown a much larger hit rate of identifying successful drugs than historical success rates in trials[1]. Our approach will therefore bring a critical competitive advantage in the selection of therapeutic deals over traditional investment approaches, which carry a much higher risk of failure.
If the underwriting gives a green light, then trial costs would be covered by the creditors – a source of important NON-dilutive funding – while VCs like us would cover the cost of Lloyd’s insurance a premium. This is a fraction of the cost that traditionally must be raised thru investors and at full dilution to the startups and investors alike.
If the startup succeeds with their trial phase, there is a step up in their valuation and everyone succeeds. If the trial fails, Lloyd’s will pay back the lenders, the startup will owe zero and both the startup and VC investors like us, will not have suffered a major loss. The company can carry on.
Importantly, since TIME is such a factor in a company’s viability, the underwriting to lending process in our model takes 3-4 months compared to the drawn-out 8-12+ months it can take to raise funds traditionally thru VCs and potential nondilutive grant funding.
With nearly 100 life science startups who have raised their hands and are in the queue for our novel funding vehicle, the market appears to have spoken YES. We are bullish on our new funding approach designed to win for all stakeholders: the startup company, our Limited Partners, the insurance-creditors and last but not least, the patients.
If anyone is interested in learning more about our funding vehicle, I would be pleased to share. Please reach out.
[1] Jenkins, I, et al. AI-Based Predictions of Molecular Target Activity from Blind Chemical Structures. Am J Biomed Sci & Res. 2024 23(1) AJBSR.MS.ID.003034, DOI: 10.34297/AJBSR.2024.23.003034.
