Wednesday, October 28, 2015

Start-Up of the Week: Semma Therapeutics

This article is the first in a series of weekly posts that will look at cell therapy start-ups that are making headlines. 

By: Leah Kinthaert

At the Cell Therapy BioProcessing Pre-Conference Symposia for the BioProcess International Conference and Exposition, Chris Gemmiti of Wyss Institute, in his "State of the Industry" talk brought up six companies who have received funding this year. His list included Semma Therapeutics, a company who was all over the news back in March when they closed a $44 million series A funding round.

What has Semma Therapeutics been up to since March?
Semma Co-Founder and CEO Robert Millman recently spoke at BioPharm America where he gave some incredible insight on the choices he and his organization have made in regards to partners, manufacturing and other strategic goals.

Millman discusses the two hats he wore, in acquiring funding for Semma.  As CEO... "I want non-diluted financing, I want a strategic partner...I don't want to be in a situation where I need data and have to go out to reraise capital. I need a partner who's committed."

Millman continued: As VC... "I want to reduce risk, reduce cost basis of my investment, pre money evaluation”. Millman explains: "The intersection of a wants of a biotech company, and the wants of a venture partner came together the funding of Semma.”

Semma Therapeutics has partnered with Novartis and Medtronics, a company which has a multimillion dollar business in diabetic pumps. Why a company that makes pumps is suddenly interested in cell therapy says a lot about how cell therapies are shaking up the healthcare industry. Millman explains: "If cells work better than pumps that industry goes away."

How Semma came to be: 
"Semma Came together very quickly once Doug Melton (scientific founder of Semma) committed that he wanted to do this not through a strategic relationship with a single pharmaceutical but wanted to incubate it with a biotech, because a biotech company can really progress things faster and it also leaves a lot of incentive on the table for the founding and the founding institution where a direct license to a pharmaceutical company may not. The goal of Semma was to raise enough capital to move it to a point of strategic advancement, but remain enough leverage on the table so when you got to that next point of value creation and had a need for another raise it would be at a high incremental value."

Millman has had several years of experience in biotech, and has some specific theories as to why some cell therapy companies have failed: “In my career I watched a lot of biotech companies fail because the CEO at the time said ‘Look I’m smarter than pharm, I am going to keep this agent and move it farther down the stream' and that’s where the problems typically happen.“

Explaining why Semma opted to choose Novartis as a partner: 
“When a pharmaceutical company wants something it will put more resources than any biotech company can put on something to move it over the hump. It’s an amazing relationship when pharma really wants what you’re working on.” Millman does, however, seem to understand why some start-ups are hesitant: “The downside of bringing in a strategic partner in the beginning is that you’re almost like captured bait”...“Some VCs will say that’s a bad model because I want to go out and hit the free market later.”

On Semma's decision to not build their own plant:
"What happens is you spend $100 million on facility infrastructure and maintenance cost for a product that you don’t even know is there. You control the process, but that is not always the best way to go forward. The investment in time to get a plant up, get ready for manufacturing...adds about a year and a half to a minimum of two years on my timeline. Renting that will triple my costs on the front end for that single per gram basis, but over the long run I think it's a better investment for us.”

Semma's biggest hurdle: 
“Our cells need to come together for the general population with a device... a delivery technology. The goal here is treating patients, how do I get what I have for patients. In my in my case I need delivery and delivery technology to access a very large patient population.”

A lot is at stake for Semma right now. As Chris Gemmiti, speaking this week at BioProcess International commented: (They got) "$44 billion in funding and they're not even at the IND stage." All eyes are on Semma as they attempt to bring their technology to the clinical stage.

Click here to watch the full panel discussion with Robert Millman of Semma at BioPharm America last month.

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