Home Bioscience eyes fresh funds
With a focus on France and Germany, the company builder is also closing in on its final two targets.
The European company builder Home Biosciences is in the process of raising its second financing round, with $40m targeted. The cash will be used to support four start-ups, two of which have already been announced with a further two hopefully emerging by year end, chief executive David Schilansky tells Evaluate Vantage.
Home was set up in late 2019 to tap into promising science originating from universities in France and Germany. Schilansky describes the group’s asset-centric operating model as being based on corporates like Bridgebio or Nimbus, or venture funds like Flagship. “We started by looking at the most efficient systems and business models, and then we built our own,” he says.
Home is putting its money to work at very early stages, before even venture firms get involved. The group also has echoes of IP commercialisation groups, a model that is long established in the UK – IP Group for example – but that is less well established in continental Europe.
“We don't invest in existing stories. We co-found and co-design every [special purpose vehicle] that we invest in. We think about the strategy, the business purpose, the milestones, the roadmap and so on,” Schilansky says.
These SPVs, set up in collaboration with full time academics, house the IP. Home Biosciences, via its “topco”, provides the cash, the management layer, and all the key company functions.
“And after three, four or five years, the idea is that the company has crossed its significant milestones and is able to fly on its own,” he says. That might mean syndicating other funds to support ongoing financing needs, or a sale. “Whatever strategic option is decided.”
Home’s current executive team can support the running of four SPVs, he says, but that bandwidth could be increased by adding more executives to the topco.
Pros and cons
Schilansky says that Home’s model helps answer a big problem in Europe: finding sufficiently experienced C-level teams and managers. He and many of his staff are formerly of DBV Technologies, a European biotech known for its protracted attempts to get a peanut allergy therapy to market.
Europe does offer some advantages over the US: lower costs and significant government support. The cost of employees can be three times less than in the US, Schilansky says, describing the tax and grant situation as “amazing”. He estimates that for every euro Home spends in France it gets back around 50 cents in non-dilutive support from government schemes.
“It's a very nice environment for early-stage ventures,” he says.
Schilansky argues that many of Europe’s biotech failures happened because the seeds were not planted correctly from the beginning. “The idea is make sure things are being done the right way from the get go, with the right level of investment and with the right skill sets. And that is not always what has been done” in Europe, he says.
Home’s first SVP, One Biosciences, was announced back in 2020. The company, spun out of Institut Curie in France, has a target-discovery platform based on single-cell technologies.
Sequantrix followed last month, co-founded with academics from Uniklink RWTH Aachen in Germany, with four novel antifibrotic targets already identified for development.
Home is focusing on explicit strategic areas – kidney disease, fibrosis, muscle and bone disorders, and pain – fields that have yet to attract as much attention in Europe as they have in the US, Schilansky says. The third and fourth vehicles will be slightly more advanced, with projects approaching a move from preclinical to proof of concept in humans.
The ultimate test of Home’s model will be the progress – or otherwise – of its SPVs. Whether it is the model that matters when it comes to these company builders, or the people making the decisions, is probably an open question. Considering the early-stage nature of the projects being supported, luck will also play a part.
Investors have backed a plenty of different models in pursuit of efficient R&D and entities that can easily attract the next round of investment. Think Puretech, Arix and F-star, alongside the names mentioned earlier. The track records of these company builders are probably as mixed as their approaches.
A signal of support for Home’s team will come soon enough with its ongoing equity raise, which Schilansky hopes to complete before the end of the year. Seed funding of $15m in 2019 was provided mostly by Redmile, a US investor, and France’s Sofinnova Partners; the new syndicate will be larger, he says.
“The pushback we have is that we're early, and people want to have assets in the clinic, because they want to create value quickly. But it's a long-term game. In Europe, if you want to do things right, you need to start two steps before,” he says.