Go Ahead, Outsource Your Entire Biotech

By Louis Garguilo, Chief Editor, Outsourced Pharma

I wasn’t convinced the new organization I came across, Persephoni BioParnters, was a fit for our publication. To find out, I spoke to CEO Hilary Schultz.

She described a business model that propels “externalization” to an ultimate implementation:

The formation of a biotech by outsourcing pretty much the entire organization, which then outsources to advance an asset through development and potential manufacturing.

Rescuing Inventors With A Venture Studio

Persephoni is based on a model that founds a company off of a novel or underutilized asset.

“A venture studio,” she explains, “is a mechanism to put the right professionals together to identify a therapeutic, fund it, and mobilize and place operational rules to execute on … or kill it quickly through experiments.”

“We do this in a bootstrapped, low-human-capital way,” which of course includes utilizing CROs, and soon, CDMOs.

Typically, Persephoni will bring in the inventor(s) of the assets as part of the team hired to oversee development.

In fact, Schultz spoke passionately about how first time founders unknowingly make decisions that close doors down stream with the first contracts they sign with inventors have been taken advantage of by their universities, VC partners, and/or the licensing agreements with pharmaceutical companies.

She views Persephoni as a sort of protectorate of those investors, and their IP.

“We want to empower the actual inventor, and maintain their voice,” she says. “We champion the inventor.”

Persephoni looks to accomplish this through reaching more equitable agreements between all parties involved in a put-together organization.

Those “parties” include a variety of biotech-industry professionals signed on with Persephoni – deemed operating partners – and who are at the ready to form/join management roles of a newco.

Back To School, And Business

Schultz has an interesting background. She realized during med school and research studies that “the clinical route was not for me.”

“You become a technician, told what you can do based on scope and practice,” she says, and that perception induced "a pivot to eight and a half years building companies.”

In a flowing stream, she mentions as her next experiences “brokering gas and electricity concerns; work in private equity and venture capital; merchant-banking processing; and building “embedded franchise-scale model systems to facilitate global growth.”

All that somehow led her back to life sciences and academia, when she decided to round out her ealier molecular biology studies at Harvard with a master's in biomedicine and business at Drexel University College of Medicine.”

But as she was pursuing a PhD, she says, “I found my thoughts again landing on business translation.”

Her advisor suggested she take the asset they were working on and try to commercialize it herself. She agreed, and formed a stealth-mode, cell-and-gene company currently looking for funding.

She also started advising the university in “a blueprint study on commercialization and biotech ecosystems,” and in another parallel, she became the executive vice president of Nucleate Bio, “an international activator program that started at the Harvard Biotech Club.”

“The mission is to democratize access to information for benchside scientists and want-to-be entreprenuers, via an activator training program that brings in pharma-related mentors,” she explains. “Johnson and Johnson and Eli Lilly are some of our biggest sponsors.”

“The organization started at four local operating chapters at universities supporting students to commercialize their discoveries. I took them from four to now operating in 32 global regions, embedding some of my franchising modeling that I had done in my previous company.”

Her preultimate position to Persephoni started when she was recruited by the state of Pennsylvania to be an entrepreneur in residence, with two aims: Build the bio-economy in Pennsylvania, and start companies.

To get the ball rolling, she started one herself, a small-molecule company with her as the executive lead.

“I then recruited and built a team around that asset. I thought there's a way to model and franchise this,” she says. “That's how Persephoni came to fruition.”

How Does It Work?

I’d describe Persephoni as a scalable nouveau modus operandi in the biotech industry, somewhat altruistic in approach, but also financially beneficial. And it includes, shall we say, outsourcing to the max.

• Initially, there’s a rigorous but streamlined de-risking of the asset done through literature research and experimentation utilizing CROs.
• Persephoni then selects the most apt scientists and from among her executives-in-waiting to work with the sponsor/inventor on the specific asset they’ll build their biotech around.
• That compilation of human resources then files for incorporation as cofounders.

“There's an inherent need for this type of modeling, where you bring de-risked assets to knowledgeable venture and human capital," Schultz says.

"Many pain points that end up closing doors downstream are a result of initial decisions founders make."

These decisions “put nails in coffins of great assets.” They lead to bad licensing terms or outcomes when inventors do tech transfers out of government or academic organizations, for example.

Persephoni, on the other hand, makes fairer deals, and her band of professionals become an outsourced and outsourcing biotech that “encompasses and steers decision-making and execution.”

Interestingly, she also has bigger pharma partners “who can take the baton” should assets pass out of development.

And, rallying to our usual interest, that’s where CDMOs will come into play, and also meaning, somewhat paradoxically, those inventor-led assets will wind up with the usual suspects – established biotechs or big pharma.

Is It Really So Different?

Therefore, perhaps this venture café model doesn’t so much upset the ecosphere of development and manufacturing outsourcing as improve the translation of research and assets into a biotech structure.

And after gaining a deeper understanding from Schultz, I’m not suggesting Persephoni is so unique it is unparalleled.

Early investors who install professionals to take business ideas and hard assets through development is not new.

Nonetheless, Schultz believes she has the best model for asset success, and for inventors and those investors.

“We will be forming 12 companies over the next three years. We have a rinse-and-repeat model,” she says confidently.

On the day we spoke, the company announced that William Heath, an exiting long-term executive at Eli Lilly, had joined Persephoni as Chief Scientific Officer.

“He’ll steer our entire portfolio,” says Schultz.

In part two, we’ll hear directly from Heath on working with CDMOs.