Look
at
recent
big
pharma
asset
acquisitions
and
new
biotech
company
launches,
and
you
might
spot
a
common
theme:
The
drugs
at
the
heart
of
these
deals
were
originally
developed
in
China.
The
portfolio
of
venture
capital
firm
Foresite
Capital
has
several
such
drugs,
the
product
of
regular
trips
it
has
made
to
the
country
since
2019.
One
key
difference
between
then
and
now:
Getting
these
assets
is
a
lot
more
competitive.
China
is
teeming
with
promising
science
in
areas
such
as
oncology
and
immunology,
said
Foresite
Managing
Director
Michael
Rome.
But
these
days,
the
competition
for
these
assets
comes
not
only
from
other
VC
firms
or
even
biotech
companies.
It’s
coming
from
big
pharma,
he
said.
Foresite
has
made
Chinese
innovation
a
key
part
of
its
investment
and
company
formation
strategy.
China-sourced
science
is
brought
into
Foresite’s
to
mature
in
the
firm’s
incubator.
There,
an
artificial
intelligence
technology
platform
analyzes
genomic
data
to
identify
drug
targets
and
guide
indication
selection.
Foresite
last
year
closed
its
sixth
fund
with
$900
million
to
invest
in
startups
at
all
stages
of
development.
Rome
sat
down
with
MedCity
News
during
the
annual
J.P.
Morgan
Healthcare
Conference
in
San
Francisco
last
week
to
discuss
the
firm’s
investment
strategy,
the
wave
of
innovation
from
China,
and
the
areas
he
sees
as
promising
for
research
and
investment.
The
Q&A
has
been
lightly
edited
for
length
and
clarity.
MedCity
News:
Tell
me
about
Foresite
Capital.
Michael
Rome:
We’re
50%
early
stage,
50%
later
stage,
[and]
for
that,
78-80%
of
our
investments
are
in
private
companies.
The
rest
we
do
in
public
companies.
We
have
an
incubator
called
Foresite
Labs
where
we
incubate
companies
and
new
concepts,
and
if
those
work,
they’re
going
to
graduate
to
a
main
fund
investment
syndicate
round.
Therapeutic
area,
we
do
everything.
We
do
a
lot
of
oncology,
autoimmune.
We
have
investments
in
neuroscience.
We
also
do
platform
companies.
And
then
again,
our
team
actually
is
the
same
team
that
does
the
early
stage
and
the
later
stage.
So
our
team
members
could
be
starting
companies,
we
could
be
investing
in
syndicated
Series
As.
On
top
of
that,
we
do
a
fair
amount
of
later
stage
Series
Bs,
the
crossover
rounds,
and
we’ll
support
our
companies
into
IPOs
and
when
they’re
public
as
well.
That’s
a
high
level
of
who
we
are.
MCN:
I’m
wondering
about
the
company
creation.
I’m
seeing
more
VC
firms
doing
that.
Are
there
certain
areas
you’re
looking
at
or
are
certain
kinds
of
companies
you’re
looking
to
create,
and
where
does
the
science
come
from?
MR:
There’s
three
flavors
of
companies
we’re
incubating
at
Foresite
Labs.
One
are
larger
platform
companies
and
we
use
kind
of
an
AI/ML-driven
approach
built
on
a
platform.
An
example
of
that
is
a
company
called
Xaira
[Therapeutics].
Last
year,
they
raised
a
billion
dollars
in
capital.
It’s
a
drug
discovery
company,
but
really
using
AI
as
their
primary
toolkit
for
discovering
drugs.
We’re
doing
more
in
that
category,
it’s
an
area
of
interest
at
Foresite
Labs,
this
kind
of
an
AI/ML-enabled
approach
in
platform
companies.
Something
else
we’re
very
active
in
are
asset-centric
plays.
We
started
looking
at
China
going
back
to
2019.
We’ve
been
doing
deals
in
China.
That’s
a
major
trend
of
ours
and
what
we’ve
been
doing
is
basically
licensing
assets
in
China
or
doing
essentially
like
an
M&A
deal
to
secure
an
asset.
Then
we’ll
incubate
that
in
a
Foresite
Labs
company.
And
sometimes
we’ve
identified
the
entrepreneur
that
we’re
working
with
and
we
find
the
asset,
or
vice
versa.
MCN:
Do
you
have
anybody
on
the
ground
in
China,
or
do
you
just
travel
a
lot?
MR:
(Laughs)
We
do
travel
a
lot.
We
have
two
full-time
consultants
that
we
use
in
China.
We
were
in
Shanghai
four
months
ago.
We
have
members
of
our
team
that
are
fluent
in
Chinese.
So
we
have
a
really
good
concentration
of
efforts
in
China.
Those
are
probably
our
two
biggest
areas
at
Foresite
Labs,
doing
AI-enabled
drug
discovery
companies,
then
doing
asset-centric
plays
with
entrepreneurs.
The
third
kind
of
companies
we’re
putting
together
are
basically
just
finding
the
right
entrepreneurs
we
work
with
and
who
are
experienced,
and
essentially
starting
companies
there.
Numerous
companies
we’ve
done
now
are
built
around
someone
we
work
with,
putting
a
company
together
from
the
ground
up.
Our
team
is
very
active
in
building
these
companies.
We
bring
our
knowledge
of
the
industry,
we’re
following
every
conference,
we’re
following
all
the
news
trends,
we
document
therapeutic
areas,
and
we
use
that
to
enable
our
platform
companies
at
Labs.
MCN:
I’m
seeing
a
lot
of
companies
doing
artificial
intelligence
or
talking
about
it.
Is
there
a
certain
flavor
of
AI
or
machine
learning
(ML)
that
would
be
emblematic
of
a
Foresite
company?
MR:
Sure,
probably
two
ways.
One
is
using
large-scale
genomic
data
to
hunt
and
find
targets.
There
is
a
classic
example
in
the
drug
discovery
industry
with
a
target
called
PCSK9.
And
a
PCSK9
inhibitor
is
very
effective
at
lowering
your
LDL
[cholesterol].
It
also
lowers
an
important
protein
called
LP(a).
All
of
these
are
implicated
in
heart
disease.
That
was
actually
discovered
using
large-scale
genomics.
There’s
another
example,
another
one
of
our
portfolio
companies
called
Latigo
[Biotherapeutics].
They
have
a
NAV1.8
inhibitor.
I
bring
it
up
because
it’s
the
same
thing.
Population
genetics
show
that
you
can
knock
out
NAV1.8
and
what’s
really
interesting
is
people
didn’t
experience
pain
the
same
way.
It’s
an
ion
channel
in
the
periphery,
and
essentially
your
pain
response
goes
down.
You
can
take
these
drugs
and
you
can
put
your
hand
in
cold
water,
it’s
called
a
cold
pressor
test,
and
it
suppresses
your
response
to
cold.
Anyway,
we’re
doing
stuff
exactly
like
that.
We’re
mining
large-scale
genomic
data.
That’s
a
platform
we’ve
built
out
over
Labs
for
a
while
now,
and
that
is
informing
new
target
direction.
Another
thing
we’ll
do
is,
a
portfolio
company
might
come
in
and
say,
‘Hey,
we’re
thinking
about
target
XY
and
Z
and
XY
and
Z
indication.
What
is
the
Labs
platform
showing,
telling
us
about
that?
Can
that
advance
drug
discovery
sooner?’
So
those
are
how
we’re
building
things
out.
MCN:
So
in
terms
of
therapeutic
areas,
are
there
areas
that
you’re
really
interested
in?
MR:
We
do
a
lot
of
oncology
and
autoimmunity,
probably
our
two
biggest
categories.
We
also
have
a
lot
of
targets
that
were
enabled,
through
the
Labs
platform
again,
in
autoimmunity
for
selecting
autoimmune
indications.
An
indication
like
lupus
is
a
very
complicated
disorder
and
it’s
basically
a
spectrum
of
problems.
So
we’re
actually
doing
things
like
looking
for
certain
genetic
signatures
that
might
respond
to
certain
drugs.
MCN:
Existing,
already
available
therapies?
MR:
Yes.
MCN:
So
this
would
be
like
a
repurposing
of
a
drug?
MR:
Yeah,
you
can
think
of
it
as
repurposing.
There’s
fair
amount
of
interest
in
an
area
called
T
cell
engagers.
Those
are
being
repurposed
from
oncology
to
autoimmunity,
and
there
actually
is
a
fairly
big
kind
of
genetic
component
of
finding
the
right
patient
population.
I
think
we
can
talk
about
Candid
[Therapeutics].
Candid
is
a
company
we
founded
in
collaboration
with
entrepreneur
Ken
Song.
Ken
sold
his
company,
RayzeBio,
last
year.
We
saw
the
autoimmune
area
started
out
in
cell
therapy
on
exciting
data
from
Georg
Schett
in
Germany,
showing
complete
remissions
in
lupus
and
other
autoimmune
conditions.
Cell
therapy
is
a
really
tough
business
model
to
personalize
therapy.
T
cell
engagers
actually
do
a
very
similar
thing.
They
bind
to
a
target
and
they
have
another
arm
that
binds
T
cells
to
direct
the
T
cells
to
its
target.
Those
were
getting
repurposed
for
autoimmune.
We
were
really
early
in
that
trend.
We
basically
found
two
assets
in
China.
And
then
we
collaborated
with
another
group
that
was
led
by
Third
Rock
[Ventures],
they
found
an
asset.
We
put
it
all
together
and
we
have
three
different
T
cell
engagers.
Ken
raised
$370
million
last
year,
one
of
the
biggest
financings.
We
have
two
products
in
the
clinic
right
now.
And
I
should
mention
all
the
assets
were
sourced
in
China.
MCN:
Why
is
China
so
hot?
I
keep
hearing
deals
happening
in
oncology
and
in
autoimmune
where
the
assets
are
coming
from
companies
in
China.
MR:
There’s
a
few
reasons.
One
is
that
they
have
an
incredible
amount
of
funding
in
the
country
going
back
the
last
decade
now,
and
even
the
Chinese
government,
believe
it
or
not,
helped
start
biotechs.
They
subsidized
a
lot
of
early-stage
research.
So
they
had
a
very
good
ground
for
entrepreneurship.
Another
thing
that
was
happening,
you
started
just
getting
really
good
scientists
who
were
starting
companies
in
China,
brilliant
people
who
were
leveraging
all
the
innovation
in
the
field
and
starting
companies.
Also,
it’s
a
lot
cheaper
to
run
a
biotech
in
China
than
it
is
in
the
U.S.,
so
you
just
saw
this
explosion
of
innovation
in
the
last
five
years.
Don’t
quote
me
on
the
year,
but
I
want
to
say
it’s
maybe
21
or
20,
the
[Chinese]
IPO
market
was
almost
flat
for
early-stage
biotech
companies.
This
was
like
a
seismic
event
because
it
meant
that
you
had
a
lot
of
companies
that
were
relying
on
public
markets
to
get
financing
that
were
sort
of
in
a
holding
pattern.
What
you
have
is
this
bolus
of
assets
and
that
opened
up
the
ground
for
a
lot
of
business
development.
We
were
there
2019,
we
sourced
a
company
that
ended
up
the
asset
at
a
public
company
called
Alumis,
which
is
a
very
early
deal
for
us.
We’ve
done
numerous
deals
in
China
since
then.
We’ve
done
asset
purchases,
we’ve
done
equity
investments
in
companies.
MCN:
Is
doing
a
deal
in
China
significantly
different
than
it
is
doing
a
deal
In
the
U.S.
or
Europe?
MR:
There
are
definitely
differences.
A
lot
of
them
are
idiosyncratic
to
China.
Their
tax
structures
are
different.
A
lot
of
times
companies
are
being
restructured
from
China
to
Cayman
[Islands]
entities.
That’s
another
nuance
in
deals.
You’re
also
getting
assets
cheaper
in
China,
and
the
science
is
great,
so
you’re
getting
fairly
good
deals.
We
were
early
in
that
trend,
and
then
pharma
started
getting
really
interested
in
China.
We
were
just
at
a
meeting
with
a
top
M&A
firm,
and
they
were
saying
pharma
is
now
making
quarterly
trips
out
to
China
looking
at
assets.
The
other
thing
that’s
interesting
is
as
it’s
gotten
more
competitive,
we
usually
lose
out
to
deals,
not
from
other
[VC]
firms,
but
from
pharmaceutical
companies
coming
in
and
bidding
up
assets.
MCN:
With
the
changing
of
presidential
administration,
President
Trump
has
made
anti-China
comments.
What
might
that
mean
for
dealmaking
in
the
future?
MR:
I
don’t
think
I
have
a
prediction
of
what
will
happen.
If
Trump
is
more
focused
on
tariffs
at
first,
that
probably
wouldn’t
impact
our
industry.
If
there
was
more
regulation
of
looking
at
deals
more
closely,
that
can
certainly
slow
the
closing
time
on
a
transaction.
But
I
haven’t
heard
anything
specific
yet.
Because
we’re
so
active
there,
we’re
following
it
really
closely.
It
would
be
a
shame,
because
there’s
a
ton
of
innovation
going
on
now
between
the
two
countries,
a
lot
of
synergies,
you
see
a
lot
of
companies
working
together.
It’s
an
exciting
time.
MCN:
In
the
bigger
picture,
apart
from
Foresite,
are
there
therapeutic
areas
you
see
that
are
hot?
I
see
a
ton
of
obesity
drug
deals,
and
I’m
just
wondering
what
your
thoughts
are
on
this
market.
Is
it
too
crowded?
MR:
Obviously
GLP-1
have
sort
of
taken
over.
What
you’re
seeing
now
is
next
generation
GLP-1
drugs
starting
to
come
on
the
market.
First
we
had
drugs
like
[Novo
Nordisk
drug]
Ozempic,
which
were
the
breakthrough
and
you
were
seeing
substantial
single
digit
weight
loss
fairly
quickly.
The
next
wave
were
drugs
targeting
other
receptors
in
the
same
family,
like
GIP.
[Eli
Lilly’s]
Mounjaro
is
a
next-generation
drug.
The
next
generation
almost
doubles
the
efficacy,
in
some
cases,
for
percentage
of
weight
loss,
and
they’re
better
tolerated.
You’re
going
to
see
now
a
third
generation
of
drugs
that
are
targeting
a
receptor
called
the
amylin
receptor,
and
now
you’re
seeing
dual
GLP-1/amylin
[targeting
drugs].
The
next
wave
will
be
drugs
that
preserve
or
enhance
muscle.
One
of
the
big
issues
with
GLP-1s
is
they
reduce
all
your
mass.
They
take
away
not
only
your
fat
mass,
but
your
muscle
mass.
There’s
a
new
generation
of
drugs
in
the
TGF-beta
space
where
you’re
seeing
muscle
preservation
or
even
muscle
enhancement.
I
think
you’re
going
to
find
people
taking
those
potentially
for
cosmetic
reasons
that
want
more
muscle,
but
also
as
you
get
older,
muscle
loss
is
big
problem.
I
think
you’re
going
to
see
dual
GLP-1
agents
that
give
you
[muscle]
preservation
or
enhancement.
MCN:
What
about
orals?
MR:
Orals
right
now
are
a
little
bit
tricky
in
that
you
just
have
oral
GLP-1s.
Those
will
come
on
the
market
soon.
If
I’m
a
patient,
I
might
want
to
go
for
the
most
weight
loss,
so
I
might
be
more
inclined
to
take
a
Mounjaro
that
is
going
to
give
you
more
[weight
loss]
than
an
oral.
But
patients
continually
have
preference
for
oral
drugs.
Those
will
be
big
market
players.
From
our
perspective
as
VCs,
we
want
to
find
the
next
dual
combos
of
orals
—
oral
GLP-1/GIP,
agonist
or
antagonist,
oral
GLP-1/amylin,
all
these
different
targets
together.
MCN:
I
do
see
a
ton
of
activity
in
metabolic/obesity,
but
at
the
same
time,
it’s
so
crowded
that
I’m
wondering
how
investable
is
such
a
crowded
space?
If
it
is
investable,
what
are
you
looking
for?
MR:
We’ve
been
looking
at
a
lot
of
opportunities,
particularly
in
China,
where
they’re
like
the
same
drug
over
and
over
again.
We
are
staying
away
from
those.
No
‘me
toos’
in
obesity
because
it’s
so
expensive
to
run
these
trials,
and
unless
you
have
a
natural
acquirer,
it’s
going
to
be
tough.
A
lot
of
pharmas
have
made
their
bets
on
their
initial
GLP-1s,
a
few
haven’t.
But
it
has
to
it
has
to
be
differentiated
for
us
to
make
a
bet.
MCN:
Differentiation
is
oral
or
superior
weight
loss?
MR:
All
of
the
above.
Orals,
superior
weight
loss,
better
tolerability,
next
generation
for
muscle
preservation.
Those
are
the
spaces
that
we’re
trying
to
get
into.
MCN:
I’m
also
seeing
a
lot
of
immunology
deals.
MR:
Yeah.
Immunology,
we’re
very
focused
right
now.
Part
of
the
reasons
is
the
innovation
in
the
past
five
years.
In
oncology,
you
had
a
wave
of
precision
oncology,
which
is
targeting
the
right
patient
population
specific
to
the
mutation
that
causes
cancer.
There
was
a
lot
of
genetics
and
the
field
took
off.
The
field
kind
of
moved,
using
that
approach
in
immunology.
If
you
have
an
indication
like
lupus,
that
could
be
a
manifestation
of
a
lot
of
different
mutations.
So
to
treat
lupus
now,
find
the
right
drug
that
is
specific
for
a
certain
patient
population.
And
that
kind
of
thesis
has
emerged
in
a
lot
of
autoimmune
mechanisms.
So
finding
the
right
cytokine
inhibitor
for
patients
who
have
dysregulation
of
whatever
cytokine
or
whatever
the
autoantibody
is.
MCN:
So
in
the
way
that
in
oncology,
knowing
the
right
patient
population
for
a
drug
is
important,
it
will
be
the
same
in
immunology
as
these
therapies
expand
from
oncology
to
immunology?
MR:
That’s
right.
Said
another
way,
we
just
started
understanding
immunology,
all
the
underlying
mechanisms,
better.
There’s
been
a
lot
of
trial
and
error,
what
drugs
work,
what
drugs
don’t
work.
That’s
one
of
the
reasons
it’s
gotten
bigger.
And
the
patient
populations
are
huge.
Humira
is
the
largest
selling
drug
right
now,
and
it’s
an
immunology
drug.
It’s
a
little
different
[than
oncology].
Immunology,
your
patients
are
on
drug
for
a
long
time,
so
the
market
opportunity
becomes
bigger.
MCN:
But
the
safety
profile
is
also
different
when
you
compare
oncology
to
immunology.
MR:
Your
margin
for
error
there
is
a
lot
tighter.
I
would
rank/order
it,
[first]
cardiovascular,
you
need
to
have
the
safest
profile
because
that’s
going
to
be
the
largest
patient
population.
Statins
or
other
mechanisms
have
to
be
exquisitely
clean.
Then
I
would
go
autoimmune.
Autoimmune
can
be
devastating
conditions,
so
you
have
a
little
more
leeway,
you
can
say,
O.K.,
I
can
get
away
with
a
little
less
safety
profile.
In
oncology,
you
know,
these
are
going
to
be
grave
indications
you
might
be
able
to
tolerate
a
drug
that’s
fairly
toxic
if
it’s
going
to
be
efficacious.
MCN:
Is
there
anything
else
we
didn’t
talk
about
that
we
should
talk
about?
MR:
If
there’s
one
thing,
right
now,
we’re
seeing
is
a
lot
of
people
developing
the
same
drug.
We’re
very
cautious
about
that.
MCN:
You
mean
in
the
same
indication,
like
everybody
is
doing
obesity
drugs?
MR:
You
could
say
obesity,
but
there
are
targets
in
autoimmune
where
you
have
six
companies
going
out
after
the
same
target.
There
might
be
nuances
and
maybe
one
is
a
longer-acting
version
of
another
one.
Those
are
safe
plays
because
investors
know
it’s
going
to
work.
But
how
much
innovation
is
that
providing
having
the
fifth
drug
or
the
sixth
drug?
We’re
aiming
to
find
things
that
have
evidence
they
are
biologically
validated,
but
might
be
a
first-in-class
mechanism.
Those
are
things
we’re
spending
a
lot
of
time
on.
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