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Why VC is Betting Big on Oral Biologics

Posted Aug 25, 2015

“Sonia

Insulin Application

Imagine if your closest friend were a diabetic patient, and she had to inject herself with insulin multiple times a day. Would popping a pill instead be better? That's what researchers are trying to accomplish: deliver large-molecule biologic drugs such as insulin in pill form. There are over 100 venture-backed companies attempting to discover an oral delivery mechanism for biologics. One reason venture capital is betting big on new oral biologics is that it could transform compliance and improve outcomes for therapies that are taking over the industry. If oral biologics can truly replace injections, they should create tens of billions of value in a fast-growing market that is worth over $200B today. The firm with that “holy grail” innovation would be the gateway. As a starting point, let's understand the differences between conventional drugs and biologics to see what a paradigm shift this will be for the industry.

Biologics vs. Conventional Drugs

The 20th-century yielded breakthrough drug discoveries such as antibiotics, and their small-molecule chemical structures allowed many of them to be delivered in pill form. Biologic drugs, on the other hand, are entirely different. They differ from conventional drugs in the following ways:

1. Biologics are complex mixtures of giant molecules, hundreds of times bigger than a chemically-synthesized standard drug molecule.

2. Biologics tend to be heat sensitive and susceptible to microbial contamination, unlike conventional drugs.

3. Biologic drugs cannot be swallowed, and must be injected or infused.

People cannot swallow biologics in pill form (like we do conventional drugs) because the body's gastrointestinal (GI) tract will destroy them. These differences make creating an oral delivery mechanism for biologics such a challenging endeavor.

Biologics are the future

Though there is no oral delivery mechanism for biologics yet, injectable biologics are at the edge of biomedical research, providing treatments for many medical illnesses. Currently, seven out of the top ten drugs in the pharmaceutical industry are biologics. These biologics are on the cutting-edge of treatment for chronic diseases such as rheumatoid arthritis, multiple sclerosis, and cancer. There are large advantages of biologic drugs over conventional ones such as 1) higher selectivity, 2) greater therapeutic efficacy, and 3) limited side effects. Perhaps most importantly, biologic drugs are new, breakthrough therapies that allow us to mediate complex diseases directly through genetic and protein engineering. In a very real sense, biologics are humanity’s first step along the path of engineering living systems.

Transform Compliance, Transform Industry

If biologics are the future of the pharmaceutical industry, then an oral delivery mechanism is the future’s sidekick. Let’s return to the image of your closest friend who injects herself with insulin throughout the day. She will probably be more likely to comply with her treatment regimen if the insulin entered her body more naturally in pill form. Let’s say her compliance rate with injectable insulin were 40 percent, but with the arrival of an insulin pill, that rate went up to 60 or 70 percent. An increased compliance rate could significantly improve her health and the health of patients like her by changing the course of the disease and preventing further complications. And we are only speaking of diabetes in this example! Imagine if other biologics treatments for illnesses such as cancer or rheumatoid arthritis were available in pill form. Oral biologics could also lower medication costs and improve access while improving the health of millions with chronic diseases across the globe.

However, delivering biologics in pill forms that evade the body’s gastric acids is still an incredible challenge. To conquer puzzles in medicine, though, it takes someone who is brave enough to think differently and combine a variety of disciplines to solve the problem. What if a company like Rani Therapeutics, that is combining the fields of biology, mechanical engineering, and chemistry were to find this “Holy Grail” of drug delivery? Venture capital supports the company’s quest--investors such as Google Ventures and the pharmaceutical company Novartis have already placed their bets on Rani finding the solution. By transforming patient outcomes for biologics treatments that are already defying diseases, oral biologics would mean a paradigm shift for our healthcare system, and is one reason venture capital is betting big.

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