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How (not) to invest in biotech - Rudi Mariën

Written by LVS on in the category Interviews with the tags , .


Rudi Mariën is without doubt a heavyweight in the Belgian biotechnology industry. After establishing his flourishing clinical lab BARC, he co-founded Innogenetics. Financing one of the first Belgian biotech companies made him a well-established figure in the industry. After the sale of Innogenetics, he re-invested in the young and expanding biotech industry. Now, almost three decades later, Belgian biotech has grown into a mature industry and Rudi can look back on an impressive track record of successful biotech-investments.

"I studied pharmacy and afterwards clinical biology, for a total of eight years of studying," starts Mariën. “It was clear to me from day one that I wanted to set up my own lab. We started in an apartment in Gent with only a few people. We focused on medical lab tests that support clinical trials.

In order to support large clinical trials, a worldwide presence is necessary. Initially, we did not have that international presence but we agreed to move into different countries anyway. After closing the deal, we identified labs in the countries where the studies needed to be conducted and set up collaborations. It was an opportunistic way of growing, but very soon we were active all over the world. We started new labs as well; this was consolidation "avant la lettre". By doing big HIV clinical trials, for example, we expanded to Singapore and South Africa.

We also expanded to the US where we had a large department together with North Shore Hospitals, located in Great Neck, north of New-York and close to JFK."

Innogenetics, the first Belgian biotech company

"We started investing in biotechnology, exactly thirty years ago. Innogenetics was founded in 1985 and at that time biotech in Belgium simply didn't exist. It took several years for the sector to grow and expand. For many years there were only 2 companies: Innogenetics and Plant Genetic Systems, the first agro-biotech company.

Innogenetics was sold to Solvay in 2008, but within two years Solvay had passed it on to Abbott. Unfortunately, Abbott was forced to sell an Innogenetics product line and decided to sell the entire company. This was when Fujirebio acquired the company. The Japanese company was only interested in Innogenetics because it provided them with an excellent European distribution channel for their diagnostic kits. This take-over created opportunities for R&D spin-offs, such as ADx Neurosciences who is developing biomarkers for neurodegenerative diseases.

Over three decades Rudi Mariën has been involved in almost every known Belgian biotechnology company. His portfolio is vast and for every decision he makes, every company he supports, well-founded arguments are put on the table.

Sell at the right moment

Devgen was a success story.
 

"I entered Devgen at a later stage," tells Mariën, "they were already on the stock market. It was a very interesting time to join. Devgen successfully created a hybrid rice variety and was able to sell their technology at the right time. Timing is everything! If they hadn't sold it at that time, they would have been forced to take on the entire GMO market and that's a tricky thing to do as a small company. They would have ended up with their back against the wall.

People should realize that selling a company isn't necessarily bad, most of the time it's necessary to sustain growth and secure the company’s future. It is not easy to raise enough funds to bring a therapy or new drug to the market without partners. It’s a global business we are in, so there’s nothing wrong with a global mindset!

Another successful investment was Actogenix, it was sold to Intrexon at the right time."

Invest in companies with charismatic CEO’s

"The current biotech landscape is full of interesting companies with a lot of potential. A great example is Multiplicom. They are doing a really good job with their genetic testing kits; they developed a BRCA test for detecting breast cancer – 1 in 2 labs uses their kits – and they just launched their line of NIPT prenatal tests. There's a good team in charge and the company has products on the market. This is an excellent position for a company to be in!

The same is true for Galapagos and Biocartis, both companies are led by charismatic CEO's with a strong vision. Having a good story and being able to present it in a positive way makes a company very attractive for financers. It's important for small companies to surround themselves with such good, capable people.

I have also invested in MDxHealth. I believe in their project, it is very focused. Prostate cancer is extremely hard to diagnose. About 20% of men who undergo a radical prostatectomy because prostate cancer was suspected, were actually misdiagnosed and didn’t need it after all! MDxHealth has a solution for that problem. Their tests are based on epigenetics, the methylation of DNA. They have eliminated the need for repeat and unnecessary multiple biopsies, a very difficult and painful procedure. On top of that, the confirmed MDx test brings more precision. Better diagnostics bring better treatment. It is easy to see that this company brings an important improvement to this huge problem. Their latest innovation is a liquid biopsy test. The SelectMDx is a urine-based test and provides urologists with additional information to further reduce unnecessary invasive biopsy procedures.

Also here a good CEO is at the helm. That's no coincidence. You might think that a good company leads itself, but a good company with a bad CEO becomes a bad company, simple as that. There are no coincidences."

I never invest in startups and always in companies with a good team behind it. There is no room for big ego’s!
 

There are no certainties when investing in biotech

"An important thing to remember is: there are no certainties when investing in biotech. The only certainty is uncertainty, that's for sure.

The lifespan of a biotech company consists of a series of capital raises and these always come faster than planned. You need a group of shareholders who can deal with that. They need to understand that more money is going to be needed and that it will take longer than planned before a biotech company starts to pay off. It's important to pick the right partners before diving into such a venture.

A mistake many investors make is investing too heavily in early stage companies. I never invest in startups. It's impossible for a startup to develop a comprehensive product and bring it to the market within ten years. Who then, should invest in early stage companies you might ask? Well, funds that specialize in early-stage financing! Government funds, for example, can commit to long-term investments and are not bound by the ten-year duration.

There is an important difference between investing in public and private companies. In stock listed companies you can get in and out at any time you want. That's not the case in private companies, where you're in it for the long run. But whether you invest in private or public, big or small companies, in the first place, you invest in good management and a strong team to support it, not in big egos. That's of paramount importance."    

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