Startups, BioPharma

Reality vs. hype: A macro look at the microbiome market

Companies that target the microbiome for various therapies have rallied $840 million since 2010, according to a new report by Silicon Valley Bank that analyzes the wider progress of the field.

What hasn’t the microbiome been linked to in mice?

For years, the potential therapeutic value of our so-called “second genome” has been celebrated in successive press releases from researchers around the world. But there’s always a gulf between animal models and viable approaches in humans. Has the microbiome really bridged that yet?

Silicon Valley Bank has gone a long way to answering that question with its recent report, titled: “Emerging Healthcare: Microbiome Investment Trends.”

The report captured some important financial trends, noting that 2014 was a pivotal coming-of-age year for the microbiome and its ability to attract private equity. Since then, the volume of deals and the amount raised has surged.

Companies that target the microbiome for various therapies have rallied $840 million since 2010, spread across 45 disclosed equity investments. The field is on track for a record year in 2017, the authors state.

What’s interesting is where the money is going. It is widely known that the highest density of microbes is in the human gut. As a result, companies with therapies addressing gastrointestinal and infectious diseases such as Clostridium difficile (C. diff) have captured almost half of the investment dollars. Where has the other half gone?

In an email forwarded by a company representative, Andrew Olson, manager of SVB Analytics, points to companies such a Vedanta, which is tackling the low hanging fruit of C. diff and inflammatory bowel diseases, alongside more novel approaches to graft-versus-host disease (GVHD) and cancer immunotherapy.

Another is Evelo Biosciences, which “just closed a $50M series B after the finalization of our report,” Olson said. Evelo “is developing single strain microbials for a multitude of diseases with a focus on cancer.”

A third example he offered is Axial Biotherapeutics, which is developing drugs for psychiatric and neurological disorders that target the well established gut-brain axis.

“It’s well known that there are a number of receptors in our brain that are also only found in high concentrations in our gut. It’s a new idea to try to link that to the microbiome system as well,” Olson said.

While there is plenty of promise in the pipeline, we’re unlikely to see a wide array of microbiome-based therapies lining the pharmacy shelves anytime soon. In June, Seres Therapeutics became the first in the field to advance into a pivotal Phase 3 trial (for C. diff). But according to SVB, a majority of companies are still in the preclinical development phase.

Which brings us to an intriguing feature of the report, a section titled: ‘Will the microbiome follow the same hype cycle as gene sequencing?’

SVB used the Gartner Hype Cycle to identify key inflection points in the development of the field. One stage is the all-too-familiar trough of disillusionment that has struck many emerging fields, including gene sequencing.

For Olson, the microbiome has a long way to go, but the technology gains made with genomics will transfer over well, providing a shortcut to the steep learning curve required to reach the clinic.

“Cynical readers might remember the hype around the human genome project in the 1990’s and how we have only recently seen applications start to take off both in medicine and more commercially (e.g. Helix). However, microbiome is in many regards a spinoff of the human genome project and can build on the advancements that were already made in that development. Computer processing and genomic sequencing are hugely advanced as compared to the beginning of the human genome project. So while microbiome applications aren’t going to be fully commercialized in the coming months, it shouldn’t be the 20 year cycle we saw for sequencing. Hopefully, the “trough of disillusionment” will be much shallower or nonexistent.”

Photo: spawns, Getty Images

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