There’s a slew of venture capital (VC)-backed cancer-related tech startups coming up in India’s biotech hub, Bengaluru. Zumutor Biologics INC has built antibody libraries to develop novel immunotherapy and has a global licence for a product to treat breast cancer. Mitra Biotech has developed a new way to test cancer drugs on tumour cultures in the lab to personalize treatment. OncoStem Diagnostics is making tests to predict the recurrence of cancer affordable for patients in India. Niramai Health Analytix uses thermal imaging with artificial intelligence for non-invasive breast cancer screening.
Zumutor, Mitra Biotech and OncoStem received early backing from the Indian arms of top US-based VCs Accel and Sequoia Capital. Niramai raised a $6 million series A round led by Japanese VC Dream Incubator this year. Mitra Biotech is the top-funded one, with over $80 million raised since its inception in 2010.
There’s a reason top VCs are taking these bets, even if it’s a long road to commercial outcomes for deep tech innovation in healthcare.
“We believe there is a 3-5x capital arbitrage and about a 2x time arbitrage in favour of some of these innovation-driven businesses to be built out of India vis-à-vis the US," says Barath Shankar Subramanian, partner at Accel, the first institutional investor to back Mitra Biotech.
The cost and time benefits come from being in a less regulated market as well as having easier access to tissue samples and clinical data, apart from the usual factor of manpower. But another, equally important, reason is the deep tech background of founders from the Indian diaspora.
Mitra Biotech is founded by former Harvard and MIT faculty members; Zumutor’s Kavitha Iyer Rodrigues left Merck to start a series of companies; Manjiri Bakre of OncoStem comes from Moores Cancer Centre in the US and holds several patents; and Niramai’s Geetha Manjunath was the data analytics lab director for Xerox Research Centre in Bengaluru.
Biswanath Majumder, research and development director at Mitra Biotech, recalls his stalwart 80-year-old academic guide’s caution when he was leaving to join the startup in 2010: “It sounds good, but please go and see if the company has a signboard, see whether it actually exists or not."
“I designed the signboard eventually," adds Majumder. Today, more and more highly qualified researchers are leaving academic labs to spin off startups or work in them.
“In healthcare, particularly cancer, there was very little cutting-edge research happening outside of the large pharma companies. But now we are starting to see this in early-stage companies as well," says Anjana Sasidharan, Principal at Sequoia Capital India.
VCs may have to stretch their usual timelines but the potential payoffs are huge, given the ballooning size of the market.
McKinsey estimates that over $50 billion is invested in oncology research and development annually worldwide, leading to an explosion of new drugs for the large numbers of people falling prey to this disease.
Startups come into this in two ways, broadly. Their innovations help with drug discovery and development or they use AI and other new-age tech to improve treatment. Either way, “it’s a global market play today, and that is what interests Sequoia India," says Sasidharan.
Going to market is the biggest challenge. “Indian companies are more removed from markets where local nuances determine commercial models," says Sasidharan. “For these cutting-edge products, the US, European Union and Japan are large markets. However, each of them has its own requirements on publication, regulatory approval, and reimbursement." Many of these startups are incorporated in the US and do their research in India.
More fundamental than finding commercial pathways is assessing the end result, which should ideally benefit cancer patients. This is a grey area.
Bill Gates-backed Foundation Medicine, for example, promised to personalize cancer diagnostics and treatment with genomic profiling of patients. Its acquisition by Roche at a valuation of $5.3 billion last year suggests that all that genomic data is gold dust for a pharma firm. And it’s a great outcome for investors in the startup too. But it’s not clear how many of the profiled patients benefited.
Two years ago, the MD Anderson Cancer Centre conducted a survey of 2,000 patients, correlating their whole genome sequencing with clinical outcomes. Only four patients had benefited. Separating the hype from reality, thus, forms the biggest challenge in assessing deep tech startups.