How did you arrive at Aurealis Pharma, a biotech company that originates in Finland?
Dirk Weber: In 2010, Aurealis Pharma was founded by today’s CSO, Thomas Wirth, in Kuopio, Finland. I’ve known Thomas for almost exactly 20 years now. During my medical studies, I spent two years at the University of Kuopio, where Thomas Wirth lives and studied pharmacy. We got to know each other there and have been friends ever since. When I later went to Washington D.C. for my PhD studies, I asked Thomas if he would like to along too – which he did. After completing our PhD theses it was clear that we were also keen pursue projects together in the future. And that’s I came to participate in the Aurealis Pharma venture in 2012 together with four other colleagues and the experienced CEO Juha Yrjänheikki. That was the actual operational start of Aurealis as a company and the development of a new technology.
What is this technology based on?
Virus-based gene therapies are gaining ground for the treatment of many diseases, but in view of their mode of action and safety concerns, they are still faced with problems gaining acceptance among doctors and patients. In order to get active substances released specifically in the diseased tissue of patients, Thomas had the idea of using bacteria instead of viruses to deliver these substances. Our first product candidate, AUP16, uses certain very well tolerated bacteria, which produce selected bacteria and release them locally. With the modified bacterium, which functions as a local bioreactor, so to speak, in order to produce therapeutic active substances directly in the affected tissue, chronic disorders of the wound healing process can be treated.
The technology of Aurealis Pharma can be used in many fields. Why are you focusing on the complex and enormous field of diabetes mellitus?
This is precisely the question we also asked ourselves, and we considered long and hard as to which disease would be strategically most favourable for the development of our technology. Our long-term objective is local cancer therapy. But this is a pretty complex field for a first application. To demonstrate the feasibility, safety and efficacy of our substance and also to prepare the regulatory authorities for a new technology, we needed a simpler indication for our first product. This gave us the idea of first using our technology as a topical treatment for chronic wound healing disorders and selecting the diabetic foot – a chronic wound healing disorder in patients with diabetes – as the first indication. This disorder is very common and not infrequently leads to amputations. Diabetic wounds no longer heal, because the patient’s immune system, nervous system and local blood supply to the tissue are compromised. Our bacteria replicate in the wound, where they produce the active substances that selectively reactivate the immune system, stimulate the formation of new blood vessels and prompt tissue cells to restore wound healing to an active healing process.
But the medical community has slowly got used to the idea of viruses as “vehicles”, while bacteria are rather unusual.
It’s well-known that bacteria directly stimulate a defensive reaction the immune system, leading to a local immune response. There is a product that has already been using this principle since the end of the 1980s in order to treat bladder cancer. When we entered the field at Aurealis in 2012, we first invested a lot of time in the search for a suitable bacterium. It was to be a bacterium that is not pathogenic and is well-tolerated by humans. We eventually hit upon the bacterium Lactococcus lactis. It is used in the food industry for making kefir, cheese any yoghurt and has an excellent safety profile. It even appears to have an antibacterial effect, because no pathogenic bacteria occur where this bacterium grows. We founds a producer that supplies Lactococcus lactis to the food industry and acquired an exclusive licence for the therapeutic use of the bacteria. At the end of 2014, using an animal model, we demonstrated in vivo how AUP16 considerably accelerates healing in the diabetic wound.
So Aurealis Pharma was founded on the basis of an idea, not a technology?
Indeed. The concept of Thomas Wirth seemed to us a very promising and highly innovative idea, and so we all personally invested in the company in 2012. With the first, modest financial resources at our disposal, we were able to start our search for the right technology and the suitable bacterium, plan the first experiments, conclude licence agreements and establish a partnership with the producer of the bacteria. It’s certainly not the normal way to go about starting up a biotech company without any prior results and only a plan on paper.
Where did the capital come from for the further financing round?
Thanks to the good network of our CEO, we received support for the series B funding round at the start of 2014 from Finnvera – a state-sponsored venture fund in Finland – and the Tekes Agency. This is an organization that provides low-interest loans for startups with support from the Finnish government. This second funding round enabled us to plan and produce the first product candidate and to undertake the first in vitro and in vivo studies for the characterization of the product.
That sounds like an ideal start in Finland. Why did you eventually move the headquarters of Aurealis Pharma to Basel?
The Finnish state helps with the seed funding of young, innovative companies. But it is also a small country. The financial resources are limited, and therefore we saw few prospects for the next funding rounds, in which we wanted above all to approach private investors and venture capitalists. We also wanted to become more international. Since I have already been working in Basel since 2007 and have some contacts here, we decided in September 2015, after some promising preliminary discussions, to move the headquarters to Basel and keep the company base in Kuopio as a subsidiary. Basel is an ideal location for life sciences companies. The know-how is enormous, and there is already a cluster of small companies that share ideas and support each other. There are also a lot of private investors in the area, some of whom come from the financial sector and some from the life sciences and who are keen to pass on their success to young biotech companies in the form of an investment or consulting support.
How easy was it to move to Basel?
The key to success lay in the good local contacts, for example with Roger Meier, a well-known entrepreneur on the local life sciences scene, who helped us enormously with his network. Through him we got to know investors and invaluable, experienced consultants for startup companies and managed to establish further contacts in the region. The i-net team also introduced us to some of their investor contacts and supported us on the path to the establishment of the joint stock company in Basel. We are very grateful for this independent support. We invested a lot of time in this relocation and it was worth it: in January 2016 we completed the series C funding round, which amounted to 5.5 million francs; half of this came from new, private investors here in Switzerland and the other half from the existing institutional investors in Finland. Thanks to support from inward investment group for Basel, we also acquired an office at the beginning of April in the Technology Park Basel. Here we found a stimulating environment with different startups and colleagues, with whom we can share ideas on science or on the planning of funding rounds.
In Finland, state support for innovation appears to function mainly through money, whereas in Basel the focus is elsewhere. What do you think the advantages and disadvantages of these two approaches are?
In many respects, Switzerland and Finland are quite similar in terms of the size of their populations and their insular foothold in Europe. In both countries, innovation is heavily promoted and founders and entrepreneurs enjoy support. In Finland, the state provides startups with financial support, but afterwards they find themselves corseted by state regulations. In addition, this kind of support reaches its limits when the company starts to grow and develop. In Basel various organizations, financial institutions and private networks support startups. The infrastructure for biotech and life sciences startups is very good in the Basel region, which is also due not least to the proximity to global pharmaceutical companies such as Novartis, Roche and Actelion. But here, too, of course no one is waiting for a new company, and every beginning is difficult. Startups have to become heavily engaged themselves, be professional in their setup and make sure they are seen and heard. It is also difficult to raise initial funding. It takes a lot of meetings, presentations and good answers to investors’ questions before you’re successful. I believe it would be good if there were a private source of funding in Switzerland for initial funding rounds that were not tied to specific conditions or made dependent on too large a shareholding.
Could you describe the ins and outs of a presentation to investors?
The establishment of our company in Switzerland was a good one-year process. Even before we had a presence in Basel, we endeavoured to make initial contacts. And here it very quickly became clear to us how important it is to have a local presence. Swiss investors like to invest geographically in Swiss companies, but not all of them are experts in the life sciences segment. So we had to explain our idea and the technology very precisely in a great many meetings and to attune our presentation to the investors in question, some of whom looked very deeply into the details of the company. At the start of our funding round here, we specifically selected individual investors who have a large network and explained the company and technology to them down to the last detail. These critical investors and their positive feedback led us to further contacts, and the interest slowly grew. In parallel with this, process, we took part in company presentations. But it quickly emerged that short presentations cannot show the whole spectrum of our company. Overall, the search for investors was a tightly managed process, in which meetings between investors also played a major role. We were also helped by clear, formal communication with well-formulated emails and appropriately prepared documents that provided information about the company and the conditions of the funding round: we made it clear from the outset that there was a narrowly defined timeframe for the actual share subscription instead of open subscription periods lasting for months. The funding round was definitely not a quick casting session where you give investors a single presentation and then get money.
What did these experiences specifically teach you as regards the funding of a life sciences startup in the Basel region?
What was and is essential is thorough preparation and a conscientious execution of the whole process. The establishment of our joint stock company was conducted professionally from the very outset. We brought in local experts and consultants early on in the process, who helped us with legal issues, the company structure and the valuation of the company. Only in this way could we present our complete strategy with the headquarters of the company in Basel and the continuation of the operational business as a subsidiary in Kuopio to investors and thus establish trust in our new organization. All the details were carefully prepared: From a company presentation, a company fact sheet and term sheet, through the subscription certificate and a precise timetable to the bank account. This showed that we work with professionalism and plan for the long term with the company in Basel.
You have also worked for big pharma in the past – what appeals to you about working in a small biotech company?
I gathered my experience in the clinical development of cancer medicines at various big pharmaceutical companies such as Merck Serono, Novartis Pharma and Takeda Pharmaceuticals and found in the different projects that the product and the team working on it are the most important link to success. I like to define my work with five Ps: Passion, Perseverance, People, Product and Patents. The work in a biotech startup can be likened to that of a surgeon who bears sole responsibility for the welfare of the patient on the operating table and has to make important decisions quickly and adjust very rapidly to changing conditions. This can be applied to my work in a small biotech company: Here you have a great deal of personal responsibility for the company and the product, have to take quick decisions and be able to cope well with changes. For me that is more exciting than working for a gigantic – and therefore inevitably also rather inert – multinational.
What advice would you give to someone who wanted to start a life sciences company?
That it is incredibly important to have staying power and to go through the phases of developing your own product with your eyes wide open. The founding of a company is great fun and very intensive. It can get very stressful, especially at the end of a funding round, because usually you don’t know until the last day of the subscription round whether it will be possible to conclude the round successfully as planned. You should have a clear objective, which you also have to champion and defend against others. The focus on the purpose of the company and the first product in development is extremely important, but it should not prevent you from recognizing opportunities and taking immediate action. No one is waiting for you. It pays to present yourself in as good a light as possible and to draw attention to yourself, because in any business it is not only objective values that count, but in most – in fact all – cases also the first impression, the gut feeling. “Just Do It” could be a good slogan for the start.
Dirk Weber is a qualified doctor (MD, PhD) with extensive experience in global drug development of anticancer drugs. Today, he is the CMO of Aurealis Pharma and responsible for the clinical development of their product candidates.
He did oncology research at Georgetown University/Lombardi Cancer Center, Washington D.C., USA, the Institute of General Pathology at Christian Albrecht University of Kiel and the Ivonex GmbH in Kiel, Germany. After this, he held senior clinical development positions at Merck Serono, Novartis Pharma and Takeda Pharmaceuticals. He has worked in early and late-stage clinical development programs, which involved interaction with all the major regulatory authorities, management of dossiers and lead responsibility for regulatory affairs teams. He also gained extensive experience in the planning and conduct of medical programs required for several commercial product launches globally with an emphasis on emerging markets.