Thread by @eperlste

A year ago we were fundraising for @PerlaraPBC’s Series B. I failed my team and our partners. I couldn’t tell a story that excited VCs.

Now that I’m firmly settled and over the moon in my new role — and I’ve had a year to reflect — here’s the deck, with lessons learned:

I believe a kiss of death for @PerlaraPBC was its ahead-of-its-time status as the first biotech Public Benefit Company. While that excited at least one investor (@mcuban) it turned off 99% of VCs who either thought their upside would be capped or didn’t want the biz model risk.

A major headwind was us bucking the AI hype cycle. I wasn’t going around spouting feel-good hyperbole about AI revolutionizing drug discovery or making baseless claims about finding X drugs in Y years. I couldn’t convince VCs that a rare disease platform offered venture scale.

I had the honor and distinction of working with an amazing team with expertise across model organisms. Unfortunately VCs didn’t see it that way. The feedback I got was we were too inexperienced — that’s the price of being lean if you don’t have VC cash to hire seasoned folks.

Although I could point to an eclectic and international cap table, in the end all of our funding rounds were basically leadless. That meant no single major investor really took ownership of helping us level up. That’s the downfall of successive party rounds.

At the time, our lead program for the congenital disorder of glycosylation #PMM2-CDG had a clinical candidate but its effects were modest — 40% increase in PMM2 enzyme activity. Data showing a 400% increase in a different cell line came too late (dmm.biologists.org/content/12/11/…)

Our other lead program for #NGLY1-CDDG had equally promising data (never published for some reason) and this time it was from actual patients. But neither PMM2-CDG nor NGLY-CDDG had viable mouse models we could test the drugs on, so VCs didn’t think the platform was validated.

Our NPC program had a NCE that we were studying with @NovartisScience in a two-year collaboration. But the intrinsic complexity of the MoA meant no dice for a P101 option (even though I just learned that our ML4 program may yield a repurposing opportunity after all)

We tried like to hell to make VCs appreciate the icebergs that are ultra-rare diseases: tiny beachhead indication but massive expansion opportunity lurking underneath. I don’t think they could see past orphan, especially using repurposed drugs to lead the charge commercially.

Based on the discovery of epalrestat as a first-in-class #PMM2 enzyme activator, we argued for a two-way street between tiny pediatric CDGs and a globally massive adult diabetes population.

We made the same argument for LSDs like Niemann-Pick Types A and C/NPA & NPC, Gaucher/GBA and Mucolipidosis Type 4/ML4, and their expansion opportunity in neurodegenerative diseases.

I thought validating our venture philanthropy model aka PerlQuest by achieving profitability was an important milestone. The reaction from VCs was “that’s nice but who cares?” I realized too late that profitability was VC FU money.

I thought growing the number of programs across diverse biology and with varied partners was what VCs wanted to see to prove repeatability and platform breadth — that we had a product engine. Again, the VCs reacted “good for you” and then passed without explanation or ghosted me.

We laid out very clearly how we would go to market and how the PerlQuest model allowed us grow the platform sustainable and set ourselves up for long-tail winners. I believe VCs thought sharing royalties with patient partners would limit upside.

The path we laid out for a repurposed clinical candidate for PMM2-CDG is pretty much how it worked out over the last 12 months post-wind down, with a few twists here and there.

Use of Proceeds. As the rejections and passes mounted, I made versions of this slide with lower and lower asks, till there were just a few existing investors left in contention. At one point I asked for a $3M bridge but the next value inflection point was too far away.

Knowing what I know now, I should seen the warning signs of: a trusted partner who would abandon our collaboration and repurposing candidates; a biopharma internal champion who left for another company at a critical juncture; investors who didn’t truly get biotech or rare disease

I can’t do it over again but if I could the three things I would do differently are:

1) Professionalize the Board after YC
2) Cap the number of PerlQuests till we had our first repurposing win
3) Relocate operations out of the Bay

Fortunately, @PerlaraPBC lives on — even though most of it died — thanks to the unflagging support of a few rare disease families who always had our backs.

This entire experience has made me stronger and wiser. Time will tell if OI and PerlQuests benefit patients.

I’m applying these lessons and this wisdom in my current role as CSO of @ReeveFoundation.

2020 is the dawn of a new era for SCI, venture philanthropy and patient-led organizations completing their metamorphoses into the next generation of biopharma companies. Onward and upward!