There are many components to getting a new biotechnology company off the ground. And the last thing anyone wants to do is reinvent the wheel for establishing laboratory platforms and recreating tools and technologies. Errik Anderson—founder, CEO, and chairman of Alloy Therapeutics—like many others founding new biotech companies, doesn’t like having to repeat the same processes every time setting up new labs.
“We were doing all the same things repeatedly,” Anderson told GEN Edge. “There was this moment of rebuying the same flow cytometer I had bought three times before. I can’t negotiate with the same business development person and wait until the quarter’s end to get the discount. It’s inefficient.”
Anderson found himself consistently questioning how to discover and develop drugs more quickly. “It very quickly became, if we do this for ourselves, why not offer it to others?” Anderson said. “Then it was a very short leap to say, how about the whole world? What would it look like to build a company that you scale this up in a different way?”
Therein lies the original impetus for Alloy Therapeutics. Anderson wanted to help the scientist-entrepreneur who has a great idea about how to make a drug but then is faced with the problem of how to get access to the tools, technologies, protocols, scientific team, and capital—all the things that have to come together to build a biotech company. It’s a long and lonely road as a scientist entrepreneur.
Anderson describes Alloy Therapeutics as a biotechnology ecosystem company empowering the global scientific community to make better medicines. “We believe that breakthroughs in medicine first come from breakthroughs in enabling technology,” he said. “There’s no reason why a hundred different research groups or companies couldn’t get access to it.”
A trio of business elements
Founded in 2017 in Boston and privately funded by visionary investors, Alloy also has labs in Athens, GA, San Francisco, and European labs in Cambridge, U.K., and Basel, Switzerland. “We collaborate with others to make medicine,” said Anderson. “It’s about bringing together all the right tools, technologies, and people at a time and a place so that you can run your first experiments to try to make medicine. Then it’s about growing up from there.”
Through a community of partners, Alloy Therapeutics democratizes access to platforms (tools and technologies), services, and company creation capabilities that are foundational for discovering and developing therapeutic biologics.
Five-and-a-half years ago, Alloy started with antibodies and eventually moved into adjacent fields. Alloy’s second and third modalities are T-cell receptors (TCRs) and genetic medicines. In 2022, it launched Keyway TCR Discovery as a fully integrated TCR-mimic and engineered TCR discovery platform and service offering. Now, it’s developing new novel formats in antisense oligonucleotides as pre-competitive technology that it will share with interested groups through its Genetic Medicines group. Alloy Therapeutics also works in peptides, cell therapy, and drug delivery.
More than 130 companies are already working with one or more of Alloy’s platform technologies. Alloy’s lead offering, the ATX-Gx™ platform, is a human therapeutic antibody discovery platform consisting of a growing suite of proprietary transgenic mice strains.
“There are over 100 partners, and there could be 1,000—it doesn’t diminish the platform’s value for one more company to use it,” said Anderson. “We share these proprietary and enabling pre-competitive technologies with the world because, if we’re going to use them for one or more of our companies, why not share them with everyone?”
Alloy Therapeutics offers services that run drug discovery campaigns for partners and continually innovate to validate and utilize cutting-edge technology in discovery offerings. And Anderson doesn’t shy away from the word service provider or CRO. “In science, everything we do is providing services,” he said. “We embrace a bit of that service mentality that is trying to collect cash, while using that capacity to also do something more strategic by improving our technologies. Working backward from solving the problem of the scientist entrepreneur, you need the world’s best team when starting a company.”
“Lead”-ing the way
When a company forms inside Alloy’s venture studio 82VS—named after the element lead (Pb) on the periodic table—Anderson says that the goal is for Alloy to be essentially invisible and “boring” behind the scenes. 82VS recently hired its president, Trier Bryant, who has built team and talent infrastructure in the military, Wall Street, and tech. With venture studios, Alloy provides venture partners and entrepreneurs access to all platforms and services at a low cost to enable quick initial experimentation, paired with company creation expertise to empower newer entrepreneurs.
“We’re trying to cut out those first 1.5–2 years and be able to run those initial experiments,” said Anderson. “Maybe it’s a few hundred thousand dollars in experiments. The alternative is perhaps you’re going out and raising venture capital, making your pitch deck, and collecting millions of dollars to run those first experiments.”
With 82VS, Alloy Therapeutics sometimes enters into a 50/50 joint venture. At other times, Alloy is reforming a company with a founder already out there. But in cases where the partner is a venture partner or an executive in residence (EIR) in the venture studio, the common stock is split between Alloy and the founding team.
“Our typical model is we open a multimillion-dollar master services agreement (MSA) that allows that company to access our services, and so they don’t pay any cash,” said Anderson. “It’s like a loan to the company. It’s also non-dilutive. The idea is how quickly can we start designing experiments and doing drug discovery.”
The type of companies built with Alloy’s venture studios can leverage the ecosystem’s platforms and services. Anderson says that Alloy has deep domain expertise and knowledge of how to discover and develop drugs across its modalities. “Our venture studio companies leverage one or more of those platforms or services to build a drug-focused company out of venture studios,” said Anderson.
If that works out and an 82VS company can make it to seed financing, Alloy Therapeutics writes the first million-dollar check to get some cash into the company. “When you have a lead or maybe two drugs in hand and some enabling data, and now you’re out doing your Series A or seed financing with new external venture capitalists with a lot of data in hand, it shifts the power dynamic a bit in this field where you can go to an investor with data in hand and maybe a drug lead,” said Anderson. “This is why we talk about innovation and access to innovation. When we think about 82VS with a venture studio, it’s not just access to innovation but also capital and expertise.”
Anderson is excited to be backing many first-time entrepreneurs. “It’s a bit hard to be a first-time entrepreneur, especially if you don’t look like someone who comes out of central casting,” said Anderson. “When you come with a lot of data, the support of a whole organization, and all our infrastructure at 82VS and Alloy, you look like a fully formed company—even though you’re a semi- or fully-virtual company with maybe a founder and a co-founder. We get excited about bringing access to technology, capital, and expertise and allowing people to start up these companies and then leave the venture studio. At that point, it’s external financing. We support them along the way and want to be really good permanent friends. We’ll always be there.”
Anderson doesn’t necessarily think Alloy’s business model makes more money than the alternative. “I don’t know that I can say that it’s a better business model, that it throws off more cash than the alternative that you’re going to build a bigger company—it’s just our business model,” said Anderson.
Nor can Alloy’s 82VS compete with the larger venture capital firms, but that’s not Alloy’s intention. “The deals Flagship, Atlas, and Third Rock Ventures will do just don’t fit our model,” said Anderson. “Ours is pretty lean. It’s a different sort of project that we’re doing. Once we step in and do that seed or Series A financing with an external party, that’s exactly the folks that we want investing in our companies. Maybe we’re taking away the company creation pieces for a year or two and bringing them a fully formed idea with our scientist-entrepreneurs we’re working with. We see this as doing a slightly different part of the value chain of how you do venture creation behind drug assets.”
For now, not a single company that has licensed Alloy’s technology has gone out of business, according to Anderson.
Until the end of time
Several characteristics set Alloy apart from most companies. The controlling class of stock is held in an entity that cannot be sold. “Alloy cannot be sold,” said Anderson. “Theoretically, Alloy could go public, but it will continue to exist so long as we don’t run out of money. It’ll just continue to be around in 100 years, innovating and sharing that innovation with others.”
Another unique aspect of the business model is that Alloy reinvests 100% of revenue into innovation and access to innovation. “When we’re collaborating with big pharma and emerging biotech companies, we’re making this promise and commitment that if you give us $5 million to do something, we will use that to develop new technology and share it with the world,” said Anderson. “We are going to reinvest all of this.”
Those two aspects of Alloy’s business model allow the ecosystem to build technologies and companies across slightly longer time horizons than a traditional venture model. “When you can start playing with time as one of your variables, like great technology and great people, you can do things that look extraordinarily different,” said Anderson. “Most of the ideas we have had are those others have had. We’ve just executed this with a slightly different business model and different constraints.”
Following a successful expansion from antibodies into TCRs and genetic medicines, Alloy will broaden its pre-competitive discovery technology and discovery services to enable innovative new therapeutic formats.
In October 2022, Alloy closed $42 million in Series D financing led by its existing investors 8VC and Mubadala Capital and joined by return investors Thiel Capital, Presight Capital, Founders Fund, and other unnamed family offices and sovereign wealth funds. Alloy will use proceeds from the Series D financing to further support the drug discovery community with new pre-competitive drug discovery technologies in biologic modalities and new partnership models designed to further fuel innovation.
