Starting 2016 with a bang, VC4Africa-listed venture AzarGen Biotechnologies closes US$3.1-million in Series B funding. VC4A had a chance to speak with Dr. Mauritz Venter to learn more about their progress and plans for the future.
VC4Africa: Can you highlight the origins of the company and its inspiration?
Mauritz Venter: AzarGen was started by four aspiring life science entrepreneurs with a diverse set of skills, interests and passions as post-graduate students at Stellenbosch University’s Institute for Plant Biotechnology. Throughout our years at university the team had a keen interest in the business aspects of science and in the beginning of 2003 decided to take up the challenge of starting up a new biotechnology company, which we called AzarGen Biotechnologies.
After attracting funding from a private (family friend) investor, followed by seed capital from the South African government, Dr. Cobus Zwiegelaar and I decided to pursue the venture full-time. Our inspiration really came from ground breaking projects like the mapping of the human genome and when we saw articles on the business of genetics/biotechnology appearing in business journals such Fortune and Business Week.
VC4A: What is special about AzarGen, how are you creating value?
MV: During the early (concept) years the team realized that to make this journey in biotech worthwhile, and with all the energy and time dedicated towards this entrepreneurial venture, we needed to enter a sector in life science. We chose biopharmaceuticals, and where we felt we would garner the highest reward if successful. This is also a high risk sector demanding probably the highest attention and capital.
As plant genetic engineers we decided to enter the biopharmaceutical sector through a relatively new platform – using plants as bioreactors to express human therapeutic proteins of high commercial value – a process known as biopharming. South Africa has a small and struggling biotechnology culture and AzarGen is the only private plant-based biopharmaceutical company in the country. AzarGen is also one of a only a few such biopharming companies in the world.
AzarGen is proving the viability of its plant-based expression platform through a lead candidate, being a human surfactant protein. Deficiency of surfactant is directly associated with neonatal respiratory distress syndrome (RDS) which is one of the most important causes of morbidity and mortality in premature-born infants worldwide. AzarGen aims to manufacture a human version of a surfactant protein in plants in sufficient amounts and purity to meet regulatory and market requirements.
VC4A: What is unique about your approach?
MV: Compared to current (conventional) mammalian, yeast and bacterial production systems, the use of plant cells to express human recombinant proteins offer greater advantages with regard to:
- Safety — no immunogenic responses from animal/bacterial-derived contamination and no adventitious agents;
- Complexity — plants are higher organisms with protein assembly mechanisms similar to humans, which can synthesize complex biopharmaceutical proteins (unlike bacterial fermentation systems that lack post-translational modification processes);
- Clinical efficacy — in addition to limited or no animal-derived immunogenic responses, plant-made modification to target protein may improve therapeutic potency in humans;
- Cost and scalability — plant-based systems allow for significantly lower safety, facility and production costs (compared to mammalian cell-based systems) and production can easily and rapidly be scaled up to accommodate increased demands.
VC4A: Can you tell us about recent developments with the business?
MV: AzarGen has been successful in attracting multiple rounds of investment over the last few years and AzarGen is proud to have achieved all the milestones to date required from these investments: 1) a Freedom-to-Operate analysis conducted by one of the world’s leading biotech legal advisory firms, 2) novel synthetic promoters with enhanced protein expression capabilities, 3) expression and purification of human surfactant protein on a ‘proof-of-concept’ scale and 4) patent applications (USPTO and PCT) for several of our technologies. AzarGen has also attracted the interest of a top international player in the plant-made pharmaceutical sector, who has accepted a position on AzarGen’s advisory board.
AzarGen has most recently been successful in attracting US$3.1-million Series B financing from South Africa’s Industrial Development Corporation (IDC). We have also established key partnerships with Holtz Biopharma Consulting and iBio in the USA.
VC4A: Why did you decide to raise capital and how will the money be used?
MV: AzarGen has made great progress with limited capital to move a portfolio of proprietary biopharmaceutical products forward. Further capital was needed for the development of pre-clinical information followed by a Phase-1 clinical trial. Key objectives for this round of funding include i) commercially feasible protein expression, quality assessment and functional assay development, ii) scaling up cGMP production, iii) pre-clinical (animal) trials and iv) Investigational New Drug (IND)-filing.
VC4A: Why did you choose IDC as the investor right for your business? Why did they choose you?
MV: In the early days, we knocked on many doors in search of investment. Following initial seed-capital investments, the search for strategic investors was challenging, due to a biotech sector not being well established in South Africa and investors having limited life science experience and lower risk appetite.
The IDC’s Venture Capital strategic business unit specialized in high-risk/high-reward projects. We attracted interest from the IDC as the nature of our business concept appeared to be an ideal fit for them. The IDC chose us, because our product addressed a real problem, it was globally unique and had the potential for high returns. Equally important, AzarGen has a management team in place that can take the company forward, showed commitment and a willingness to partner with IDC.
VC4A: How do you see the sector of Bio Tech in South Africa evolving?
MV: With an elevated awareness that success in commercial biotechnology is more dependent on ‘real-world’ business skills, I am excited about the future of biotech in South Africa. The industry in South Africa is quite small compared to Germany, UK and/or USA, but South Africa has the potential to grow as a leader in the African biotech sector.
VC4A: What are some of your early lessons learned? Any advice to other entrepreneurs out there?
MV: There are many lessons learned — and we are still learning, but four lessons I can highlight:
1) Biotech entrepreneurs must have a clear understanding that modern science is just a means to an end;
2) Biotech entrepreneurs must be able to tolerate biological uncertainty and therefore be extremely adaptable to change business model/strategy if needed;
3) Execution of a sustainable business strategy in the Life Science sector relies heavily on business capabilities rather than technological capabilities.
4) Build trust and a relationship with your investors as this makes it easier to go forward in the tougher days.