Saxton Looks for Early Stage Opportunities

Tracy Saxton, investment director at Roche Venture Fund, began her career at the research bench but quickly founder he way into the corporate side working in business development and eventually venture capital.

“I really wanted to start doing things earlier the decision making process, really starting right from university spinouts, what’s the right technology with the right people, the right funders, and being a part of the investing community allowed me to be there from the beginning, and also just see a lot more translational science, “ Saxton told OIS.TV during a break at OIS@ASRS.

In the interview, Saxton shares what opportunities Roche Venture Fund sees in ophthalmology. How early the corporate fund is willing to invest, and how start-up companies can benefit from having Roche as an investor.


Tracy Saxton, PhD

Tracy Saxton is an Investment Director with the Roche Venture Fund (RVF). She currently serves on the boards of Lumos Pharmaceuticals, SutroVax Inc, Mission Therapeutics, Millendo Therapeutics and Purigen Biosystems.

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Tom Salemi: This is Tom Salemi from OIS TV. We’re here at OIS@ASRS. I’m very happy to be joined by Tracy Saxton, Investment Director at Roche Venture Fund. Welcome.

Tracy Saxton: Thank you. Good to be here.

TS: Now how did you find your way to Roche?

Saxton: So I started at Roche Venture Fund in January of last year. Previously, I was at a private equity firm called SV Life Sciences Advisors which does a lot of investing in the ophthalmology space.

TS: Big fan.

Saxton: I’m sure you’re very well familiar with that firm. And prior to joining SV I was – I have PhDs in molecular genetics, got my MBA from Columbia Business School. I spent about 10 years doing drug discovery and development, operational roles in small biotech companies before moving to the investing side.

TS: What drew you to the dark side?

Saxton: The dark side. I really wanted to start doing things earlier, earlier in the decision making process, really starting right from university spinouts, what’s the right technology with the right people, the right funders, and being a part of the investing community allowed me to be there from the beginning, and also just see a lot more translational science, which has been pretty exciting.

TS: I joke. I cover VCs for that exact reason, because they see the stuff before anyone else does very often.

Saxton: It’s nice to be on the cutting edge and it’s great to be able to see really just a lot more science than when I was in the trenches on the bench myself.

TS: Now, historically, corporates have been seen as the later stage money, but of course that’s not the case anymore. I’m guessing at Roche that you’re still involved in those early stage efforts?

Saxton: Yes. We like to fund companies early. Most of our investments we come in at series A, a few that we started in seeds, a very small number during the series B financing. So we like to look at things preclinically, new targets, new mechanism of actions, things that will change the practice of medicine. If they’re targets that are already known, there are follow on investments, we feel like there are other sources of capital for that, and it’s a place where we can really excel.

TS: So how long have you been investing in ophthalmology, or following the ophthalmology sector?

Saxton: So I’ve been following the ophthalmology for about 5 years now, mostly from the large number of investments that were done at my previous firm, SV Life Sciences.

TS: Sure. So you have a pretty good sampling then. Is this a sector that’s drawing more interest from private equity investors, from corporate investors? There does seem to be more and more activity. Obviously we have a new event today.

Saxton: Yeah. So I think that there are new drug approvals, new ways of targeting ophthalmology diseases that are gathering a lot of interest from investors and entrepreneurs, as well as pharmaceutical companies that are the eventual customers. So advances in delivery, advances in gene therapy. There are a lot of different, new sciences that are expanding the ophthalmology field, and I think that brings dollars, people and excitement for new potential therapies.

TS: As an investor, what is your biggest challenge? Is it finding new technology to invest in that’s worth investing? Because there’s always new technology. Is it finding the talent to lead those ventures? Or a lot of VCs are having trouble finding other investors to invest in an early stage company, in a series A company because they don’t want to assume that risk anymore?

Saxton: Yeah. So there have been a lot of new funds that have been raised in the last couple of years, so I think that we’ll see that the syndication for good ideas and good founding teams will be there. Also a lot of good entrepreneurial talent in the ophthalmology space. So it’s really this marriage of a good technology with the right therapeutic indication that has been our biggest challenge to find the right investment opportunities. You’ll see something which is an interesting target, but for a clinical development plan where you need a large number of patients in Phase III for a long period of time before you understand whether you have a product. And that’s what’s difficult for early stage investors. It’s really you can take target risk, but then if you need 10 years of development time, that’s hard to take that time risk. And so it’s not only the new technologies and finding targets that are truly validated in the preclinical sense, but also the long horizons. So if there were better, other patient selection, markers, outcome measures, then I think we could start seeing some more interest in even earlier stage investment opportunities.

TS: Are there some specialties where that risk, that ten year window are more acceptable than others because maybe the clinical testing is more – you’re more confident in the biomarkers, or more confident in the endpoints? And where does ophthalmology sort of fall within that scale?

Saxton: Yeah. It’s a great question. So for venture funds, usually funds are 10 year funds.

TS: Sure.

Saxton: So it’s very undesirable to have something where you don’t have your big proof of concept clinically for ten years. That’s difficult unless there is something that’s earlier. That unfortunately leaves you for the indications that already have drugs on the market going after similar targets, where people understand the efficacy that’s on the table. So for example, we’ve heard at this conference to date already is quite a few different strategies around anti-VEGF and anti-PDGF for macular degeneration. We know these – we understand that these are targets that are approvable by the FDA and have efficacy, but they’re not necessarily getting full potential due to frequency of administration. So I think those types of targets are easier to invest in if you’re looking at a delivery mechanism.

TS: Great point.

Saxton: Because you know that if you can get it to the right place for the right period of residence time, you have a potential drug, and then you’re looking at a commercial play. Is it something that patients and physicians and insurers are interested in?

TS: That’s a great point. It’s like in the newspaper business, where you can put out the best, Pulitzer Prize winning project, but if the paper boy doesn’t get it to the front step, what good does that do you?

Saxton: Yes. Delivery, I think, is something that we’ve seen a lot of conversation already today, and will continue for quite some time until we understand how can we get things to the back of the eye without monthly injections, how can we – or bi-monthly injections – and how can we keep things on the front of the eye without the tears wiping them away. So there’s both front of the eye and back of the eye delivery challenges that, if someone cracks that nut, I think could be really successful.

TS: Great point. So is Roche, if you’re investing in early stage, in series A, if you’re thinking about ten year windows, are you, as an investor for this company, are you looking at ROI? Or is it a strategic investment? Can you make a strategic investment that’s really that far out?

Saxton: Yeah. So Roche Venture Fund is primarily a return-on-investment fund. We report into the treasury. We are not part of the research, development, business development or commercial organization. So every corporate venture fund is quite different in their motivations and their alignment with different groups. So we make our decisions independently from the rest of the organization, which both gives us the freedom to invest in areas that we think will have good returns. But also we do have some input that we can get from the rest of the organization to help us make decisions. So for example, if someone in our ophthalmology team thinks that a particular target or a particular patient population or a particular endpoint that might not be well appreciated by the rest of the community might be an opportunity for a small company to exploit, then we can work with them to design a strategy for an investment that will hopefully shrink that time from ten years down to something earlier, where at least there’s a proof of mechanism or proof of concept. But as with all investors, ten years is, you know, some evergreen funds might find that appealing, but it’s pretty difficult from an investment horizon.

TS: So where does ophthalmology sort of fall within that? Obviously Roche is huge and has interests everywhere. This is an area where, if you invest in a company in ophthalmology, they may have access to some of those other elements within Roche?

Saxton: So for each company, it’s on a company-company by basis. So some of our portfolio companies, and this is actually more general, not just to ophthalmology, they’ll want input from the rest of the organization because we do have clinical expertise, commercial expertise, formulation expertise. They’ll want Roche Venture Fund sitting around the table with – from their companies because we can give them access to information they may not otherwise get. There’s another group of our portfolio companies that really does not want the parent company to know – they want to stay in stealth mode; they’re secretive about – and rightly so – about their –

TS: Is that something you have to overcome when you come on a really quality company that you want to be part of, but they are concerned of what they might be letting in the door?

Saxton: Yeah. I mean so for most founding teams, I’ve either had someone who’s had a corporate fund on their board or knows someone who’s had a corporate fund on their board. So I think people appreciate that. Having a corporate venture fund on their board for an early-stage company can provide a lot of advantages and input.
So we really have not seen any pushback recently from syndicate partners or founding teams. I think there was a lot of questions 10 years ago. Do you really want someone with a corporate fund who might be feeding information back to the parent company? And it just hasn’t been a problem, and in fact, I think it’s been pretty advantageous for small companies to have access to the expertise. So it’s worked out, I think, to be quite a good ecosystem that way.

TS: Terrific. And just final question: we’re all about looking forward at OIS about innovation. What do you see? Any successes or milestones you see happening over the next couple years that have you excited at Roche and the Roche Venture Fund?

Saxton: Yeah. And so I think that with macular degeneration, which is something obviously that Roche Genentech is quite heavily involved in, we’d really like to see earlier diagnosis. Patients are frequently don’t have – already have vision loss in one eye by the time they start treatment, so we’d like to see that could expand vision gains and saving vision for a lot of people if we could get them into treatment earlier. We’d love to see changes in delivery or residence time in the back of the eye for macular degeneration as well, really reduce the burden on physicians and patients to be able to get this vision saving treatment. And I’m also really interested in hearing about opportunities in the glaucoma space that isn’t necessarily around intraocular pressure. There’s a lot of biology that’s around the back of the eye in the retina and the neurons that I think could really give much better efficacy to patients than just looking at IOP. So I think that from both a clinical endpoint and clinical target perspective, there could be some really interesting gains in that space as well.

TS: A recent Stanford study about the neural regrowth of the ocular nerves just is really fascinating, Star Trek-y stuff.

Saxton: Yeah. It’s going to be – Yeah. So if we can get into therapeutic realms that really benefit the neural health around the eye, I think that could be really interesting.

TS: Great. Well, thanks for joining us at OIS today.

Saxton: You’re welcome. Good to be here.