Small biotech companies are rapidly becoming leading stakeholders in the clinical development of new therapies, driving innovation and growth. According to a McKinsey 2022 report, the top 15 pharmaceutical companies share of the industry’s clinical pipeline halved from approximately 40% in 2011 to 20% in 2021. Small and midsize companies are forecasted to grow at a compound annual growth rate (CAGR) of 11% to reach $22 billion in 2025, while the top 20 largest biopharma companies are forecasted to grow at a CAGR of 5% to reach $24 billion in 2025. R&D spending of large companies is projected to grow at 4% per year, while R&D spending for small biotech companies is forecasted to grow at up to 8% per year. The top 20 largest biopharma companies (by revenue) are expected to bring more clinical research services back in-house.
IQVIA defines emerging biopharma companies as those with less than $500 million in annual sales and less than $200 million in R&D spending per year. Small companies have global prescription sales between $500 million to $5 billion in the calendar year.
Biotech #1: Arcutis Biotherapeutics, Inc.
Arcutis Biotherapeutics, Inc. is a medical dermatology biotech company that focuses on helping patients with immune-mediated dermatological diseases and conditions. Arcutis’ pipeline includes multiple development programs for a range of inflammatory dermatological conditions, including plaque psoriasis, atopic dermatitis, and seborrheic dermatitis. Headquartered in California, Arcutis was founded in 2016 and has 259 US-based employees, 95% of which say it is a great place to work. In 2022, Arcutis was ranked 3rd in Fortune’s Best Workplaces in Biotechnology and Pharmaceuticals. With its potential to advance the standard of care in dermatology, Arcutis has formed strategic collaborations with AstraZeneca for exclusive worldwide rights to all topical dermatological uses of their roflumilast and with Jiangsu Hengrui Medicine Co., Ltd. for an exclusive license to their active pharmaceutical ingredient in ARQ-252 for all topical dermatological uses in the U.S., Canada, Europe, and Japan.
Biotech #2: Arvinas
Arvinas is a clinical-stage biopharmaceutical company focused on pioneering a new class of medicines to target and degrade disease-causing proteins for people living with debilitating and life-threatening diseases. Arvinas’s proprietary PROTAC Discovery Engine engineers proteolysis targeting chimeras or PROTAC-targeted protein degraders, that harness the body’s natural protein disposal system to selectively degrade and remove disease-causing proteins. The company remains undeterred by conditions that are “undruggable.” Founded in 2013, the company is based in New Haven, Connecticut. In 2021, the company entered into a collaboration agreement with Pfizer, which was granted worldwide co-exclusive rights to develop and commercialize products containing the Arvinas proprietary compound ARV-471. Arvinas also has a Research Collaboration agreement with Pfizer, a license agreement with Genentech, and a collaboration agreement with Bayer. From an investor standpoint, market analysts believe that the company’s pipeline has a substantial market opportunity and a potential return of 130% in a year (from December 2022).
Biotech #3: Denali Therapeutics
Founded in 2013, Denali Therapeutics is a biopharmaceutical company developing product candidates engineered to cross the blood-brain barrier (BBB) for neurodegenerative diseases. The company’s approach is to rigorously assess genetically validated targets, engineer delivery across the BBB, and guide development through biomarkers that demonstrate target and pathway engagement. Denali is based in South San Francisco. In October 2022, Denali announced the pricing of its public offering of shares at a price to the public of $26.50 per share. By December 2022, Denali made the list of best small-cap stocks to buy for 2023, with market analysts viewing it as an emerging leader in neurodegenerative diseases and central nervous system (CNS) lysosomal storage disorders. Analysts covering the Denali stock tracked by S&P Global Market Intelligence had an average target price of $64.47 in the 12 months that followed.
Biotech #4: DNA Script
DNA Script’s goal is for its enzymatic DNA synthesis technology to become a major engine of genomics research and personalized medicine. The core R&D of Paris-based DNA Script has produced innovations in enzyme engineering, surface, and nucleotide chemistries, and instrumentation, culminating in SYNTAX, the world’s first benchtop DNA printer powered by enzymatic technology. Commercially launched in 2021, scientists can use the SYNTAX System to print DNA on demand in their own labs. In 2022, DNA Script was named Overall MedTech company of the year in the Biotech Breakthrough Awards 2022 – Medical Technology category. In the same year, Fast Company included DNA Script in its Top 10 Most Innovative Biotech Companies list. DNA Script is part of a consortium selected by the Intelligence Advanced Research Projects Activity (IARPA) to develop a DNA-based system for data storage. DNA Script also partners with Moderna and GE Research to develop on-demand vaccines for biothreats.
Biotech #5: Emulate, Inc.
Emulate, Inc. is a leading provider of next-generation in vitro models. It launched the human Brain-Chip for researchers and drug developers investigating neuroinflammation and seeking to improve drug discovery for neurodegenerative diseases such as Alzheimer’s and Parkinson’s. The Emulate Brain-Chip is a realistic model of cell types in the brain that researchers can use to investigate neuroinflammation mechanisms and evaluate the efficacy of drug candidates in piercing the blood-brain barrier. In 2021, the Emulate Brain-Chip was ranked #4 on The Scientist magazine’s 2021 Top 10 Innovations list. Emulate also launched the Colon Intestine-Chip for researchers investigating inflammatory intestinal diseases. Emulate advocates for animal rights, and Emulate’s chips aim to replace animal testing. Emulate supports the reduction in primates’ use for drug testing, the FDA Modernization Act, and the Humane Research Act, which calls for alternatives to animal testing. Industry recognition includes being named in Fast Company‘s annual list of the World’s Most Innovative Companies for 2022 and Fierce Medtech’s 2021 Fierce 15 med tech companies.
Biotech #6: Fate Therapeutics
Founded in 2007, Fate Therapeutics is a clinical-stage biopharmaceutical company dedicated to transforming patients’ lives with cancer and immune disorders by developing first-in-class cellular immunotherapies. The company’s cellular immunotherapies are based on a novel ex vivo cell programming approach. Fate Therapeutics is a leader in the clinical development and manufacture of universal, off-the-shelf cell products using its proprietary induced pluripotent stem cell product platform. Market analysts believe that the outcomes of Fate Therapeutics’ ongoing clinical trials will impact its stock and see an increase in the magnitude of 375%. From an investor point of view, Fate Therapeutics is listed in market analysts’ best small-cap stocks to buy for 2023. Fate Therapeutics is headquartered in San Diego, CA.
Biotech #7: Insmed Incorporated
Insmed Incorporated is a global biopharmaceutical company that aims to transform patients’ lives with severe and rare diseases. Insmed was recognized as the top company to work for in Science‘s 2021 Top Employers Survey and ranked among Fortune’s Top 25 Small and Medium Workplaces in biotechnology and pharmaceuticals in 2022. Founded in 1988, Insmed is headquartered in the US and has a growing footprint in Europe and Japan, with 578 employees worldwide. The company entered into three strategic financing agreements and raised aggregate gross proceeds of $775 million. In light of conditional approval for an Insmed drug and another showing promise, Barclays, in December 2022, suggested that Insmed stock could grow by 90%.
Biotech #8: PathAI
PathAI is a global leader in artificial intelligence (AI)-powered technology for pathology that has the potential to inform biomarker development, better identify and treat patients, and enable personalized medicine. Through its platform, PathAI promises substantial improvement in diagnostic accuracy and treatment efficacy by leveraging modern approaches in machine and deep learning. A collaboration with Roche allows PathAI to provide a comprehensive menu of AI-powered pathology solutions and diagnostics. Founded in 2016, PathAI has over 250 US-based employees. In 2022, Fortune recognized PathAI as one of the best small and medium workplaces in biotechnology and pharmaceuticals.
Biotech #9: Strata Oncology, Inc.
Strata Oncology, Inc. is a precision oncology company that combines molecular profiling, real-world data, and a large-scale clinical trial platform to identify and deliver optimal treatments. Strata Oncology’s approach combines molecular profiling and advanced algorithms with precision-matched clinical trials to accelerate the impact of precision medicine. In 2021, CB Insights recognized Strata Oncology as one of the 150 most promising private digital health companies in the world. One year later, Strata Oncology was named in Fast Company‘s annual list of the World’s Most Innovative Companies 2022 and received an honorable mention in Fast Company’s 2022 World Changing Ideas Awards for its Precision Indications for Approved Therapies (Strata PATHTM) clinical trial. Through their investments, industry partners like Pfizer Ventures and Merck Global Health Innovation Fund have acknowledged Strata’s innovation and potential.
Biotech #10: TMRW Life Sciences
Founded in 2018, TMRW Life Sciences, Inc. is a life sciences technology company that created the world’s first and only FDA-cleared automated, software-guided specimen management platform for frozen eggs and embryos in vitro fertilization (IVF). The proprietary RFID-enabled labware and integrated software management solution digitally tracks, monitors, and manages frozen eggs and embryos. The platform has been adopted in world-renowned clinics across the US and will soon be available in the UK and Europe. To serve a growing market for fertility services and a projected increase in IVF births, TMRW provides a scalable solution for clinics. TMRW was a finalist in Fast Company‘s 2021 World Changing Ideas Award software category and, in 2022, was named Fast Company‘s #1 Most Innovative Biotech company.
Vial: The CRO for Small Biotech
Smaller biotech companies may not have the relationships nor name recognition to navigate interactions with clinical trial sites, investigators, patients, caregivers, and regulators. Finding and working with a CRO like Vial that understands their needs and has established relationships with stakeholders is of great value to emerging and small biotech companies. Engaging a small CRO like Vial has the benefits of speed, agility, and working with a true partner.
To learn more about how the Vial CRO is reimagining clinical trials, connect with a Vial team member today!
