Biotech Firms Tap Saudis for Funding.

"Some biotechnology startups are raising capital from Saudi Arabia as U.S. venture funding retreats and Middle East countries seek to boost their life-sciences industries.

Chicago-based Flashpoint Therapeutics recently raised seed financing led by Beta Lab, a new venture firm based in Riyadh, and biomedical startups including Insilico Medicine have secured funding from Prosperity7 Ventures, the venture fund of Aramco Ventures, a subsidiary of Saudi Arabia's national oil company.

Saudi Arabia, whose national oil company posted record profits in 2022, seeks to diversify its economy. It is well-positioned to establish a globally competitive biotech hub, said a report by Strategy&, a part of the PricewaterhouseCoopers network. 

The report cited developments such as the streamlining of regulatory frameworks for clinical trials, testing and bioethics.

Other Middle Eastern countries such as the United Arab Emirates are making similar efforts in biotech.

"The region's become much more relevant within the biotech ecosystem," said Ali Siam, chief business officer of Rubedo Life Sciences, a longevity-focused biotech startup in Sunnyvale, Calif., that participated in a February longevity conference in Saudi Arabia.

Saudi Arabia plans to invest more than $1 billion annually in aging treatments through Hevolution Foundation, a nonprofit established in 2021 that expects to put much of its initial grant funding to work in U.S. universities and startups.

Fundraising from foreign backers can raise ethical or geopolitical concerns, particularly during the current period of heightened global conflict. Saudi Arabia, a U.S. ally, is among the Middle Eastern countries the State Department cited in March for human-rights abuses, including extrajudicial killings and arbitrary arrest and detention.

When considering investors, entrepreneurs should evaluate whether the source of capital would violate their own ethics or those of employees and business partners, said Kirk Hanson, a senior fellow at the Markkula Center for Applied Ethics at Santa Clara University, who has advised entrepreneurs and venture capitalists on ethical matters. "Every startup manager needs to raise questions about the source of their funds," he said.

Some entrepreneurs said Saudi Arabia is undergoing a rapid socioeconomic transformation and that joining its life-sciences sector contributes to that shift.

Saudi Arabia in 2016 launched Vision 2030, a plan to modernize government, industry and society. This includes an effort to transform its healthcare system by innovating in areas such as disease prevention and widening access to care.

"You cannot fix human rights abuses by ignoring the country," said Alex Zhavoronkov, founder and co-chief executive of New York- and Hong Kong-based Insilico. He spoke at the recent Future Investment Initiative conference in Riyadh -- nicknamed "Davos in the Desert" -- a gathering of business, academic and policy professionals.

Insilico, which discovers drugs using artificial intelligence, in 2022 raised Series D2 venture financing led by Prosperity7 and signed an agreement with Saudi Arabia's Ministry of Investment to help Saudi Arabia build its biotech industry, including by sharing its software platform and expertise with local biotechs.

Insilico also has established a generative AI and quantum-computing research-and-development center in Abu Dhabi, the capital of the United Arab Emirates. Its Middle East presence is important to its long-term future because relationships it is forming will pay dividends as the company expands, Zhavoronkov said.

"In this region, people value relationships, they don't change partners every day," he said. "It takes a very long time to build up a relationship, but then that relationship lasts a long time."

Saudi Arabian investors move quickly when they see opportunity, said Chad Mirkin, director of the International Institute for Nanotechnology at Northwestern University. Mirkin visited Riyadh in April to accept the King Faisal Prize, launched by the philanthropic King Faisal Foundation to recognize achievement in Islamic studies, science, medicine and other disciplines.

While there, he said he toured universities and met with officials including the minister of investment and minister of communications and information technology.

He said those meetings led within six months to investments from Beta Lab in two companies founded around technology from his lab, Flashpoint Therapeutics, and 3-D printing company Azul 3D.

"The U.S. venture market is stressed and becoming a lot more conservative. That makes it at the very least a slower process, if not an untenable one," Mirkin said.

Beta Lab, which invests in life sciences and AI startups globally, launched in late 2022 and expects to make five to 10 investments annually for the next two to three years.

Flashpoint, which is initially developing a treatment for HPV-positive head-and-neck cancer patients, has signed a deal to explore a potential collaboration with King Faisal Specialist Hospital & Research Center, according to Chief Executive Adam Margolin.

Beta Lab has a network with hospitals and investors in the region that can help Flashpoint, Margolin said." [1]

1. EXCHANGE --- Biotech Firms Tap Saudis for Funding. Gormley, Brian.  Wall Street Journal, Eastern edition; New York, N.Y.. 11 Nov 2023: B.11.