Investing

Big Pharma And Google Invest More In Rani Therapeutics

Quick Take

Big pharma firms Novartis (NVS) and AstraZeneca (AZN) along with Google Ventures (GOOG) have continued to support oral biologics startup Rani Therapeutics with a $39 million investment.

Rani is developing the ability to change the delivery of drugs from injections to pills.

Big pharma firms such as Novartis and AstraZeneca are deviating from their sole focus on drugs by investing in drug delivery technologies that potentially impact the efficacy of drugs and their overall market value.

Investee Company

San Jose, California-based Rani was founded in 2012 to develop technologies to enable drugs normally delivered via injection such as insulin to be delivered instead via orally ingested pills.

Management is headed by founder and CEO Mir Imran, who has a career spanning many developments for medical treatments.

Below is a brief video about Rani’s approach to oral biotherapeutics:

(Source: Rani Therapeutics)

The firm’s robotic pill essentially bypasses the stomach and delivers its contents while traversing the small intestine, thus avoiding the digestive enzymes within the stomach.

The main benefits are that by changing the delivery from injectables to orally swallowed pills, patients are more likely to continue their medication improving compliance and patient outcomes while potentially reducing overall healthcare system costs.

Rani has entered into a number of collaborations, including with existing investors Novartis and AstraZeneca as well as with MedImmune.

Investment Terms and Rationale

The firm has now raised a total of $100 million in financing, according to the report on CNBC. Investors include a large syndicate of venture capital firms. Valuation was not disclosed.

Novartis has been an active corporate investor in biopharma technology startups, investing in earnest since 2014.

The graphic below shows investment focus by various metrics (click to enlarge),

(Source: Mattermark)

The graphic indicates that Novartis invests across all development stages, including Series A.

Also notable is that Boston represents its busiest geographic region, followed by the Bay Area, San Diego and Los Angeles.

GV, which is an investment arm of Google, is ramping up its investment frequency in healthcare companies. In 2017 to-date, GV has invested in nine biopharmaceutical companies, although most typically at the later Series B and C stages rather than higher risk Series A.

The investments by Novartis and AstraZeneca represent an interesting shift in strategy. Big pharma is typically focused on developing drugs to treat illnesses, not on what is essentially a medical device.

By being able to control how a drug is delivered, big pharma can control the absorption rate and characteristics, potentially improving efficacy and ultimately patient outcomes, which all flow into the total lifetime value of a particular drug.

I expect to see more investments by big pharma firms along the lines of improving drug delivery options as they compete on many different levels for healthcare dollars.

I write about M&A deals, public company investments in technology startups, insider activity, and IPOs. Click the Follow button next to my name at the top or bottom of this article if you want to receive future articles automatically.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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