Earlier this year, biotech startup Rani Therapeutics signed a collaboration agreement with one of the largest pharma companies in the world, Novartis, to develop a "robotic pill" for complex biotech drugs. So why, we wondered, would a startup that investors already like, decide to turn not to leading VCs but to the crowd to raise funding? Well, as it turns out, the crowd loves them.
Many of today’s leading drugs for treatment of chronic diseases such as diabetes, rheumatoid arthritis, psoriasis, ulcerative colitis and Crohn’s disease must be administered by painful injections, often several times a day. This is because molecules from which these drugs are created, like insulin, are usually too large to be administered orally. Rani Therapeutics is developing a revolutionary approach for delivering these drugs orally, which means that millions of patients who currently require painful injections could instead receive their medications orally. The oral product Rani Therapeutics is developing could replace a variety of injectable drugs, which would radically improve the patient experience.
Early Series-C round funding
In May 2015, Rani Therapeutics announced that it had closed its Series C round of funding. Participants in this round included not only Novartis, but also Google Ventures, InCube Ventures, a life sciences venture fund (and a part of the innovation lab where Rani Therapeutics began), and VentureHealth, an online venture fund, among others. That same month, Rani and Novartis announced their joint collaboration to create what both companies hope will be a "robotic" pill that can administer even large-molecule drugs orally.
Despite their Series C success, Rani decided to raise their next round of funding by turning to crowdfunding, a decision that has proven to be has been an unequivocal success. As of publication, the startup had already raised 80 percent ($40,000,000) of their funding goal of $50,000,000 on Crowdfunder.
Why is the crowd so interested in Rani Therapeutics?
Most investors who invest in biotech firms and pharma companies find themselves riding the ups-and-downs of the market, which responds dramatically to each announcement by publicly-traded firms - whether the news is good or bad. By investing in a startup like Rani Therapeutics, crowd investors are hoping to get a share of what could turn out to be a very successful company, especially if it manages to develop the robotic pill Novartis is betting on. As such, this could be a win-win-win situation for the startup, for its investors, and, thinking ahead, for patients, saving them the painful injections currently needed to provide them with their medications.
What do you need to know about Rani Therapeutics before you join the crowd?
The approach and technology for Rani Therapeutics was developed at InCube Labs, a multi-disciplinary life sciences R&D lab that focuses on developing breakthrough medical innovations (InCube Ventures is also one of the investors in Rani Therapeutics). The chairman and CEO of Rani Therapeutics is Mir Imran, a prolific healthcare innovator and entrepreneur and the head of InCube Labs.
The biotech firm says it has already demonstrated a greater than 50% bioavailability of its product, which could have a dramatic effect on how medications are administered in the future. If successful the Rani product offers an innovative an easily consumable alternative: to injections, which could be designed for a variety of injectable drugs.
It is also important to remember that there have been previous, unsuccessful attempts to create so-called oral biologics; Rani, however believes that its approach will truly transform the market and lead to a breakthrough in the way medications are administered in the future.
So what do you think? Could crowd investment in biotech and pharma be the future of funding medical breakthroughs?