This Time IS Different: Introducing Lux Bio + Tech™
For more than a decade, Lux has partnered at the earliest stages with rebel founders breaking down boundaries at the intersection of biology and technology. During a time when traditional biotech sought serendipitous single solutions — a target hypothesis and a therapeutic molecule — Lux sought out scientists and technologists attuned to the underlying advances across a multitude of disciplines. Often these entrepreneurs not only proposed a solution for a historically intractable disease but simultaneously imagined substrate to industrialize the very path to future solutions. In considering these investments, we wondered: “Will this work in the clinic?” and “Are we building the machinery to more effectively unearth better solutions to myriad diseases over time?” For inspiration we turned to those who had pioneered trails in large pharma and biotech, as well as to the last several decades of tech and business innovations across semiconductors, the internet, and the cloud.
That thinking has led us to today, when we are introducing Lux Bio + Tech, a secular investment theme that covers a range of companies, from those innovating to further the molecular understanding of the “omics stack” to those building “operating systems’’ for the future of drug discovery and ultimately even drug development. In the case of existing Lux portfolio companies Kallyope, Cajal Neuroscience and Variant Bio, we’ve played founding roles in unearthing new targets to historically intractable diseases. When given existing “undruggable” biology, we’ve partnered with entrepreneurs inventing and pushing the limits of what constitutes the underlying modalities of what drugs can be. We see Adimab, Eikon Therapeutics, Recursion Pharma, Anagenex, Senti Biosciences, LabGenius, Plexium, and Creyon as leading examples. Over time these companies have transformed from radical, even heretical, ideas to undeniable technical, scientific, and clinical proof points.
The last decade has ushered in an unparalleled understanding of the molecular basis of biology, enabled by emergent tool kits to engineer and perturb biology, ultimately increasing the velocity of discovery. Today, Moore’s Law-like cost curves exist along many axes in biotech and have given rise to an era of precise, high fidelity, large scale, highly reproducible, and increasingly automated biological and chemical experimentation and discovery. The modern scientist-entrepreneur not only sits at the wetbench but also has proficiency to deconvolute high dimensional and historically unmanageable data with GPUs, scalable and elastic compute, and the array of advances from machine learning and deep learning.
Unveiling the Lux Bio + Tech Index™
Looking broadly across the rapidly expanding bio + tech ecosystem, we can definitively say: this is no longer a secret! Many of the pioneers advancing these trends exist amongst today’s publicly traded enterprises. That’s why today we are also unveiling the Lux Bio + Tech Index™ [BLOOMBERG: LUXBT Index], composed of 45 publicly-listed companies that best represent the confluence and integration of molecular and cell biology, omics, biochemistry, automation, software, imaging, and machine learning. The Index represents the public companies that are leaders in:
1) Emerging modalities of therapeutic delivery including cell and gene therapies, ASOs and OBMs, and Digital Tx
2) Novel classes of drug targets and mechanisms including the gut biome as a target, RNAs as targets “the transcriptome”, historically “undruggable” targets, protein degraders, bispecifics, and cells as targets
3) Unbundling the “omics stack” including next gen DNA sequencing, single cell sequencing, RNA, proteomics, metabolomics, spatial transcriptomics, phenomics, and vivomics
4) Pushing the limits of structural biology and biochemistry including CryoEM, machine learning for structure and function prediction, DNA-barcoded discovery, generative protein design, and chemical engineering
5) Closed loop software integrated platforms with data moats and nonlinear increasing returns on platform R&D
For inclusion, an issuer must have a market cap greater than $500M (USD) and be involved at the intersection of biology and technology. Historical revenue growth was also considered for inclusion, with some discretion allowed if revenue growth is outweighed by qualitative factors. Specifically, issuers with revenue growth greater than 10% in two of the past three years are included, unless the company has priced its initial public offering (IPO) within two years of constitution and only has two years of financials available. In this case, only one year of annual growth above 10% is required. For a company to stay in the Index, it must have grown annual revenue at least 7% in at least one of the last two calendar years.
The Index is rebalanced quarterly on the second Friday of January, April, July and October. Moving forward, the Security Eligibility Criteria are applied using market data on the first Friday of the aforementioned months which serve as the quarterly index selection dates. The results of the index selection will be applied to the index on the index rebalancing date and shares are fixed on the selection date. The Index is disseminated publicly in real time (every 15 seconds) and follows the NYSE holiday calendar. Standard tax withholding rates are implemented where dividends are reinvested back into the dividend paying security. The timing of the dividend adjustment is on the open of the effective date of the dividend. Late dividend treatment is not applied.
Q2 2021 Index
The majority of companies in the Index were founded within the last decade as fast moving VC-backed startups and have continued to maintain their aggressive growth — witness companies like Sana Biotechnology ($4.7 billion market cap, founded in 2018) and Beam Therapeutics ($5.1 billion market cap, founded in 2017). Conversely others were created much earlier as pioneers of new modalities and have continued their growth: examples here include Regeneron Pharmaceuticals ($52 billion market cap) and Ionis Pharmaceuticals ($6.1 billion market cap).
The COVID pandemic and speed of advanced vaccine development via mRNA challenged the paradigm of what is possible in the future of biotechnology. The most brilliant minds in biotechnology believe the impressive velocity of vaccine development represents only the beginning of what’s to come, realizing the profound impact these organizations can have on the world. The directional arrow of progress for Bio + Tech has the potential to impact everything from how patients understand their genetic history, to how diagnostic data is obtained and analyzed, to how therapy is recommended and executed, to how outcomes are measured and quantified.
And this is only the beginning.
The information set forth in the Lux Bio + Tech Index™ is provided for informational and discussion purposes only and is not intended to be, and shall not be regarded or construed as, a recommendation for a transaction or investment or financial, tax, investment or other advice of any kind by Lux Capital. Lux Capital makes no warranty or representation regarding any such information or the data presented in such materials. Lux Capital and/or pooled investment vehicles which it manages, and individuals and entities affiliated with such vehicles, may purchase, sell or hold securities of issuers that are constituents of the Lux Bio + Tech Index™ from time to time and at any time, including in advance of or following an issuer being added to or removed from the Lux Bio + Tech Index™.