The Atom Bioworks Investment Thesis
November 23rd, 2021
Our core biotech investment thesis at Gravity Fund is that humanity’s ability to engineer biology will fundamentally transform how we diagnose, treat, and manage disease. Tools like computational biology, protein folding modeling, evolutionary biology engines, rationally designed nanomaterials, and CRISPR enable an expanding pool of entrepreneurs to simulate, analyze and engineer biology with greater and greater precision and sophistication. From monoclonal antibody cocktails engineered to mitigate resistance evolution, to bacteria and viruses engineered to express new proteins, to autoimmune cells engineered to attack cancer. The explosion of engineered therapeutics and diagnostics is leading us closer than ever before to that holy grail of life sciences, the cure.
Atom Bioworks falls squarely under this thesis. Atom Bioworks has developed an AI based rational drug design platform that allows them to program a DNA nanostructure used to detect and destroy infectious diseases and cancer. DNA, when folded into nanostructures with a specific shape, is capable of spacing and arranging binding sites into a complex geometric pattern with nanometre precision. Atom Bioworks’ patented software platform extracts a binding site pattern from a viral or tumor cell’s surface, generates multiple nanostructure (DNA Star) designs and the necessary DNA sequences to build the DNA Star. The DNA necessary to build the DNA Star is synthesized in the Atom Bioworks DNA Synthesizer, and the individual DNA strands are combined to form the DNA Star.
Traditionally, disease targeting antibodies bind with one specific antigen (binding site) on a diseased cell. Binding rates are low and many therapies fail safety studies because they accidentally bind off target with healthy cells. DNA Star achieves significantly higher binding affinity with diseased cells, dramatically increasing efficacy while simultaneously reducing the incidence of binding off target, decreasing or eliminating toxicity issues. DNA Star achieves this because it is programmed to bind with a very specific network of binding sites, as opposed to just one target. Unless that network of binding sites is present in a precise configuration, DNA Star will not bind. This is drastically different than the traditional monoclonal antibody approach of binding with a single site.
Because the DNA Star is programmed to bind with a precise configuration of disease specific binding sites, it can be used as both a diagnostic and a therapeutic. Upon successfully binding with a diseased cell, the DNA star can itself inhibit further spread (without delivering a companion drug), or deliver a targeted therapy. Additionally, DNA Star can be programmed to emit a fluorescent signal upon successful binding (indicating that a specific disease is present). Its binding specificity makes it both a highly effective therapeutic mechanism and a highly accurate diagnostic. Thus, the technology also offers a highly accurate companion diagnostic with every therapeutic application.
Traditionally, it takes at least six months to design and build an antibody. Atom Bioworks’ software can design a programmed DNA structure and generate the required DNA sequencing instructions in less than one day. Atom Bioworks has put in place commercial volume DNA synthesis and DNA structure manufacturing systems. The combination makes Atom Bioworks fast to design/develop and ready to scale manufacturing. Development speed and manufacturing scale are two bottlenecks that have historically hampered the ability to deliver antibodies when needed. The FDA authorized two antibodies for emergency use in high-risk COVID patients, one cocktail from Regeneron and another from Eli Lilly. While both showed promise as a treatment option for severely ill COVID patients, neither became widely available until Spring of 2021, an entire year after the first major surge in cases, due primarily to manufacturing constraints.
Atom Bioworks has made significant progress developing diagnostic partnerships. The Company were funded by the NIH RADx (5% selection rate) to develop a sensitive DNA Star based rapid COVID test. The diagnostic is 10x more accurate than either the PCR or Antigen based COVID tests commonly used today, requires zero sample processing time at a lab, produces a result in 3 min versus 30min - 3hrs, is highly scalable, and development of a test for a new strain takes a matter of days (versus months for the PCR and Antigen tests).
In addition to winning government development grants and contracts, Atom Bioworks has also engaged in partnership discussions with multiple biopharma and diagnostics companies about developing high affinity binding systems for use in consumer-friendly diagnostics devices, as well as potential therapeutics applications. The consumer-friendly diagnostics device consists of a small hardware reader and disposable cartridges corresponding to specific disease states. Each cartridge could contain an Atom Bioworks DNA Star in combination with a fluorescence agent that becomes activated upon DNA Star’s successful binding. The partner companies can quickly integrate the DNA-Star binding probe with their own hardware for fluorescence signal or colorimetric signal readout.
The COVID diagnostic partnership offers a rare opportunity for Atom Bioworks- an ability to generate significant revenue at the earliest stages of its therapeutic pipeline development. Typically, therapeutics companies do not have the ability to generate revenue until a lead candidate has demonstrated promising clinical data and generated partnership interest from big pharma. This typically requires early-stage therapeutics companies to raise significant amounts of capital to fund clinical development. Atom Bioworks has the potential to self-fund much of its clinical work, significantly reducing dilution risk carried by early investors.
Atom Bioworks received the lateral flow industry's 2021 innovation award at this year's Advanced Lateral Flow Conference, beating industry stalwarts like Orasure. The honor was awarded to Atom Bioworks after the committee saw the company’s creative application of using DNA Star in creating the world's first antibody free lateral flow assay that delivers high clinical sample sensitivity. This was the same honor awarded to Luminostics (backed by Khosla and YC). After winning that award, Luminostics went on to grow from a small startup to a thriving diagnostics company with users around the country ranging from doctor’s offices and other acute-care settings, drive-through testing sites, event organizers, and employers. Here’s a sampling of audience quotes about Atom Bioworks from the competiton:
“ Finally, we have a usable alternative to antibody in building immunoassay, this is huge!”
“Atom Bio’s DNA Star is in its own class when compared to the other four entrants in terms of innovation.”
While the Company’s progress relative to diagnostics is impressive, the holy grail for Atom Bioworks is its ability to utilize its DNA Star technology as a therapeutics platform. Atom Bioworks intends to develop partnerships with large pharma companies to co-develop therapeutics using DNA Star. The Atom Bioworks team was published in Nature for their early work on this front. They demonstrated that a designer DNA nanostructure can act as a template to display multiple binding motifs with precise spatial pattern-recognition properties, and that this approach can confer potent viral inhibitory capabilities. A star-shaped DNA architecture, carrying five molecular beacon-like motifs, was constructed to display ten dengue envelope protein domain III (ED3)-targeting aptamers into a two-dimensional pattern precisely matching the spatial arrangement of ED3 clusters on the dengue (DENV) viral surface. The resulting multivalent interactions provided high DENV-binding avidity. The paper shows that the DNA Star structure is a potent viral inhibitor, improving viral inhibition by 7,500 times over the standard of care drug, Aptamer.
Additionally, the Atom Bioworks team is publishing a “Nature” article showcasing its work using DNA Star to treat COVID. In that study, they demonstrated that DNA Star showed equivalent inhibition potency to the traditional picomolar SARS-CoV-2 miniprotein inhibitors developed by the rational design leader Baker’s lab. The physical bulk of the DNA star, and its negative charge, prevent the virus from latching on to host cells, shutting down infection. This is a significant accomplishment because the traditional protein-protein inhibitors show significant ability to inhibit COVID infection progression. This was the first time that it was shown that a DNA-protein inhibitor could match or exceed the performance of protein-protein inhibitors. As mentioned above, Atom Bioworks also solves the design and manufacturing bottlenecks that prevented protein-protein inhibitors from reaching market in a timely manner, so demonstrating efficacy equivalency paired with the ability to rapidly design and scale is a major step change.
While Atom Bioworks demonstrated proof of concept in the infections disease sector, its more lucrative opportunity is in targeted oncology therapeutics. Monoclonal antibodies are used to inhibit cancer growth in the same way that they’re used to inhibit infectious disease progression. The application of monoclonal antibodies in cancer treatment is well accepted and the challenges associated with existing treatments are well known. Atom Bioworks solves two of the largest challenges facing this class of drugs by 1.) inhibiting disease progression at a higher rate than traditional monoclonal antibodies (i.e. 7,500x improvement in infectious disease in the Nature paper) and 2.) reducing or eliminating the delivery of a therapeutic molecule off-target (the leading cause of clinical trial failure for targeted oncology therapies) due to the high binding specificty of the DNA Star.
As mentioned above, each DNA Star therapeutic can also be used as a diagnostic. This presents an opportunity for Atom Bioworks to use DNA Star to precisely diagnose whether a patient will respond to the corresponding DNA Star therapeutic. This is important in terms of getting the right therapeutics to the right patients and improving treatment outcomes. It’s also an extremely valuable tool that can be used to select clinical trial participants and dramatically improve the likelihood of clinical trial success.
Atom Bioworks has several opportunities in front of it that, if it successfully actions against any one of them, has the potential to result in a $10B+ revenue company. The Company’s model of developing partnerships to offlay development cost/effort significantly de-risks each opportunity and allows the Company to pursue multiple opportunities at the same time.
Looking broadly at the company’s total addressable market, the infectious disease testing market represents a $17B annual market. This includes tests for the Flu, Norovirus, HIV, HBV, HPV, etc. Looking more broadly still, the In-Vitro diagnostics market is expected to surpass $91B by 2027.
The global monoclonal antibody market was valued at $143.5B in 2020 and is expected to surpass $368.8B by 2027. Key trends in the market include increasing prevalence of cancer, rising regulatory approvals and launch of therapies, increasing research collaborations for the development of robust drugs pipeline, and adoption of collaboration strategies by the companies. Moreover, increasing research collaborations for the development of robust drugs pipeline is a major factor that is expected to drive the market growth over the forecast period. Success of popular monoclonal antibodies such as Avastin, Herceptin, and Rituxan (revenue as $6.8B, $7.1B, and $5.9B, respectively in 2017 globally) has spurred manufacturers’ interest in these therapies and partnership development around novel next-gen therapeutic approaches, such as the approach offered by Atom Bioworks.
We believe that Atom Bioworks combines a best-in-class team, with a patented novel high affinity binding rational design technology platform that brings a tremendous value proposition to multiple $100B markets (diagnostics and targeted therapies). Similar to how Amazon reinvented cloud computing as an infrastructure service for businesses by providing higher development speed and lower cost, Atom Bioworks aims to provide a high affinity binding system as the infrastructure for life science companies, and speed up development while also reducing development costs. It is rare to see a team of this caliber at the helm of a company with potential ‘holy grail’ technology in both the diagnostic and therapeutic sectors. This is the opportunity in front of Atom Bioworks. We couldn’t be more excited to support them.
