 "Shiladitya Sengupta")
The building housing Vyome Biosciences in the Patparganj area of Delhi looks nondescript, belying the activities of the 35-member team inside. At the office, scientists inoculate product molecules on petri dishes of fungi and bacteria inside the aseptic enclosure of a Laminar Air-Flow Chamber.
Seeking to increase the efficacy of product molecules, the bio-pharmaceutical start-up is generating huge interest in the dermatology segment. Since its conception, it has recorded about $12 million in investment, the latest about a month ago, though it hasn't generated any revenue yet.
"For decades, there has not been much focus on novel product development in acne and dandruff. It's an untapped area, with a global market worth billions. This is the segment Vyome will cater to with its prescription (Rx) and over-the-counter (OTC) products," says Alok Samtaney, investment director, Sabre Partners, which has led an investment of about $8 million (Rs 50 crore), along with co-investors Kalaari Capital, Aarin Capital and Navam Capital, in a recent series-B funding in the company.
| FOUNDERS' BACKGROUND |
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Assistant professor of medicine at Harvard Medical School, serial entrepreneur and has co-founded four companies. One of his ventures, Cerulean Pharma, debuted on NASDAQ earlier this year
Director at Institute of Genomics and Integrative Biology. Recipient of the Infosys Prize in life sciences for his discovery of crucial enzymes which are necessary for the synthesis of the bacteria Mycobacterium tuberculosis
Executive director at Navam Capital. Been a columnist for The New York Times, Wall Street Journal, Forbes and Mint
Former CEO at Emami and ex-President at Cavin Kare, Shantha Biotech and Aurobindo Pharma. Philosophical musings interest Venkat and he likes delving into Indian philosophy
The dermatology sector is estimated at $20-25 billion, with products for acne and dandruff accounting for a considerable chunk of that.
The beginning
In 2009, at the Young Investigator Meeting in Boston, an annual event offering opportunities to young researchers to work in and for India, Rajesh Gokhale and Shiladitya Sengupta got talking. "The discussion moved to how there was a systemic lack of innovation in the dermatology space for decades now. Somehow, that nascent idea fructified through the next year or so," says Sengupta, chairman of the Board of Directors at Vyome and assistant professor of medicine at Harvard Medical School.
In 2010, Vyome Biosciences was founded by Shiladitya Sengupta, Rajesh Gokhale and Rajeev Mantri. Rajesh Gokhale, the co-founder and director of the company, is also the director at Institute of Genomics and Integrative Biology, New Delhi; earlier, Mantri, also co-founder and director at Vyome, had worked at New York-based Lux Capital. N Venkat, former chief executive at Emami and president at Cavin Kare, Shantha Biotech and Aurobindo Pharma, was brought on board in 2013.
The pre-series A-funding involved a lot of bootstrapping, with Sengupta's father assembling furniture for the office, which was an ex-gutkha factory. The seed investment of $1 million came from Navam Capital, funded by Mantri's family-run, Kolkata-based investment firm GPSK Investment Group.
In 2012, through series-A funding, the company raised $3.3 million from Kalaari Capital (formerly known as IndoUS Venture Partners), Aarin Capital and Navam Capital.
With five platform technologies patented and a couple of OTC drugs recently concluding clinical trials, licensing and revenue generation is the next step. "Once licensing of the Rx and OTC products happens, revenue will start flowing. We're expecting OTC licensing in a few quarters. Rx products are still a few years down the line, as it takes longer to develop these," says Venkat, chief executive of Vyome.
Though Vyome is the first innovation-oriented company in the dermatology sector in India, it is one of the many on a global scale. Others in this space include Galderma, Allergan, Pfizer, GSK, Merck, Roche and Sanofi.
The model predominant among other smaller global players involves developing a new product to any stage - from phase I to phase-III, while bearing all the risk - and subsequently cashing out or being acquired by a larger player.
The business model entails a recursive loop of investment - licensing or partnership, product release and subsequent royalties.
"The first few years involve investment in developing platforms, products and technologies which have a value inflexion point for a licensing opportunity. Other products also reach development stage, in parallel. Therefore, it becomes a recurrent cycle of products, platform maturity, licensing and royalties," says Venkat.
Investors and analysts say it is usual for drug research companies to see large investments being sunk before recovery. Experts say costs of $6-11 million are common in developing a new product to the second phase of clinical trials.
Focus
"It's exciting to be a part of knowledge monetisation. We're combining genomics and nanotechnology to create wealth," says Raghunath Mashelkar, former director-general of the Council of Scientific and Industrial Research and part of Vyome's board of directors.
Vyome sounds upbeat about its new technology being subsumed by global consumer product brands or pharma companies. "The acne or dandruff products you see today are palliative in nature. For instance, they remove dandruff flakes instead of acting on the fungi, which continues to proliferate and facilitate flake regeneration. Our research scientifically targets the fungi. It's the science that will help us grow," says Sengupta.
The road ahead
For any innovation-driven biopharmaceutical company, scalability is a challenge, due to a multitude of factors that can stymie innovation. With two OTC products, which it hopes to license out a few quarters down the line, and a couple of Rx products in the pre-clinical stages, Vyome is looking at potential suitors by early 2016.
"It's premature to close any possibilities at this stage. However, as of now, our plan entails developing technology and licensing it to major brands. Beyond that, we will see what the future brings," says Mantri.
For Vyome, the primary challenge is the seeming lack of innovation in the dermatology sector for it to innovate and build upon. Paradoxically, this is also something it stands to gain from. If it can, that is.
EXPERT TAKE
Shekhar Mitra is former senior VP of global R&D at P&G. He also serves on the scientific advisory board of Vyome Biosciences
