Flagship Pioneering's Valo Health Secures $110 Million in Extended Series B Funding

Since its establishment in 2000, the investment firm Flagship Pioneering has been instrumental in the creation of numerous life sciences companies. Over the past 15 years, David Berry, as a general partner at Flagship Pioneering, has spearheaded the launch of over 30 companies, with five currently publicly traded: Seres Therapeutics, Sensen Bio, Evelo Biosciences, T2 Biosystems, and Axcella Health.

Berry's Unique Approach to Company Leadership

Typically, Berry assumes the role of a company’s initial CEO, subsequently transitioning out of the leadership position within approximately 18 months. However, he currently holds no intention of relinquishing his role as CEO of Valo Health. This Boston-based drug discovery company, founded three years ago and employing 110 individuals, is viewed by Berry and Flagship as potentially becoming one of the firm’s most significant ventures.

Valo Health's Potential and Funding

This assessment is particularly noteworthy considering Flagship’s prior incubation of Moderna, an 11-year-old company now valued at a $50 billion market capitalization, largely due to the success of its coronavirus vaccine. Reflecting confidence in Valo’s potential, the company today announced an additional $110 million in extended Series B financing from Koch Disruptive Technologies.

This extension brings the total Series B round to $300 million, and the overall funding raised by the young company to over $450 million.

Standing Out in a Competitive Landscape

With hundreds of drug discovery companies leveraging advancements in artificial intelligence, machine learning, and computational power, the question arises: what distinguishes Valo Health? Insights from a recent conversation with Berry are presented below, edited for brevity and clarity.

TC: The Uniqueness of Valo's Computational Platform

TC: Valo aims to expedite drug creation through its computational platform, Opal, striving for greater speed and efficacy than its competitors. Can you clarify for those outside the field what makes this platform uniquely valuable?

DB: From the outset, our operations were conducted on a different scale compared to previous Flagship Pioneering companies. Generally, Flagship companies receive an initial commitment of approximately $50 million. However, recognizing the vast opportunity presented by Valo, we initiated the process by securing external financing partners as part of a Series A round totaling around $100 million.

Furthermore, our approach to research and development is characterized by its breadth and systematic nature, contrasting with the more targeted strategies often employed. Historically, life sciences companies have been evaluated primarily based on their leading therapeutic asset. However, if one possesses the capacity to alter the scope, scale, potential, speed, probability of success, and cost of drug development, the resulting entity will not resemble a conventional therapeutics company.

TC: Tackling Multiple Therapeutic Areas

TC: Valo’s simultaneous focus on multiple therapeutic areas – oncology, neurodegenerative diseases, and cardiovascular diseases – is a key differentiator. How are you managing such a broad scope of work?

DB: The traditional biopharma model operates as a fragmented, point-to-point system. Up to 15 different groups contribute, passing results between each other, often over organizational boundaries. This inherent disconnection is problematic. Reliance on mice, cell lines, and extracted organs fails to accurately represent a complete, living human system, or the manifestation of disease within that context.

We are pioneering a transformative model, powered by high-quality, human-centric data analyzed in an integrated, yet modular fashion. We’ve established a unified architecture, utilizing consistent species, decision-making criteria, and key performance indicators (KPIs) throughout the entire R&D process. This shared computational core enables continuous learning and refinement. We adhere to regulatory requirements, but this process simultaneously enhances our data and maintains a human-centric perspective. For instance, identifying a new target in cardiovascular or neurodegenerative disease is based on our human data, not animal models or laboratory-grown cells.

TC: The Source and Quality of Human Data

TC: Where is this human data sourced from? Is the data used by Opal superior or distinct from that utilized by others?

DB: While we have not yet publicly disclosed the origins of our data sets, we are confident that their scale and quality are exceptionally high. We have not encountered comparable data sets in terms of scope and size. We have announced a limited subset of our data lake through a partnership with Global Genomics Group, providing access to a cardio-metabolic data set.

TC: Breakthroughs and Progress

TC: After several years of work, have you achieved any significant breakthroughs?

DB: I believe our efforts over the past two years have established a robust technological foundation for transformation. We’ve launched four therapeutic programs, each demonstrating our ability to rapidly develop therapeutic candidates and overcome historical obstacles that previously hindered such development – often within weeks.

TC: A Specific Example – NAMPT

TC: Could you elaborate on one of these therapies to illustrate your point?

DB: One program, focused on NAMPT, targets a potent cancer pathway. However, it’s known to cause retinal toxicity. Our goal was to harness the therapeutic benefit while preventing the molecule from reaching the retina, requiring a precise molecular design. Within a couple of weeks, we engineered a molecule with sufficient differentiation in blood flow to the eye, minimizing potential adverse effects.

TC: Timeline to Market

TC: Are any of these candidates nearing market availability?

DB: While I anticipate their eventual market entry, they are not yet at that stage. With the current financing, we expect to advance molecules into clinical trials and ultimately bring our developed drugs to market.

TC: Commercialization Strategy

TC: Will Valo market these therapies independently, or will they be sold to a larger pharmaceutical company?

DB: Both options remain viable. Developing a diverse portfolio of therapeutics provides us with flexibility in shaping our ultimate business model.