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Start-ups

Start-ups

Venture capital for cancer research

Rigontec, a German biotech start-up, used venture capital to develop a drug that helps the immune system fight cancer cells. After only three years of development work, it was acquired by the American pharmaceutical giant Merck & Co.

Christian Schetter and Christine Schuberth-Wagner (Rigontec)
EXPERTS IN IMMUNOTHERAPY

CEO Christian Schetter and scientific director Christine Schuberth-Wagner were invested in the fight against cancer during their activity at Rigontec.

It is the kind of development that all venture capital investors dream of: started in 2014 as a spin-off from the University of Bonn, biotech start-up Rigontec was sold at a high profit to a large corporation at the end of 2017. In the start-up industry, this is called an “exit to a strategic buyer”. Apart from an IPO, the sale to a strategic buyer is one of the most popular strategies of owners and investors.

Rigontec was working in immunotherapy, currently the most promising field of cancer research. Unlike chemotherapy or radiation therapy, cancer immunotherapy involves special active substances that mobilise the patient's immune system in its battle against the disease. “The therapeutic agents make the cancer cells turn on themselves,” explains Christian Schetter, managing director of Rigontec GmbH, who successfully negotiated the deal with Merck & Co.

Although cancer immunotherapy has been around for decades and has met some measure of success in the last ten years, it was only a few years ago that the leading US research magazine “Science” announced the “break-through of the year” in this segment. All major pharmaceutical companies are looking for immunotherapeutic agents for their portfolios: Merck & Co. alone is having more than 550 studies conducted around the world in the area of immuno-oncology. Venture capital funds therefore keep an eye out for start-ups pursuing research in this field. “Our investors were also driven by the motivation to advance clinical research that could save many lives,” says Schetter, who thinks Rigontec is in good hands with Merck.

Industry leaders such as Forbion Capital Partners, Boehringer Ingelheim Venture Fund, High-Tech Start-up Fund (HTGF), NRW.BANK, MP Healthcare Venture Management, Sunstone Capital and Wellington Partners Life Sciences were among the Rigontec investors. Forbion’s involvement was financially supported by KfW which invests in venture capital funds to strengthen Germany as a technology location. KfW has also joined the German Ministry for Economic Affairs and Energy as the second-largest public investor to the HTGF.

Test tubes in a lab (Rigontec)
FOUNDATIONS OF SCIENCE

Colouring enables proteins and genetic substances to become visible.

Together, they provided Rigontec with almost EUR 30 million, which was mainly used for clinical studies and tests. A formidable amount for a German start-up: the market in Germany is developing slowly. The investors have now reaped their rewards: Merck & Co. paid EUR 115 million for the company Another EUR 349 million will follow if Merck & Co. achieves certain clinical and commercial results with Rigontec's drugs.

Although the final results will not be available until 2019, the exit is already a huge success: “The sale of Rigontec is the perfect example of a successful exit. The company increased its value drastically within a very short time. For the investors, this is – apart from the high profits – evidence that they made the right investment decision,” says Sonja Höpfner, Deputy Spokeswoman of KfW.

Schetter is convinced that Rigontec's technology is unique worldwide. However, the molecular biologist did not expect the company to be sold so quickly. And it's not even his first success. Prior to his current role, he was CEO of Fresenius Biotech GmbH for six years. The new anti-cancer medicine launched by the company even received an award. Under Schetter's guidance, Fresenius managed to successfully sell its biotech segment. Prior to that, he was a member of the management team at Coley Pharmaceutical – a company that owes its name to William Coley, a pioneer in cancer immunotherapy. The company no longer exists: “Unfortunately our medicine failed in an important study for several reasons.” But ten years of research were not for nothing: in 2007, the company was bought by the pharmaceutical giant Pfizer.

Rigontec laboratory
SHEDDING LIGHT

Researchers use a transilluminator to detect molecules. They are wearing orange filter goggles, which produce a visible contrast between the light of the transilluminator and the tinted molecule.

Rigontec was named after RIG-I, a receptor of the immune system. As soon as certain viruses enter our body, it activates our defensive forces. The founders of Rigontec, two professors from Bonn, discovered how RIG-I identifies the viruses. “The receptor recognises their RNA, a DNA copy that usually transforms genetic information into proteins,” says Schetter. RIG-I takes advantage of the special characteristics of the viral RNA. As the receptor exists in all cell types – including cancer cells – the scientists wanted to use their discovery to combat cancer and developed the active substance RGT100, which activates RIG-I as the only immune receptor. This minimises the side effects of the therapy.

“Our active substance imitates the virus RNA. In contrast to the virus, however, it is not pathogenic,” explains Schetter. “If this RNA is introduced into the tumours, RIG-I will recognise them and drive the tumour cells to natural cell death. At the same time, the patient's immune system is programmed to fight the tumour cells, much like a software application.”

Source
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The article appeared in VC "Financing Innovation" (2016).

To German edition

The active ingredient could be used to treat various types of tumours and their metastases. The scientists have also already managed to gather data showing that the new therapeutic agents generate immunological memory. As a result, patients may also be protected against new tumours from forming over the long term.

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All United Nations member states adopted the 2030 Agenda in 2015. At its heart is a list of 17 goals for sustainable development, known as the Sustainable Development Goals (SDGs). Our world should become a place where people are able to live in peace with each other in ways that are ecologically compatible, socially just, and economically effective.

Published on KfW Stories: 5 September 2017, last updated 7 February 2019.