What is a Virtual Biotech?

Described as companies that mainly manage and direct rather than hire and build, Virtual Biotech companies discover new opportunities internally or in license, using collaborations, contracts, and strategic alliances. Virtual biotechs typically have only a few employees, no laboratory, and contract out all work. A small management and consulting core coordinates and monitors a set of contracted service providers to develop one or several drug candidates.

Virtual biotechs outsource their research to contract research organizations (CROs), enabling researchers to work remotely. As early as 1993, Nature presented the notion of virtual biotech companies. Dr. Paul Abrams, who has since dedicated over thirty years to cancer research, was president and CEO of virtual biotech NeoRx. The objective of virtual biotechs was to refrain from performing pharmaceutical functions on a large scale, compartmentalizing, or duplicating skills as did traditional pharma organizations. NeoRx reported improved output while expenses were reduced by 40%.

According to Abrams, key strengths of virtual biotechs include:

• having the expertise and flexibility to adapt to shifting priorities
• the ability to change focus without requiring separate, permanent, and expensive infrastructure
• requiring less total capital than traditional biotech companies
• offering greater returns on investment
• decreasing risks associated with a fully integrated strategy.

Early Successes of Virtual Biotechs

A landmark example of a successful virtual biotech was X01 Ltd, a spin-out company from the University of Cambridge and Cambridge University Hospitals. X01 developed a new anticoagulant drug as a new class of anticoagulation drugs entirely through the work of CROs. Being a virtual biotech allowed it to move fast, catching the attention of Janssen Pharmaceuticals, which acquired it within 23 months of its inception.

Early Examples of Virtual Biotechs

1. Big pharma & virtual pharma

The first example of big pharma founding a virtual pharmaceutical company was Roche’s Protogidm Ltd in the 1990s.

2. Virtual biotech start-ups

More than a decade ago, Tioga Pharmaceuticals was a San Diego-based virtual biotech with two full-time employees and a sole drug candidate for irritable bowel syndrome (IBS). Around the same time, Cambridge, MA-based Atlas Venture invested in two virtual biotech start-ups with two full-time employees each and virtual strategies to advance their assets.

3. Virtual drug discovery

Virtual biotech Nimbus partnered with Schrödinger for privileged access to its WaterMaps tech. Access to this tech helped Nimbus hunt for new small-molecule drugs.

How Virtual Biotechs Are Changing Drug Discovery

The goal of a virtual biotech is to reach fast PoC efficiently, which is enabled by the lack of costly corporate infrastructure.

1. Lean structure

Virtual biotechs differ from other R&D companies, e.g., biotech start-ups, because they solely comprise experienced teams of managers. Intensive outsourcing allows them to focus on their core competencies to ensure an environment conducive to fast and rigorous decision-making.

2. Lack of internal production or development facilities

Virtual biotechs are distinct from small biotech start-ups, which maintain internal R&D labs and other functions. Virtual biotechs enjoy low overhead costs as they do not have expensive fixed assets. Fleming (2022) observed that in the 1990s, when companies had their own internal labs, the cause of failure was often foreclosure by landlords.

3. Outsourcing

Outsourcing to CROs removes dependence on university lab space, government funding, and technology transfer processes for scientists. Virtual biotechs have the flexibility to select appropriate resources and contractors for every step of drug development. Further, contracts with external providers are typically short-term, allowing easier reallocation of resources if the team decides to pull the plug from projects.

4. Funding

Requiring just investor funding, individuals with limited access to capital, e.g., scientists, entrepreneurs, professors, and graduate students, can aspire (and achieve) founding their own companies to develop biotech products. An example is the foundation of academic spin-off companies like X01 Ltd of the University of Cambridge and Cambridge University Hospitals.

5. Technology

Virtual biotechs do not rely on large workforces, so technology is deployed to fill the gaps. The example of Reverie Labs demonstrates how virtual biotechs, which focus on developing and applying ML algorithms, can improve the identification of drug candidates.

6. Focus on Drug Development

Virtual biotechs focus on drug development rather than commercialization. Their main advantage is their rapid development speed and efficiency due to their fast-to-PoCs strategy.

Breaking Boundaries

How virtual biotechs are breaking boundaries in drug discovery and development.

The Parkinson’s Virtual Biotech

The Parkinson’s Virtual Biotech is a new approach to drug development in the charity sector. As with other virtual biotechs, it has low fixed costs – with no full-time staff or buildings. The Virtual Biotech team, led by pharma and biotech experts, reviews and curates the most promising research on Parkinson’s Disease from the potential thousands of studies. The Parkinson’s Virtual Biotech invests in the selected projects directly, provides oversight, and identifies the right global partners. Parkinson’s Virtual Biotech has received more than $19 million since it started in 2017, and in 2022, the Parkinson’s Foundation announced that it would invest a minimum of $3 million.

Reverie Labs

Founded by two students who met on their first day of college, Reverie Labs applies machine learning (ML) to biology, has no internal lab facility, and received interest from Roche and Genentech within three years of its inception. Estimating that big pharma takes $100 million and two years to choose a drug candidate for clinical trials, Reverie realized that new computational tools were needed. Focusing on developing ML algorithms to improve the identification of potential drug candidates, Reverie’s unique technology platform yielded candidates that can penetrate the blood-brain barrier to target brain cancer. Cumbers (2020) views this start-up as the next generation in precision medicine.

Conclusion

To continue impacting drug discovery and development, virtual biotech companies should remain small to preserve their highly efficient edge, have low fixed costs, and be led by a skilled and experienced core management team.

Empowering Drug Discovery Through Modern CRO Services and Technology

At Vial, we stand at the forefront of reimagining drug discovery through our full-service Contract Research Organization (CRO) powered by innovative technology. With virtual biotechs and the clinical trial landscape rapidly evolving, our therapeutic expertise and clinical research services can drive transformative changes.

Clinical Research Services: Our CRO services can be tailored to meet the unique needs of virtual biotechs, enabling them to accelerate their drug discovery programs with efficiency and precision. We offer end-to-end support, from preclinical research to clinical trials, ensuring that every stage of the development process is seamlessly executed. Our experienced team of ClinOps experts and researchers collaborate closely with virtual biotech companies to design and execute studies that yield high-quality data and insights.

TrialOS: Technology is at the heart of our approach. Our modern, intuitive technology platform empowers virtual biotechs and other drug development companies to harness the full potential of their research. TrialOS combines modern, intuitive eSource, EDC, and ePRO into one connected system, streamlining site processes and enabling considerable efficiencies. With advanced data analytics, real-time monitoring, and predictive modeling, we provide our clients with the tools they need to make informed decisions at every step.

Therapeutic Expertise: Vial’s expertise spans across a wide spectrum of specialties and therapeutic areas, including Dermatology CRO, Ophthalmology CRO, Oncology CRO, Gastroenterology CRO, Neurology CRO, Cardiology CRO, Medical Device CRO, Rare Disease CRO, and Digital Therapeutics CRO. This comprehensive coverage reflects our dedication to addressing the unique challenges and intricacies that each therapeutic area presents.

Introducing Battery Bio: Fueling the Future of Drug Discovery

In line with our commitment to innovation, we’re excited to introduce our drug discovery arm, Battery Bio. Battery Bio represents the convergence of hyper-scalability and artificial intelligence (AI), resulting in a biotech entity that’s poised to reshape the industry.

Powered by AI: Battery Bio harnesses the power of AI to navigate the complexities of drug discovery. Our AI-driven algorithms analyze vast datasets, including insights from previous learning, generate novel molecules, and explore uncharted structural possibilities. This tech-forward approach greatly expedites the path from concept to drug candidate.

Hyper-Scalability: The virtual biotech landscape demands adaptability and rapid scaling. Battery Bio is designed for immense scale, enabled by Vial’s lower clinical trial cost structure. By leveraging this cost efficiency, we can take bold strides towards scientific discovery.

Want to learn more about Vial or Battery Bio, connect with a Vial team member today!