What it’s like to pivot a health startup in a pandemic
From male birth control to COVID-19 trials: How a Y Combinator-backed startup spun off a new company to test a COVID-19 treatment.
In early March, YourChoice Therapeutics CEO Akash Bakshi was typing out his investor update when he tucked in a question at the bottom. His company's progress toward using niclosamide, a medication normally used to treat tapeworms, as a new kind of birth control that stopped sperm from moving was going well — the startup had just scored a new grant from the National Institutes of Health. But COVID-19 was just starting to take hold in the U.S. On a whim, Bakshi's team decided to search to see if it could work on the virus, too, and stumbled across some papers that suggested it could be a promising treatment.
The ask to investors? It would cost Bakshi's team about $500,000 to buy enough from their supplier to test it.
"It felt like we had a moral obligation or a karmic duty that, if we knew something could help, at least I'm telling the world that I think it can help," Bakshi said. "And it's on the world now — if you don't want to help me, I tried my best."
Unlike raising money for a contraception startup, some investors jumped forward to put up the money immediately. Gmail creator and Y Combinator partner Paul Buchheit told Bakshi to go all in on it, wiring the company its first check. But not everyone supported the idea: Other investors balked at what they saw as a distraction to the progress YourChoice was already making and a waste of time, Bakshi said.
He had to make a choice: pivot his company and focus on developing a COVID treatment, or stay the course with his other startup to placate investor pressure.
"It was really the struggle of: Do I appease one person or do I appease my own conscience?" Bakshi said. "I think luckily we decided it was better to move forward with where we felt we had a moral obligation."
It's a decision many health tech startups have faced since the early spring as the coronavirus pandemic spread throughout the world. Companies like Ginkgo Bioworks have refocused their efforts toward developing testing. Bucheit, the Y Combinator partner, has personally invested in at least 10 different companies that are now working on different solutions. Y Combinator lists 25 companies that are all working on projects to fight COVID. Even if the whole company isn't shifting, many health tech companies have worked to develop coronavirus-related products, like 23andMe's research on whether blood types play a role in COVID-19.
For Bakshi, his company happened to be at a good time to shift gears. The new NIH grant meant that its preclinical animal studies would continue at SRI International, a nonprofit research institute, and wouldn't wrap up for a year. So Bakshi and his co-founders, Nadja Mannowetz and Andrew Bartynski, spun out a sister company, called ANA Therapeutics, to focus on evaluating niclosamide as a treatment for COVID-19.
A turbulent path
With early investment in hand, Bakshi called and placed the order for niclosamide from a European supplier on March 12. But hours later, President Trump announced that the U.S. would ban all commercial flights from Europe, setting off a scramble to get the drug into the U.S. before the borders closed.
"We really had only closed one check that was enough to bring over overpriced niclosamide to the United States," Bakshi said. "And we're like, well, this dream can end very quickly if we don't get this across the Atlantic like right now."
After a tussle with FedEx and niclosamide getting held up in customs in Tennessee, the company was able to receive the shipment and send some to a professor in Texas to start testing. Initial indicators showed positive signs, Bakshi said, but by then, Trump had a new favorite thing to talk about: hydroxychloroquine. Suddenly, every potential investor in ANA wanted to know how well niclosamide stood up against hydroxychloroquine. After that, it was about Gilead Sciences and its Remdesivir drug.
Bakshi, though, seems undaunted going up against big pharma companies that have more capital and more people to throw at evaluating coronavirus treatments than a small startup. The big companies didn't necessarily have people focused on coronavirus before the COVID-19 pandemic, he said, so he views it as more of a level playing field than people think — minus the capital that bigger companies can tap into. He's also raising a new funding round for ANA to get its niclosamide trials up and running.
"Niclosamide has a long history of being safe and nontoxic, and has demonstrated excellent antiviral properties in the lab," Buchheit, its first investor, told Protocol. "Of course as with any new drug, there are many reasons why it might not work, but given the urgency of the situation and the lack of good treatments, I definitely think that this is one worth exploring and supporting."
Now, ANA is working to secure FDA approval for its clinical trials and expects to start introducing human patients to the trial in August. Accelerating timelines is the biggest impactthe pandemic has had on the health care industry, Bakshi said. "The timelines for development are crazily different," he said. "There was no way that we could develop our vaginally administered products any sooner than five or six years. And yet for COVID-19, we're hoping to get this into folks as early as next year. I think it makes us realize how much we can do in condensed time frames."
Bakshi hopes ANA will be able to protect against COVID and that the success of the trial will carry over into interest in the contraception business, which is still moving along on schedule. He, like many, can't see how life "goes back to normal" until there's a vaccine or treatment — probably both. Until then, Bakshi will continue working from his childhood home in Foster City, where he's quarantining with his 86-year-old grandmother to take care of her during the pandemic. And looking back, he doesn't regret his decision to move forward with the ANA spin-off — no matter the outcome.
"I think had we not done this, we would have been beating ourselves up, feeling as though we could have done something and yet we didn't," Bakshi said.
Next in Protocol's Health Care Manual: The pandemic has ushered in the future of health care, and it looks a lot like Zoom