A higher bar for investment is a credit to biotech, says Maraganore

Alnylam veteran John Maraganore on The BioCentury Show: innovation, investment and navigating headwinds facing industry

“The bar has gotten higher because science has gotten so much better,” John Maraganore said on The BioCentury Show. Reflecting on the capital markets and the state of innovation, the founder and former CEO of Alnylam Pharmaceuticals Inc. (NASDAQ:ALNY) painted a picture of a robust ecosystem fueled by sprawling innovation, where the higher scrutiny by investors will serve the industry well.

In a broad-ranging conversation, Maraganore gave his views on the innovation and funding landscape, geopolitical issues facing the industry and the outlook for the next generation of leaders. Since leaving Alnylam at the end of 2021, Maraganore has joined Arch Ventures, several biotech boards, and taken an active role in mentoring programs and non-profit foundations. He is also on the board of BIO, where he was chair in 2017-19. 

Maraganore said that though the funding environment is starting to improve, investors are being far more discerning than previously, “and I think that’s a good thing.” 

“Companies truly need to be developing distinct, differentiated and high-impact medicines. And if they’re not doing that, they’re not going to get funded. Plain and simple,” he said. The crowding into specific technologies or targets may continue, and it’s not necessarily adverse, he said, because the system will filter for the best science. “It’s a good thing to allow that to happen, to have a framework, where larger numbers of innovators come forward with their big ideas. And then we see which ones are really going to be successful at the end.”

For companies with novel modalities, they don’t have the luxury of testing the technology against an established target to demonstrate proof of principle, they need to take both modality risk and target or indication risk. 

“It’s not that easy anymore,” said Maraganore. “You have to absolutely marry up your modality approach — where you want to make a difference — with opportunity, with the unmet need, where you can excite investors around the potential of what you’re going to do. And if you can’t make that case, you’re going to have a hard time getting funded.”

Maraganore also said the concerns about the effects of the Inflation Reduction Act “are very real,” but that the industry’s resilience would allow it to withstand the blow. He is hopeful for changes to the act to soften the small molecule penalty.

He also raised concerns about the effect of the Biosecure Act and the effect it would have on the global supply chain.

“I think it will take decades to nationalize a supply chain, and I’m not even sure a nationalized supply chain really is the right answer,” he said.

BIO has an important role in pushing for a solution that will serve the national security interest, while retaining the need to access raw materials and API. “It has to be done very, very carefully so that we don’t ultimately disrupt access of medicines for patients,” he said.