12 San Diego Life Sciences Startups to Watch in 2016

Xconomy San Diego – A whole new crop of life sciences startups are germinating in San Diego, which is good news for the regional cluster of established companies that are focused on innovation in biotechnology, medical devices, healthcare technologies, and medical diagnostics. Renewal is crucial to sustaining and growing an innovation cluster like San Diego’s life sciences community.

But identifying a dozen local startups to watch in the life sciences has been a far more challenging task than selecting the 12 tech startups that made Xconomy’s list of local tech companies to watch in September.

For one thing, life sciences startups typically take far longer to go to market, with regulatory requirements that often take a decade or longer to meet.

Life sciences startups also require far more invested capital just to demonstrate a proof of concept. A group of venture investors that has invested $40 or $50 million in an early stage biotech has essentially validated the company and its technology. It’s my intent here to highlight the other, less visible, life sciences startups.

So the criteria used here were intentionally fuzzy. Most of the companies on this list were founded in the last five years. Most have raised less than $25 million from investors. None of them are public companies.

San Diego’s Amplyx Pharmaceuticals, a frugal drug development company focused on improving existing cancer and anti-viral drugs, would have been a good candidate to make the list. But Amplyx raised $40.5 million from several venture investors in November. (In the preceding nine years, Amplyx had subsisted on $7.7 million in grants and some angel funding.) Crinetics Pharmaceuticals, which scavenged lab equipment for six years, fell off the list in the same way—after raising $40 million.

Some companies made the list based on the strength of their startup leadership. Avelas co-founder Roger Tsien was a 2008 Nobel Prize winner in chemistry for his discoveries in fluorescing peptides. Phil Baran, a co-founder of Sirenas (previously known as Sirenas Marine Discovery) and a professor of chemistry at The Scripps Research Institute, was named a MacArthur fellow in 2013 for his work in synthetic chemistry.

Some companies made the cut based on the strength of their board members, who are often also investors or well-connected to venture investors. Dan Bradbury, the former CEO of San Diego’s Amylin Pharmaceuticals and an active biotech investor, is on the board of both DiaVacs and Renova Therapeutics.

Some made the list based on their innovation. CEO Michael Newman, who is the CEO and lone employee of Decoy Biosystems, said he founded the company to revive some very old research exploring the potential of using killed bacteria to spur the body’s immune system to fight cancer. “Today, cancer immunotherapy is the hottest field in the world,” Newman said. “And what people don’t realize is that it was invented in the 1800s.”

One of the most surprising discoveries that resulted from my quest to identify some of San Diego’s most-promising startups was the sheer number of early stage companies that are germinating here.

In my effort to cast a wide net, I talked with a number of life sciences investors in San Diego. I met with Kara Bortone, a scientific scout and portfolio manager for Johnson & Johnson Innovation and the JLABS incubator in San Diego. I talked with service providers who work with early stage biotechs. Biocom, the San Diego-based industry group, provided a spreadsheet that listed more than 40 local life sciences startups.

By the time I was done, my list had close to 80 companies.

And then the great winnowing began, followed by some immediate second-guessing. As one VC investor put it, “I had no idea there are this many new companies in town. How come you didn’t include [my portfolio company]?”

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