CEO Martin Lehr featured in Life Science Leader Magazine

Life Science Leader - CEO Corner

My Life As A Recovering VC, Zigging Where Others Zag

In 2015, my VC career at Osage University Partners had come to a crossroad. I had spent the last six years working 80-hour weeks in the pursuit of becoming a general partner (GP) at the firm. One of the key steps toward becoming a GP is to take active advisory roles with portfolio companies. This means serving on boards and providing sound counsel to management teams. My first several board meetings were incredibly exciting and educational, but that initial wave of euphoria quickly turned into guilt.

While joining a board is supposed to be a badge of honor for most young Vcs, I felt like a fraud. Who was I to opine about drug development and strategy to a CEO with 25+ years’ experience?

It was at that moment that I decided I could no longer pursue becoming a GP. I strongly believed that if I ever wanted to become a truly great venture investor and portfolio company board member, I would need to walk in the shoes of a biotech CEO.

From that moment, I had a choice: I could join an existing startup in a junior role and grow with the company or start my own biotech. The former provided mentorship and job security, while the latter provided greater immediate career upside, but also abundant risk.

To help me weigh my options, I consulted multiple mentors, including Bob Adelson of Osage University Partners, Neal Walker of Aclaris Therapeutics, and Mel Sorensen of Galera Therapeutics. The feedback I received was consistent — I was an entrepreneur who had the startup itch. At the time, I really had no idea what my mentors were talking about because I had always thought of myself as an investor and not an entrepreneur.

But now that I had decided to become an entrepreneur, I had to choose the focus of my company.

A VIRTUAL START IN ONCOLOGY

As a VC, I generally disliked platforms because they are capital-intensive, which in turn incentivizes companies to enter into distracting business development partnerships. On the other hand, single medicines generally have too much binary risk for most investors. My plan therefore became to meld the two by creating a disease-specific platform that would acquire individual medicines against known targets. My background is in oncology, so it seemed natural to choose oncology as the company’s focus. To conserve capital, we would start as a virtual company and convert to bricks and mortar as the company’s pipeline and capital resources matured.

To jump-start this effort, I raised almost $10 million over 18 months in 2016 and 2017. Raising this capital was a gargantuan task as I was a 33-year-old first-time entrepreneur with no prior pharmaceutical drug development experience. Fortunately, there were some fantastic early believers in Context, including Loeb Capital, an NYC-based family office with 30+ years’ experience investing in biotech companies.

My board of directors was instrumental during this time, whether it was accompanying me on fund-raising pitches or providing feedback on pitch decks. Drawing upon my former VC network, I recruited talented current and former executives who had a blend of large biopharmaceutical and startup biotech experience. It also did not hurt that several of my board members were well-known to venture investors.

With the capital in hand, I needed to find oncology medicines that fit within my bank account. This meant the oncology medicines would have to be in early preclinical development or unloved by other medicine prospectors.

As I searched for medicines to acquire, I was inundated with news articles about immuno-oncology. My belief was that the area had become overheated with too much capital chasing the same therapeutic targets and cancers. This, in turn, became my thesis: The cheapest oncology medicines for me to acquire were likely those that targeted cold tumors because those tumors are inherently nonresponsive to immuno-oncology.

The largest class of cold tumors by addressable patients are the hormone receptor positive cancers, which include breast, prostate, and ovarian. While the first immunotherapy, Provenge, was approved in prostate cancer, it is not a particularly effective therapy, and no other immuno-oncology therapies have been approved in the hormonal space since.

Over a six-month period, I reviewed over 50 medicines for hormone receptor positive cancer. Upon speaking with these companies, I learned that they, too, felt a market dislocation driven by capital-intensive immuno-oncology companies, and that despite having excellent medicines, few investors were knocking on their doors. The CEOs of these companies felt that investors were so focused on immuno- oncology that they had totally lost touch with the market potential and unmet needs in the hormonal space. In several instances, CEOs told me that investors would routinely confuse hormone receptor positive breast cancer with triple negative or HER2 positive. Yet, those same investors could script the entire treatment algorithm and the decision points for when to use PD-1 therapy in non-small cell lung cancer.

CONVINCING INVESTORS

Internalizing this information, I realized I was going to have a steep hill to climb with investors. Identifying and acquiring medicines would be relatively facile; however, convincing investors that the medicines were valuable was going to be a real challenge. I was going to have to spend a tremendous amount of time educating investors on the market potential and unmet need in the hormone receptor positive space. Teaching investors is always a dicey proposition because it detracts from painting a full value proposition beyond just market needs, and runs the risk of insulting the investors’ intelligence.

To help win investors over, I needed to put together a strong team that could not only help me build Context into a clinical development organization, but also provide additional validation of my strategy and assumptions.

Through Jeff Hatfield, a mentor of mine and current Zafgen CEO, I connected with Scott Applebaum, Rich Morris, and Deepak Lala, all of whom had previously worked at Vitae Pharmaceuticals, which had been acquired by Allergan. The three men wanted to continue working together, so they joined Context and, in doing so, brought instant credibility and operational sophistication to the company.

Just before the 2018 JP Morgan conference, we were able to acquire Apristor, a promising investigational breast cancer medicine. Apristor was the unloved medicine I had been looking for, and it has been essential to Context’s growth. The medicine facilitated the company’s transition from preclinical to clinical and will transition us again in a few years from clinical to commercial.

DON’T JUMP TO CONCLUSIONS

Being CEO during Context’s meteoric growth has taught me a lot of things, the most important of which is not to jump to conclusions because most major events in a startup’s journey are driven by luck — good or bad. I remember one particularly bad pitch in front of a well-known Boston VC who really knew his breast cancer stuff. We walked out of the meeting so beaten up that our team was confident Apristor was worthless and Context was done. I wrote the VC a thank you note and never expected to hear back from him. To my surprise, I received an immediate response requesting our team to present in front of the fund’s partnership. I was relieved that I had kept my cool during the meeting and was gracious afterward. Never taking anything for granted enables me to stay level-headed and to keep our team focused on what matters most — developing drugs that can have a meaningful impact for patients.

MARTIN LEHR is CEO and cofounder at Context Therapeutics, a clinical-stage biopharmaceutical company dedicated to developing novel medicines for hormone receptor positive cancers.

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