Behind the Build: Q&A with Stephen Smith, NOCD

Colored by his own experience with OCD, Stephen Smith helped create NOCD, a digital health startup to address this chronic and severe psychiatric condition that affects one in 40 people, which is over 180 million people globally.

NOCD is dedicated to helping people with OCD and related conditions receive effective, affordable, and convenient treatment. Therapy is delivered through a virtual platform, which offers members live video sessions with a licensed therapist who specializes in Exposure and Response Prevention (ERP) therapy –the gold-standard treatment for OCD. The platform also offers interim support between sessions from peer communities and self-help tools. It’s a model that Smith wishes he had access to when he was first navigating the disorder.

Smith explained, “I realized that my journey with OCD sadly was the norm, not the exception, and it didn’t have to be that way, considering how effective ERP can be for most with the condition.” In ERP therapy, an individual is encouraged to confront the stimuli that trigger distress related to their obsessions, while also resisting the urge to perform compulsions to reduce that distress.

As the success of ERP often depends on consistently practicing exposures outside of therapy sessions, Smith identified that “the problem was operational in nature, not clinical, which meant it could be solved.” That was the catalyst for the inception of NOCD, and an on-demand platform was developed to identify, engage, and manage people with OCD more effectively, affordably, and conveniently.

What motivated you to start NOCD?

I didn’t start experiencing severe OCD symptoms until I was a sophomore in college. Prior to my OCD onset, life was great. I was playing quarterback at a small university in Texas, doing very well academically, and thriving socially. However, my life changed on a dime once I returned home to the Chicagoland area for summer break. One evening, I started having strange fears that made me question my core values and character. Unlike other fears that naturally went away over time, these were different. They felt stuck in my head, and the harder I tried to make them go away, the worse they became. Because I didn’t realize that these were hallmark OCD symptoms, I sought help from a generalist psychologist in my area. He misdiagnosed and mistreated me, teaching me strategies that weren’t just ineffective but were harmful in retrospect. I got worse and saw several other providers who similarly misdiagnosed and mistreated me, causing me to become constantly distressed, develop severe depression, halt my football career, leave school, and eventually become housebound.

While housebound, I spent most of my time compulsively searching Google, to disprove my recurring, unwanted, fears and relieve my debilitating anxiety. This put me in a position to find a forum for other people going through the same experience. They defined their symptoms as OCD and shared how they regained their life by doing ERP Therapy. I felt like I had a breakthrough and immediately searched for ERP Therapy. That’s when I ran into a whole other set of barriers: There was only one licensed therapist in my area who specialized in ERP, and it cost over $300 per session to work with her. Moreover, she had a seven-month waitlist, preventing me from getting help even if I could find a way to pay for the care. It was a disaster, but a family member helped me eventually get off the waitlist, cover the cost of the treatment, and see the provider. The experience completely changed my life. The ERP specialist diagnosed me with OCD, started me on ERP Therapy, and helped me see transformational results after only a handful of months. The progress allowed me to eventually return to school, restart my football career, and finish my degree. While at school, I had an opportunity to reflect on my journey, ultimately forming my vision for NOCD.

What differentiates NOCD from other telehealth providers in the industry? In what ways have you achieved success where others in the field have fallen short?

NOCD is the only OCD-specialty provider in the industry that accepts insurance for over 140 million Americans in all 50 states and has a wait time of less than 7 days on average. Further, we offer care that is a hybrid of “tech and touch,” an integrated treatment experience that helps people not only during sessions, but also between sessions when their therapist isn’t available. Consequently, in the largest peer-reviewed OCD treatment study ever conducted, NOCD Therapy was proven to drive significant reductions in OCD severity in half the amount of time than standard ERP Therapy.

What’s been the most rewarding part of your tenure with NOCD to date?

One of the most rewarding parts of my tenure with NOCD is seeing the outcomes we generate for our members, particularly their personal anecdotes because they are a testament to the profound impact of our efforts. OCD can feel really isolating and we make it a priority to bring together the OCD community so that no one feels alone. Also, it’s been very rewarding watching several people on our team develop professionally over the years. We’ve had people who joined the company out of college who are now directors or VPs. They’ve flourished here, and they’ll be able to work anywhere they choose down the road.

How would you describe your leadership style?

Although my sports background makes me competitive, I pride myself on being involved. My style is to form strong relationships with people on our team at all levels, so I can ensure they feel happy, healthy, and properly supported. I try to lead by example and push the tempo operationally, so people can be in a situation that allows them to achieve beyond their personal expectations and move mountains in the industry.

What’s one lesson you’ve learned so far as Co-Founder and CEO?

As Co-founder and CEO, there comes a time when the success of the company is completely based on how well key people in the company perform. Therefore, it’s up to me to not only find excellent talent but also to groom and develop talent.

What does the future look like for NOCD?

F-Prime has been crucial in helping my team and me understand how to scale NOCD in such a way that it withstands the test of time. We have “product-market fit,” with patients, providers, and payers, so now we’re focused on efficiently scaling to reach millions of people globally in need of evidence-based care.

Our company is excited about the opportunity to scale with partners who are interested in identifying people with OCD and related conditions. For instance, we would like to make at least one preferred psychiatrist partner in each U.S. state that we serve, to allow us to expand medication management operations. We don’t offer medication management services, for context. Seeing our members get better makes me most hopeful about NOCD’s future—many of them not only experience life-changing outcomes but sometimes even life-saving outcomes.

What’s the best piece of professional advice you’ve ever received?

Build a product that people don’t just like, but love. It is the key to building a generational company. We take that advice seriously every day at NOCD.

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Tracking the Industry Rebound with the F-Prime Fintech Index

Introducing our upgraded tool for tracking public fintech markets

Last month, we launched our new version of the F-Prime Fintech Index. Users can now explore:

Adaptive visual multiples and benchmarks
Head-to-head company comparisons
Adaptive sector and vertical-specific benchmarks
Time series of historical metrics by sector and revenue growth
Company and sector comparisons by revenue, growth, margins, multiples, and more.

Using these new tools, we wanted to share some key insights.

Fintech is Recovering

While the F-Prime Fintech Index took the steepest decline of all the indexes we’re tracking in 2021 and 2022 — plummeting 72% in 2022 — it has also experienced the sharpest rebound over the last 12 months, climbing 67%. While this is still far from its peak, fintech businesses continue to grow and we expect to see more IPOs return to the market over the next few years.

f-prime fintech index

In terms of market capitalization, Shopify, Paypal, MercadoLibre, Nubank, and Square are all leading the F-Prime Fintech Index. These companies are also top contenders for revenue.

f-prime fintech index company comparison

For the top ten companies in the F-Prime Fintech Index, median growth rate remains stable at 57 percent despite the changes in valuation.

growth rate company comparison f-prime fintech index

Meanwhile, there has been a large recalculation of revenue multiples. Median growth rate companies (those that grew LTM revenue by 20-40 percent) are now trading at 5x. Throughout 2020 and 2021, they regularly traded at more than 10x.

multiples f-prime fintech index

Payments

f-prime fintech index

FIS, Paypal and Adyen have the largest payment volume, with $2.2T, $1.4T, and $829B respectively.

f-prime fintech index

Meanwhile, MercadoLibre, Shopify and dLocal have the highest take rate.

f-prime fintech index

Finally, dLocal, Marqeta and PagSeguro top the TPV growth chart.

Banking and WAM

In terms of users, disruptors like Nubank and Nerdwallet are catching up to large incumbents like Chase. Their growth rates are high — 33 and 7 percent, respectively — with considerably lower CAC.

f-prime fintech index

Of course, Chase clearly has a much, much higher market cap — $410B vs $37B for Nubank — as it can extract more value with multiple lines of business, the most profitable of which are Consumer & Community Banking and Asset & Wealth management. It remains to be seen if the challengers can monetize users as successfully as incumbents.

f-prime fintech index

Despite an ongoing “crypto winter” that has reduced the number of users and overall holdings for companies like Coinbase, crypto companies are still managing large numbers of both. Meanwhile, equity trading disruptors like Robinhood are also quickly catching up to traditional incumbents like Charles Schwab in terms of number of users, with 15.9M vs 34.1M and a 34 percent growth rate. At the current rate, Robinhood could eclipse Charles Schwab’s user numbers by 2026.

However, much like in the banking sector, incumbents like Schwab retain considerably higher AUM and can monetize users more effectively. It remains to be seen whether challengers like Robinhood can challenge incumbents in terms of monetization.

Explore the Index

The F-Prime Fintech Index is a free resource, and a great place to see what’s really going on in the industry. Questions? Insights? Get in touch here.

Fintech in Q3 — And Loads of New Functionality for the F-Prime Fintech Index!

Profitable Fintechs That Demonstrate Sustained High Growth Are Rewarded With Big Multiples in Q3. The Rest — Not So Much.

Headline: This quarter, we wanted to show how the Index has performed over the past year. After the significant decline in fintech stocks alongside the broader tech sector in 2021 and 2022, fintech disruptors have quietly recovered a lot of ground over the last twelve months. The F-Prime Fintech Index is up 80%+ LTM, though still ~60% off its 2021 highs. The F-Prime Fintech Index continues to outperform other indexes we’re tracking: the Emerging Cloud Index was up ~6%, Nasdaq grew ~27%, and the S&P 500 climbed ~19% over the past year.

Despite a year-to-date rebound, the F-Prime Fintech Index lost $74B in market cap in Q3, with the median market cap decreasing from $2.8B to $2.4B. Payments companies Adyen, Shopify, and Block drove 75% of the decline, losing $31B, $13B, and $13B respectively in market capitalization in the wake of earnings and profitability misses, plus headwinds in the overall market.

Multiples: Companies that continue to grow rapidly (that is, 40%+ YoY) have seen an increase in multiples to 5x, up from 3.8x last quarter. Investors are rewarding sustained high-growth with higher multiples — a reversion to historical valuations and a change from our last update. For the first time since Q4 2021, high-growth companies are garnering higher multiples than medium growth companies (see the flip in the chart above), despite the fact that most have not achieved profitability.

However, most high-growth companies are still trading significantly below their 2021 multiples, on average reaching ~40% of their Q4 2021 multiples. A few companies have nonetheless exceeded their 2021 multiples, rewarded for their sustained high growth and profitability. Well done, Wise — 72% YoY growth and 12% profit margins.

By sub-sector: Sectors that experienced significant valuation re-ratings in 2022 saw the biggest bounce back in Q3. Multiples in the lending vertical rebounded from 1.1x in Q4 2022 to 6.1x this quarter. Category leader Affirm increased to 6.8x from 3.7x; however, removing Funding Circle from the Index and Lufax’s lack of multiples (due to its negative enterprise value) account for ~50% of the increase in average lending multiples.

Macro and real-estate sector concerns continue to weigh on the proptech vertical which is still trading at ~1x, though better than 0.5x at the beginning of the year. Meanwhile, all proptech companies in the F-Prime Fintech Index saw multiples increase, with Blend seeing a jump to 2x from 0.8x.

While the durability of payments businesses has garnered stable multiples (4.5x for the past year), a few — Shopify, Flywire, Mercado Libre, Remitly, and Wise — have seen improvements in multiples. Likewise, B2B SaaS companies have continued to attain the highest multiples (more details below).

Index removals: While M&A activity continues to increase in both public and private markets, no F-Prime Fintech Index companies were acquired this quarter. However, Bright Health Group (BHG) no longer met our criteria and was removed from the Index.

F-Prime’s Summer Internship Program: Meet our 2023 interns and fellows

Thank you to our interns and fellow for their contributions this summer and for choosing F-Prime!

This summer, F-Prime was thrilled to welcome a talented cohort of interns and fellows to our Cambridge and London offices to help with competitive landscape analysis, sourcing, founder calls, and more. Read on to learn what it’s like to join our internship program.

“I have been able to explore new thematic areas in which the team was still building its knowledge base. By getting deep into the science and innovation through meeting entrepreneurs and academics, I have added to the team’s thinking and identified potential plays which culminated in presentations to the partners. A special shout out to Ana and Martin for the mentorship and support over the summer!”

“My time was split between assisting with an ongoing deal — leading a summer exploration project — and taking part in meetings with potential investments. I’ve had a great time in all of these activities, but I particularly enjoyed being an integral part of a deal team. Between self-guided research into standards of care, calls with key opinion leaders, diving into the relevant primary literature, and doing some basic market forecasting, I was able to leverage the clinical and research training I’ve received and develop so many new skills along the way.”

“I have been researching the biotech landscape of foreign markets and performing due diligence on interesting licensing opportunities abroad. I have also participated in many introductory and follow-up meetings with prospective US-based companies, where my research expertise and previous work experience have been invaluable in helping me evaluate each opportunity. I’ve learned a lot throughout the summer and was able to connect with people at all professional levels and across disciplines. One important skill I’ve been able to develop during my time at F-Prime is learning how to become versed in a new area of science within days, which is quite different from my Ph.D. experience of developing deep expertise in one area over many years.”

“I joined the F-Prime/FBRI team primarily due to the invaluable opportunity to collaborate with individuals deeply committed to fostering and accelerating my personal learning and professional growth. Although it is a lean team, I am fortunate because it translates to more one-on-one attention. I am getting opportunities to actively participate in diverse projects that make me feel valued as an individual, and that my contributions are noticed and appreciated (even as an intern!).”

“I was drawn to F-Prime because of the learning culture at the firm. I wanted to play a role in the translation of good ideas into real medicines and the firm has amazing people doing exactly that. On virtually every topic I encounter, there is a resident expert at the firm who can help me in framing my thinking. This ability to get to the right answer faster makes everyone more productive.

I also want to highlight that the deals the firm sees are a function of its reputation. People want to invest with F-Prime because they know they’ll not only receive capital but also an engaged partner who can help them along the trajectory of the company. This means that we see some of the most interesting ideas that will shape the future of medicine and often get to take part in their realization.”

“One of the exhilarating projects I’ve been involved in is the thematic research on Gen AI x Fintech. The possibilities with breakthrough technology like Gen AI are awe-inspiring. I find it fascinating to delve into its potential for the future and hear how visionary entrepreneurs contemplate disrupting the financial services landscape. It’s been an incredible journey so far, and I’m eagerly looking forward to sharing the outcomes of our research.”

“I have always planned to spin out my PhD research but had no idea how VCs actually decide to fund these projects. I joined to learn how other spinouts and startups pitch to VCs and learn about the decision processes that VCs make.”

Applications for 2024 are not open yet, but if you are interested in learning more, please send an email to careers@fprimecapital.com.

Technologies Enabling the Future of Robotics

In June, F-Prime co-hosted Robotics Invest, an invite-only summit packed with keynotes, panels, and case studies featuring the robotics industry’s most experienced investors, founders, and operators. During her time there, Betsy Mulé took advantage of this unusual concentration of tech industry talent by interviewing several founders — Yaro Tenzer of RightHand Robotics, Helen Greiner of Tertill and iRobot, Rajat Bhageria of Chef Robotics, David Morczinek of AirWorks and David Johnson of Dexai Robotics — about the state of the industry.

Here, they discuss the technologies that are enabling the current wave of robotics innovation, and what the future of the industry might look like.

Recorded at Robotics Invest

5 Lessons Robotics Founders Can Learn From the AV Industry

Founders must learn the hard-fought lessons of the last five years to find success in this unique category.

Throughout the late 2010s and early 2020s, the autonomous vehicle industry captured the imagination of the startup community and the public. However, the category’s meteoric rise preceded an even more meteoric fall over the last 18 to 24 months. From 2018 to 2021, investments in the AV sector across the U.S. and Europe increased by nearly 2.5x, eventually peaking at close to $10 billion in 2021. Then, in 2022, investments fell to $4 billion, with 2023 likely to see further precipitous declines.

Meanwhile, the broader robotics ecosystem has continued to flourish, with companies focused on mostly industrial “vertical” use cases now commanding the bulk of investment dollars. In 2022, these companies attracted $7 billion in investments, defying the broader slowdown in VC investment by growing 15% over the previous year.

We recently analyzed the trends shaping the industry in our State of Robotics report, and identified five lessons that the next generation of robotics founders can take from the successes and failures of the AV industry.

vertical robotics investment overtakes autonomous vehicles

VC excitement for hardware businesses is higher than ever

In the U.S. and Europe, more than $60 billion have been invested in robotics and AV alone over five years, with the AV sector leading the way. AI is making hardware much smarter, which is enabling companies to generate the kind of high-margin recurring revenues typically associated with software businesses.

AI also creates opportunities to disrupt traditional industries with massive addressable markets. For example, across the logistics ecosystem, AV companies such as Aurora are disrupting the trucking industry, while companies like Locus and RightHand Robotics (an F-Prime portfolio company) are transforming how fulfillment operations are done.

For founders, this surge in interest means there are more robotics investors than ever, ranging from newcomers in the category to those with an extensive track record in the space. Even top-tier investors such as Sequoia and Andreessen Horowitz are starting to make investments in the category, an encouraging bellwether for overall VC interest in robotics.

Nevertheless, hardware-oriented investments are not the right fit for all investors, and it’s best to seek out those who have made a commitment to robotics and understand what it takes to be successful.

You must eventually build a real business

Much of the early effort in AV focused on technology development, and success was defined by performance of demos and pilots. However, pilots are not the same as commercial success. As both acquirers and investors realized the challenges of creating self-sustaining AV businesses, capital started to dry up and many companies shut down or were forced to scale back their strategy.

Today’s robotics founders must focus on real commercial proof points at every phase of their journey. Investors want to see production deployments that deliver measurable ROI (return on investment). Pilot customers who are “excited by the technology” are very different from customers who are motivated enough to manage the operational changes required to adopt it and demonstrate high utilization.

At the same time, founders must demonstrate attractive unit economics associated with their offering — for example, more than 70% gross margin after subtracting BOM (bill of materials) and support costs from lifetime revenues.

Use case selection matters

Early efforts in AV targeted the largest, most challenging problem: generalized autonomy on passenger roads. While the TAM (total addressable market) was massive and the use case seemed like the obvious one to target, technology challenges and uncertain timelines ultimately led many players to pivot toward more tractable use cases, such as trucking and delivery. Lots of capital was burned in that transition, and as investor interest waned, many companies did not survive.

Founders must identify use cases that have real value and that can be realistically automated without massive capital investment. Many companies are now pursuing use cases in constrained operating environments with greater fault tolerance, and often with a human-in-the-loop element, which creates more technical feasibility. Identifying such use cases where the TAM is still significant is the sweet spot for a VC-backed robotics business, often requiring founders to have a deep understanding of the target industry.

Acquisition and exit activity drives a virtuous cycle of investments

GM’s acquisition of Cruise for $500 million in 2016 sparked the AV race. The deal made the startup community realize AV’s disruptive potential in the eyes of incumbents, and how much capital they were ready to invest in the acquisition of technology. The ensuing years saw annual AV investments take off, the creation of 10 AV unicorns, and large IPOs or acquisitions for companies such as Aurora, Zoox, and Uber ATG.

The lesson for startups is that large incumbents can propel investment momentum and help overcome investor reluctance around what may be a still-unproven use case. Investors will look to incumbents for validation of the problem statement, and many incumbents are starting to actively engage startups for exactly this purpose, like John Deere’s Startup Collaborator and Suffolk Technologies’ BOOST. If your startup is able to drive real customer value and disrupt legacy business models, incumbents will eventually come calling, even if they are not yet active acquirers. Investment dollars will follow, more incumbents will jump in, and startup formation will accelerate.

Only the strong survive

AV businesses were very capital intensive, and as investments ebbed, only the strongest players were able to continue raising capital. Even companies such as Argo AI, with more than $1 billion of capital, were ultimately shut down, whereas Aurora was able to raise an additional $820 million as recently as mid-2023.

Founders must focus on being the winner in your chosen segment or use case. There will inevitably be competition for any good idea, and those startups will often find willing early-stage investors to support them. However, being an “also-ran” is ultimately a losing strategy in robotics. Later stage dollars will flow disproportionately to the winner, customers will favor the most established providers, and acquirers will focus their efforts on the market leaders.

Today’s robotics founders have a number of factors on their side: technological acceleration, labor shortages, stagnant productivity gains, and a cadre of investors who are increasingly interested in the category. However, founders must learn the hard-fought lessons of the last five years to find success in this unique category.

Originally published in TechCrunch. Read the full story here.

Check out our State of Robotics report here.

Influencers Are a New Class of Travel Agents — But Lack the Right Tools

For many, “travel agent” sounds like an anachronistic job title, conjuring images of shoulder pads and strip malls, corded telephones and desktop computers with cathode-ray tube monitors. Indeed, ever since the advent of online booking, travel industry watchers have been predicting the demise of traditional travel agents. But in reality, travel agencies are still estimated to be a $72 billion industry in the United States alone, and upwards of $450 billion globally. Travel agents haven’t disappeared, many have just swapped the drab offices and chunky monitors for ring lights and smartphones.

In this story for travel industry publication PhocusWire, Betsy Mulé explores the opportunities awaiting startups who can build useful tools to help influencers step into their newfound role as modern travel agents.

Read the full story here.

Originally published in PhocusWire

How Quovo Became Embedded in the New Financial Services Tech Stack

Lowell Putnam joins David Jegen to reflect on Quovo’s biggest wins

If you’re a fintech startup and the prospect is a top three bank, the answer is probably “as much as possible — without breaking your team.”

In the late 2010s, financial API startup Quovo spent two full years selling and onboarding one of the largest banks in the United States.

“We were a company of 60 people at the time, and eight of them had to be on a call with this bank every day, five days a week,” CEO and Co-founder Lowell Putnam said recently, speaking with F-Prime’s David Jegen about their partnership in the years after we co-led their 2017 Series B. “They did all of their releases on Saturday nights after midnight, and they needed people from our team to listen in. Not a lot of startups are ready for that.”

“It was quite telling that one extremely old and traditional FI would reach out to acquire Quovo at the same time that you’re also getting offers from one of the fastest-growing companies in fintech.”

David Jegen, F-Prime Managing Partner

The Perks of Being a Grownup

Nevertheless, David and other investors on the board backed the team to close the deal. Quovo ultimately won one of the largest open banking contracts in the U.S., a market-moving vindication of the company’s account connection and aggregation services — and its implementation team’s execution.

“Having a top three bank, especially, gave us this great sense of being a grownup compared to the other folks out there,” Lowell said. “We remain one of the few startups that had a contract from them, but it was a two-year process. David and some of our other investors stuck with it the whole way: ‘Keep doing it, keep putting the implementation resources in.’

“And everything that went into that deal ended up making the company stronger. But if you guys hadn’t supported us — because it was bending everything from a spend standpoint — it would’ve been so much more difficult.”

The Mafia Effect

Quovo developed some serious go-to-market muscles selling to a major bank, and they helped the company knock down logo after logo across the financial services industry in the years after that deal.

“We had to build a full implementation, customer success, and account management team — and not like, you know, a typical client success team taking folks out for beers,” Lowell said. “Some of the folks from that team are now doing amazing things. Adams Conrad, a principal who’s crushing it at QED right now, was managing our entire relationship with Betterment. Nicole Newlin is doing great things at Ocrolus. Our first data science hire is now a senior member of the engineering team at Plaid. And the rest of Quovo saw this team putting out fires for that one big bank — it just grew the rest of the company up, too. It was incredible for the culture.”

“I often say that successful alumni say as much about a startup’s founders than the ultimate financial outcome,” David added. “And I think it’s a wonderful statement that the people Lowell attracted and helped to grow went on to do other great things.”

Building Again

With great logo diversity among its customers — from financial titans to tiny startups — and clear momentum, it wasn’t long before acquirers came knocking.

“You had a foot in the world of big financial institutions,” David said, “and fielded an offer from a player in that space who respected you and Quovo in a way that was disproportionate to your size.

Plaid and Quovo ultimately combined to become the clear category leader for financial data aggregation and account authentication, and one of the great success stories of the fintech disruption.

Behind the Breakthrough: Q&A with Emanuele Ostuni, ARTBIO

What does it mean to be CEO? It is more than holding the highest-ranking position in an organization. It is becoming a business builder.

In a way, all CEOs have the same responsibilities — expanding the company, collaborating with the board, engaging stakeholders, defining strategy, and creating a positive culture. However, the way in which one approaches these tasks is a means to stand out from the crowd.

Emanuele Ostuni is founding CEO of ARTBIO and worked closely with Roy Larsen and ARTBIO’s investors to build the company and its business model. Previously, he was head of Europe for Cell and Gene Therapies at Novartis Oncology, where he oversaw all commercialization aspects for Kymriah in Europe, the first FDA-approved CAR-T cell therapy.

For Ostuni, he never spent time in radiopharmaceuticals, but his role at Novartis had overlapping complexities. The products they were pursuing were multifaceted to make, deliver, and administer and he got satisfaction out of sorting through how to simplify it for patients, physicians, and ultimately payers. He felt his best when he was managing something multi-dimensional.

He explained, “The potential for efficacy in radiopharmaceuticals is high and there is an opportunity to build a platform, establish a supply chain and create a differentiated pipeline that allows ARTBIO to stand out from what the rest of the industry is doing.”

As ARTBIO launched in June 2023 with a $23 million seeding financing, Ostuni shares what drew him to ARTBIO, insights into his current role including leadership style, and advises fellow CEOs to connect with each other since they are “the few people who really understand what we go through.”

1. What motivated you to join ARTBIO?

As a scientist and seasoned executive, I was really intrigued by the potential of the technology and the science behind the company. The radiopharmaceuticals industry is not as well developed as the rest of oncology and immuno-oncology offering an opportunity to extract some good wins for patients while at the same time moving the field forward in a meaningful way.

In my early conversations with the F-Prime team, they were very open about sharing what they were thinking about and allowed me to share my views on how my experience in CAR T could lend itself to the innovation that was required to bring forward radiopharmaceuticals. It became a joint project very quickly where everybody brought something. F-Prime identified the technology from the scientific founders and allowed me to assess how it could be pushed forward.

2. What differentiates ARTBIO from other RLT players in the industry?

Our choice of medical isotope was driven by what is best for patients to beat their cancer. With that decision, we built backward to the technology needed to produce the isotope and have supply chain security – we are unique in that we also own and control the manufacturing of isotopes instead of relying on a third party. Our manufacturing approach is distributed to match the dynamics of the isotope, instead of trying to force fit it into a centralized approach that is exposed to several risks as most others are doing – issues with that approach have already surfaced with a negative impact on patients. Lastly, we created our own discovery labs to build a pipeline of new experimental therapies leveraging our ideal isotope manufacturing. We are creating this important infrastructure in part alone and in part in collaboration with a focus on simplifying and improving the delivery of therapies to patients and hospitals.

3. What’s been the most rewarding aspect of ARTBIO coming out of stealth?

We recently attended the Society of Nuclear Medicine and Molecular Imaging’s 2023 Annual Meeting, and it was amazing to see the team in action. I am most satisfied when I see them succeeding and it really showed when we were there all together. At ARTBIO, we believe in the importance of teamwork, exchange, and collaboration to bring our field forward.

We were also having conversations with peers and investors, both on the ground and in the background, that gave me clarity that we have accomplished a tremendous amount. Since the fundraise, it is clear to me how our differentiation from competitors is emerging. We are inspired by the many advances and innovative ideas that our industry is working on and there are many unmet needs left to be addressed.

4. How would you describe your leadership style?

I tend to be a giver, and I start with trust. I am also an experimentalist by nature and focus less on if something is right or wrong, but rather on having a robust approach and hypothesis. If things do not work as well as we expected, I ask why? What is the learning so that we quickly adjust and reach our goals?

I also surround myself with deep experts who also have personal characteristics that I think are critical for our team. We are building a new space, and the way things worked in the past is not going to work this time around. I am looking for people who have expertise in neighboring areas of the business, and also the ability to learn what is going to be different about our approach from what’s been done in the past. I aim for people who are driven and those who are doing it in a humble way. They put the team before themselves, thrive on data and value the importance of being transparent.

5. What’s one lesson you’ve learned so far as CEO of ARTBIO?

As a giver, it is hard to stop, but as CEO I have had to learn to modulate and know when it is the right time to stop serving. The CEO role can be a bit lonely, but I prioritize understanding what my stakeholders need rather than what I need from them.

6. ARTBIO just launched, but are there any noteworthy goals that you as CEO are currently focused on achieving?

My number one focus right now is rounding out the team. We can fundraise, but we need the people who manage those funds. I want to bring people with the right know-how, and also those who have chemistry with the team that we have in place now. Only the team can move the company forward.

As we work to optimize isotope manufacturing, therapy manufacturing, preclinical research, and clinical development, I need to make sure that all aspects move forward without becoming each other’s obstacle.

7. What is the best piece of professional advice you’ve ever received?

I have been blessed with many managers, peers, and direct reports who taught me a lot through their actions and words. The quote that I always go back to that summarizes a lot of my learnings and attitude is by Winston Churchill: “Success is not final, failure is not fatal: it is the courage to continue that counts.”

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Revolutionizing gene-based editing to create lifelong cures

The team developed a DNA base editing technology that enabled more precise edits through direct chemical conversion of one base to another compared to approaches that introduce double-strand breaks.

Unlike first-generation approaches that introduce double-strand breaks, Beam’s base editing allows precise edits through direct chemical conversion of one base to another to address the point mutations that underlie many human diseases.

Industry Overview: The dawn of a new era in gene editing with CRISPR

CRISPR gene editing ushered in a new era of both modifying and understanding the genome. Prior editing approaches such as zinc finger nucleases, TALENs, and meganucleases are more cumbersome, costly, and time-consuming, as they require significant protein engineering for adaptation to the corresponding target sequence. In contrast, CRISPR uses a guide RNA to direct the active protein to specific genomic sequences through base pairing with the target location. Once in place, CRISPR cuts DNA and then allows natural DNA repair mechanisms to take over.

The Opportunity: Understanding use cases – gene disruption vs. specific gene editing

First-generation editing technologies, including CRISPR, rely on introducing double strand breaks into the genome. While precise edits could theoretically be achieved through homology-directed repair (HDR) or non-homologous end joining (NHEJ), these processes are much less efficient, and as such, traditional editing approaches are more suited for gene disruption than for specific and precise gene editing. Safety is also a lingering concern with first-generation editing approaches due to the potential for chromosomal rearrangements, as insertions and deletions occur with high frequency.

CRISPR sparked a revolution for new, next generation gene editing technologies that allow scientists to more efficiently and precisely modify the genome.

Why We Invested: Supporting the next wave of gene editing technologies

At F-Prime, we understand that breakthrough technologies require time to develop, which is why we continue to seek out innovators pioneering new approaches who embrace both the excitement and the challenges associated with advancing nascent modalities alongside us.

F-Prime recognized the transformative therapeutic potential of DNA editing and made early investments in companies focused on furthering CRISPR-based platforms such as Caribou. We also realized the power of technologies that could achieve direct single nucleobase editing to significantly expand the overall utility of this entirely new therapeutic category.

Our affiliate FBRI, which is comprised of a team dedicated to supporting research efforts to identify breakthrough discoveries, funded David Liu’s early base editing work. Dr. Liu is a renowned gene editing expert, scientific co-founder of Editas and Harvard and Broad Institute researcher. His team developed a DNA base editing technology that enabled more precise edits through direct chemical conversion of one base to another compared to approaches that introduce double-strand breaks. This discovery paved the way for the second generation of gene editing technologies and ultimately led to the creation of Beam Therapeutics.

Source: Beam Therapeutics

To facilitate the progress of this tremendously promising research, we invited the company to work out of F-Prime’s incubator office space with biopharma executive, John Evans, leading the team as CEO. Meanwhile, F-Prime’s President and Managing Partner, Stephen Knight, M.D., and Partner, Jessica Alston, Ph.D., helped to establish the company by assisting with licensing and IP discussions, and other members of the F-Prime team supported the company with recruiting key management hires, developing a strategic business plan and ultimately preparing the company for its public offering.

Founded in 2017, Beam Therapeutics raised nearly $223 million privately before going public in February 2020. They also announced a collaboration with Pfizer in January 2022. Today, Beam Therapeutics is a leader in harnessing base editing to develop precision genetic medicines that provide lifelong cures to patients suffering from serious diseases.

Learn more about Beam’s approach and vision for base editing in this video.

Our Focus: F-Prime continues to invest in biotech leaders

As we did with Beam, we’re constantly searching for the next breakthrough to invest in; sometimes, we build companies from scratch which we’ve done over 30 times and counting.

The convergence of science, technology, and healthcare in ways that achieve groundbreaking advancements gives rise to inspiring businesses and great investment opportunities.

“F-Prime played a critical role in establishing and growing Beam, helping us assemble our team and develop our vision to become the leading platform for precision gene editing. We are incredibly grateful for the team’s support for our mission to bring life-changing treatments to patients suffering from serious diseases.”

—John Evans, CEO