Pliant and the 5 Ps of Therapeutics Investing at Menlo
Congratulations to Bernard Coulie and the team at Pliant Therapeutics on a successful IPO! Pliant, a Menlo Ventures portfolio company, made its successful debut on NASDAQ today. The company originally filed to raise $86 million, increased the price to $16, upsized the round by 50%, ultimately raised $144 million, and closed at $21, up 33% on the first day of trading. This strong showing demonstrates that public market investors are just as excited as we are about the potential for Pliant, a leading biotech developing new treatments for diseases related to fibrosis. Here’s why we’re excited about Pliant, and the 5 Ps we use to evaluate therapeutics investments.
Major lead Program opportunity in IPF
Traditionally, biotech and public investors have primarily valued the lead program—do you have a great potential drug or not? By all metrics, Pliant’s lead program is strongly positioned, with high quality pre-clinical/early clinical data and entering Phase II clinical studies in idiopathic pulmonary fibrosis (IPF), a severe chronic lung disease with major unmet needs (5 MM patients worldwide, median survival post-diagnosis <5 years, current medications only slow progression).
Portfolio + Platform opportunity in fibrosis
Some hybrid bio/tech investors focus primarily on platform and portfolio—can your technology produce many drugs? At Menlo, we try to balance platform, portfolio, and program to identify teams with broad platforms and clinical applications and deep biological, clinical, and market expertise to make the lead programs successful. This is also where Pliant stands out. Pliant combines a powerful integrin-based product engine with strong expertise in fibrosis, a major underserved disease category. Pliant’s long-stated goal has been to produce at least one new product per year, and its current pipeline, which spans lung disease, kidney disease, liver disease, cancer, and muscular dystrophy, attests to the progress to date and ongoing potential.
Partnership with Novartis
One way I judge a biotech platform is whether the pipeline of assets diminishes in quality—do you have a one-hit-wonder, or is success sustainable? If the first asset is the best asset, it can be a great drug, but not the best fit for Menlo, since our firm is at its core a technology investor. As a consequence, we like to see pharma partnerships to make equity capital more efficient, accelerate and force-multiply programs, and streamline future fundraising. The Pliant team had high standards in finding a partner for their NASH/liver disease program, and their patience was rewarded in signing a high-quality partner in Novartis to a win-win deal that included strong upfront and ongoing economics, catalyzed the recent Series C round, and featured further investment in the IPO.
Last but first, People
Our investment thesis starts and ends with people. At Menlo, we generally prefer to invest in (and continue to look for) outstanding founder teams, but biotech VC has shifted in recent years to emphasize internal incubation. In Pliant’s case, our friends at Third Rock Ventures brought the core team together very early on, led by Bernard as CEO. I first met Bernard, Hans, Hoyoung, and others well before we invested, and this helped us conduct our scientific diligence more quickly when the opportunity came. Since then, the team has continued to execute under a culture of scientific and medical leadership that many of us appreciate more and more in today’s world.
Menlo and therapeutics
At Menlo, we have a long history of successful therapeutic investments, including the incubation of and initial investment in Gilead Sciences. In the last few years, we have ramped up our therapeutics investing, including investments in Pliant, Recursion, Encoded, Senti, Epiodyne, and others. Congratulations to Bernard and the Pliant team on your latest milestone and thank you for your partnership.
We look forward to continuing the journey together.