Johnson & Johnson's incubator arm JLABS has launched an initiative focusing on addressing health inequalities at the earliest stages of drug development.
Beginning this year, every conversation the incubator has with potential new partners will assess not only whether they are addressing an unmet medical need, but also whether their treatments will confront health inequity, said JLABS' global head, Melinda Richter. Studies have shown that there are stark disparities in access to healthcare among different socioeconomic groups, and these have been made more acute during the COVID-19 pandemic.
JLABS global head Melinda Richter |
"I hope, if nothing else, it starts this industry standard where we all talk about health equity for every innovation," Richter told S&P Global Market Intelligence. "That is an absolutely number one priority for us, and that will change the game."
The incubator may have a significant impact on the next generation of innovation: It has partnered with almost 800 companies across the healthcare landscape in the last decade, providing these businesses with office and laboratory space as well as guidance and networking. Of those partners, 45 have since gone public.
Having given J&J a leg up on promising innovations in the field, JLABS now offers the company an opportunity to influence health equity and security around the world, Richter said.
"We had a really extensive look at what we can do that can have systemic and sustainable change not just for JLABs but for J&J and the industry," Richter said. "We're increasing our capacity for talent that will be able to serve on boards and will represent not only diverse membership but diverse voices, and all of that is for the purpose of health equity."
Investing in AI
Newer technologies such as artificial intelligence and machine learning can play an important role in health equity, Richter said, pointing to a surge in partnerships with companies that help ensure marginalized communities are taken into account as drugs are developed.
JLABS has partnered with Birmingham, Ala.-based Acclinate Inc., which uses AI to recruit people of color for clinical trials, as well as New York-based DrugViu Inc., which creates population databases to match therapies and research to patients with autoimmune disorders.
J&J's venture capital arm JJDC is also taking a greater interest in how technology can increase health equity. The $175 million in capital that JJDC deployed across 156 active portfolio companies in 2021 included Iterative Scopes Inc, Datavant Inc. and PAIGE.AI Inc., who joined fellow AI developers like Aetion Inc. and Verana Health Inc.
Iterative, Datavant and Paige are all in part focused on recruiting patients for clinical trials and finding the right drugs for the right people, JJDC vice president of venture investments Asish Xavier told Market Intelligence.
"We are focused on companies that ... help improve clinical trial segmentation and match clinical trial design and patients with the drug," Xavier said. "That's an area where certainly there is scope for a lot of improvement."
The influence of companies like J&J can set the agenda for further down the pharmaceutical ecosystem. Smaller companies in the initial stages of drug development are less likely to have health equity high on their list of priorities, said Toddy Berry, life sciences national co-leader at consultancy firm BDO.
"At the earlier stages, [health equity] isn't really on the agenda, which isn't to say it won't be adopted," Berry said in an interview. "It's a concept that has been widely adopted by larger companies and the investment community."
Guiding J&J
As the largest healthcare company in the world by market capitalization, J&J's success depends in part on insights gleaned either from much smaller companies partnering with JLABS or investments from JJDC. The recognition that even a company of J&J's size cannot source all of its talent and invention internally led to the formation of JLABS as a no-strings-attached incubator for the life sciences 10 years ago, Richter said.
"J&J has to be humble enough to say the best science and technology is just as likely, if not more, to come from outside the walls of a big company like J&J," Richter said. "But these entrepreneurs face many more hurdles that prevent the best science and technology from moving forward."
JLABS is not just looking at patients but the people behind the science, Richter said. Of JLABS' partners over the years, 32% have been female-led companies and 30% have been minority-run.
These partnerships provide J&J with a wider view of the industry and help JJDC to target investment before forging a protracted contractual agreement, Xavier said.
"It's a symbiotic relationship between the R&D strategy, which is updated every three years or so, and a continuous feedback loop between [J&J] and us on advances," Xavier said.
The J&J group also includes the Janssen pharmaceutical division — which develops products for oncology, immunology, neuroscience, cardiovascular conditions and vaccines, among others — and a medical device arm that spans orthopedics and surgery. J&J announced the spinoff of its consumer health division in 2021.
"We are a big, complicated company," Richter said. "[J&J] have their therapy areas and their priorities, and so that becomes our true north for what to look for."
Richter called the arrangement "a bidirectional information flow, where we bring them things that are on the edges" while J&J has a better view of the markets.
Success stories
Arcturus Therapeutics Holdings Inc., which has an mRNA-based COVID-19 vaccine in late-stage studies, was one of JLABS' first collaborators when the incubator opened in San Diego. Arcturus secured early venture financing during their time at JLABS and then went on to a $200 million IPO in July 2020.
Another company that had its roots in the JLABS network is Cortexyme Inc., which is developing Alzheimer's disease treatments and closed an IPO at about $78 million in 2019.
JLABS can also guide new technologies into different avenues to address unmet needs where J&J has a financial interest, such as gut medicine-focused Persephone Biome Inc.
JLABS and Persephone are looking at how the San Diego-based company's gut microbiome technology can help monitor how patients are responding to cancer treatments, potentially finding biomarkers that lead to therapeutics with a personalized touch.
"Persephone's technology is all about boosting the immune system through the gut for vaccines to make them more effective," Richter said. "As we started that collaboration with them and dug more into it, we decided this could be the basis for oncology plays."
The director's aim is to "help tip the scales to things that maybe the market doesn't see as valuable from a business perspective right now but will be in the future," Richter said.