YC-backed Perlstein Lab continues their rare disease drug discovery

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Perlstein Lab, or PLab as it is also known, continues to hone its automated drug discovery platform and presents its latest iteration Wednesday March 23rd at Y Combinator Demo Day. The platform they created helps the bio startup focus on finding cures for rare diseases rather than common ones. This novel approach is different from most Big Pharma labs and is thus one of their differentiators.

What is an “automated drug discovery platform?” I asked this to PLab founder and CEO Ethan Perlstein and he summarized for me. Hold onto your braincells, we’re about to get a little technical.

First of all, it is important to know that, according to Perlstein, there are about 7000 diseases classified as rare and 95% of these have no FDA approved cure. This is PLab’s area of focus. This is a much different model than Big Pharma which usually focuses on more common illnesses where the research ROI stands to be much greater.

Of these 7000 rare diseases, about half are caused by a single broken gene. These are usually inherited diseases and affect children.

PLab focuses on single broken gene diseases initially because they are obviously less complex and easier to approach. Using a molecular apparatus known as a CRISPR—which Perlstein likened to a command line editor for animal genomes—PLab alters the genome of test animals (yeasts, flies, worms, fish and sometimes mice) to mimic the broken gene disorder…to essentially, make them ill. Because many of these animal are small, even microscopic, PLab can have large numbers of them to test against.

Then, using an automated platform, they apply thousands of chemical compounds to these animals to see which compounds are effective at reversing or bypassing the loss of the broken gene’s function.

In this way they can rapidly and effectively test for cures.

Using these complex animal types is key to effectiveness according to Perlstein, and differentiates their lab in many ways from Big Pharma, who often focus on cellular tests in petri dishes rather than live organisms.

I did have to ask Perlstein what he thought the general public might think about their animal testing. He responded by saying that they prioritize by the least complex animals first—yeasts, worms, flies and fish—an only move up to mice if necessary. However, he indicated that even when testing on mice becomes necessary, they are not doing anything differently from many Pharma companies out there that also test on mice.

The second future phase they have planned is to add a predictive learning model to this automated platform that will become faster over time and generate many more insights more quickly and efficiently.

So that’s an extremely simplified version of how their technology works. How they plan to enter the market revolves around two main business models which could be summarized as Lead Gen and Accelerator.

In one model, they plan to operate as sort of a scout or lead generation partner to larger pharmaceutical companies. For example, when the ROI makes it much harder for a big pharma company to dive into research on a rare disease, PLab could use their intellectual property to be the research partner and to efficiently determine a reasonable disease to target. Then they hand off the results to the larger company to conduct clinical trials. They are currently discussing partnerships now.

To bolster this, PLab has calculated a market size of $1 million per person afflicted.

A second, more radical model, involves ultra-rare diseases. These are diseases that afflict less than one person in a million. These are diseases that larger pharmaceutical companies definitely don’t focus on.  However, many of the families of the afflicted are already raising funds on their own to contribute to research. In this business model, PLab will work directly with these patient families. Each disease would spin off as a separate research-based startup company focused on that disease. PLab would take a cut of the business they help accelerate.

PLab was already quite busy before joining Y Combinator and had already raised a total of $2.5 million from several investors including Retrophin and their infamous ex-CEO Martin Shkreli. However they have severed all ties with Skreli and are not linked with him any longer. PLab has also raised another $1 million convertible note via Slow Ventures.

UPDATE: Slow Ventures only invested $500,000 on the $1 million convertible note. The other $500,000 on the note is a mix of angels and existing investors.