Beating the odds in biotech: inside one investor's strategy for high-risk drug discovery

I recently attended the healthspan Hevolution conference in Riyadh, an event focused on health across the lifespan, biotech, regenerative medicine and age-related disease.

During a panel discussion on investment in health science, panellist Dr Werner Lanthaler, CEO of family office Wlanholding, made a startling claim. 

"It still takes 14 years to bring a drug from discovery to the market, and the average failure rate at phase one entry is still well over 50 per cent."

In the past few decades, 90 per cent of clinical drug developments have failed during clinical phase I, II, and III clinical studies and drug approval. Researchers at the College of Pharmacy, University of Michigan, suggest four possible reasons: "lack of clinical efficacy, unmanageable toxicity, poor drug-like properties, and lack of commercial needs and poor strategic planning."

With this in mind, and the rapid growth of drug discovery startups — and startups working to solve the painpoints in the lab — I wanted to explore how investors approach the high-risk domain of clinical drug trials. So I sat down and spoke with Lanthaler to learn more. 

Lanthaler previously served as CEO of Evotec AG for nearly 15 years, transforming it into a global leader in drug discovery and development with a focus on precision medicine and artificial intelligence. Before Evotec, he was CFO at Intercell AG, where he played a key role in the company's IPO and vaccine development.

Lanthaler is widely recognised for his innovative vision and commitment to integrating advanced technologies into drug development, serves on various startup boards, and advises leading private equity firms.

Fix the Data, fix the pipeline

Lanthaler emphasised the critical importance of data integrity at the earliest stages of investment in clinical drug development.

 "Bringing this to an experimental point," he explained, "we always have to ask the questions: 'Is it true, is it reproducible, is it the correct data that we are investing in?'" 

He underscored the urgency of this approach by pointing to a troubling statistic: 

"The valley of death starts when you know that 67 per cent of the data that is published out there cannot effectively be reproduced for drug discovery and drug development purposes.

You have to eradicate that mistake at the beginning, because otherwise, everything that happens 14 years down the line will lead to failure — as we've seen so often in Alzheimer's, Parkinson's, and other diseases."

Lanthaler contends that "curing data that we work with is an immensely growing field – and it will be investable. Looking at the right data to start with is where we make money better predictable in its outcome."

The value of a family office

Many startups in medtech and biotech say their first port of call is a family office. According to Lanthaler, while family officers are sometimes viewed as less sophisticated than venture capital or private equity, 

"I'd argue that, in my case, we have significant due diligence capability because of my network built over 25 years. That can be more advantageous than what you see at many VCs, where they may not have such deep scientific expertise.

"I don't invest anywhere that doesn't have scientifically 'first-in-class' or "best-in-class' insights or a management team whose track record and personality I trust. I need privileged access to scientific or team insights that let me lead an investment rather than just following others."

Diversification, timing, and deep capital are critical to managing risk in drug discovery

According to Lanthaler, with high-risk investment stakes, diversification and portfolio thinking are essential. 

"Even the most rigorous scientific due diligence can't fully anticipate what might go wrong in drug development — often, only the data from the final stages of clinical trials provides clarity." 

Timing, therefore, becomes a critical factor: you need to decide whether to stay through the next risk milestone or exit beforehand. 

"That decision is more constrained in private investments, but in public markets, it's easier to step back and wait for the next data point."

Lanthaler emphasises the importance of spreading risk:

"No one is omniscient enough to foresee every outcome. If you can't fund a broad enough portfolio to hedge against some failures, it becomes incredibly stressful. Failures will happen."

He also points out the opportunity at later stages of development:

"When I talk about the stage of investment, there can be excellent opportunities right before a product launch. Early investors sometimes lose patience; by then, they might be willing to exit. So investing at the market-launch stage or during commercialisation can be very attractive."

At the same time, Lanthaler's mandate at Wlanholding focuses on cutting-edge science:

"Our edge lies in backing 'best-in-class' or 'first-in-class' seed science.

But we also need the capital to keep investing at least through Series B—otherwise early investors get diluted into oblivion. Those seemingly small initial investments of €250,000 or $250,000 can turn into a €2 to 3 million commitment if you follow on through Series B."

He does however note that. while there are plenty of matching funds available, but what's missing is enough private, first-dollar Seed investors to get things started.

Strategic investment diversification

Wlanholding's investment portfolio reflects a strategic blend of cutting-edge biotech innovation and sustainability.

Proxygen

Proxygen is a biotechnology company specialising in the field of targeted protein degradation (TPD). It is developing "molecular glue degraders" that harness the body's own protein-disposal machinery to eliminate disease-causing proteins. By doing so, Proxygen aims to tackle diseases (such as certain cancers, neurodegenerative conditions, and more) that have been traditionally considered "undruggable" or difficult to treat with standard therapies.

Solgate 

Solgate discovers and develops novel therapies by targeting solute carrier (SLC) transporters — a family of membrane proteins responsible for transporting critical molecules like nutrients, metabolites, and ions across cell membranes. 

By harnessing advanced drug discovery techniques, the company aims to modulate the function of these often overlooked transporters, opening new avenues to treating a wide range of diseases, including metabolic, oncological, and neurological disorders.

Pexxes

Pexxes focused on antibody therapies to treat chronic diseases in pets: dogs, cats, and horses.

Providing proof of diversification, Lanthaler also invests in sustainable data storage company Cerabyte, and maker of organic detergents and cleaning products, Planet Pure.

In biotech's brutal landscape of long timelines and high failure rates, Lanthaler's strategy—betting early on breakthrough science, doubling down with capital, and timing exits with precision—shows how to turn risk into reward.