Vida Ventures: Stefan Vitorovic
“If you treat people well, work hard and stick to your principles, things will work out.”
Drug development is an incredible feat—perhaps one of the most complex tasks that we undertake as a species. The seed of a scientific breakthrough may germinate in a single mind; yet to translate that discovery requires a symphony of academics, clinicians, investors, entrepreneurs, lawyers, CRO technicians, manufacturers, regulators, pharma experts—all working in concert to produce a life changing medicine.
If the drug development ecosystem—spanning big pharma to fledgling biotech—were to agree on a ground truth, it would likely regard the team-based nature of the industry: “To develop an impactful medicine takes a rich mosaic of individuals…it takes a village,” says Stefan Vitorovic, Co-Founder and Managing Director of Vida Ventures. In previous Biomarker interviews with storied scientists, entrepreneurs and investors, many cite the same principle: exceptional accomplishments necessitate exceptional groups of people.
It is a philosophy that has guided Vitorovic from the beginning: “I was very lucky that I had many people who encouraged my passions early on,” he reflects. Despite immigrating from Serbia and attending an under-resourced public school in Florida, these early mentors pushed him to achieve. After reaching the finals of the Intel Science and Engineering Fair, and representing the USA in biochemistry olympiads, he went to Stanford—with the idea of becoming a physician-scientist: “during college I never really looked up—I finished undergrad early…I was very focused.”
While completing a master’s degree in biology with Helen Blau at Stanford, serendipity steered Stefan towards a different path: “I was riding my bicycle between classes and saw a bunch of people uncharacteristically dressed in suits. I realized it was a career fair.” The prospect of entering the workplace excited Vitorovic, and he applied to 42 internships. Only Credit Suisse took a chance on the scientifically knowledgeable, but financially ignorant college kid: “It was a whirlwind… I was lucky that I had a lot of people help me along the way. It was very humbling, and I am still friends with a lot of the folks that I worked with.”
Excited by the idea of communicating science in the business world, Vitorovic finished his master’s degree and left the lab: “I never did end up coming back to the bench.” After working in healthcare investment banking, he yearned to understand more complex healthcare businesses. He soon joined the private equity giant, TPG Capital: “This was an interesting experience to really understand how mature companies operate. However, it also reaffirmed that I really liked the earlier, creative and more R&D side of healthcare.” After completing an MBA at Harvard Business School, Vitorovic took a position at Third Rock Ventures, to help build these “earlier, creative” companies. At TRV he was part of the founding team of Decibel Therapeutics, and learned directly from the likes of Kevin Starr, Mark Levin and Alexis Borisy. He developed a passion for neuroscience and the untapped opportunities in the space (Q#7). He cites co-workers like Kiran Reddy, Steve Paul and Frank Gentile as inspirations: “At TRV I met so many of the folks that I still count as some of my closest relationships—both in business and personally.”
In 2017, Stefan made the leap to co-found Vida Ventures—now with the support of Boston biotech: “We were very fortunate in that the biotech community welcomed us with open arms.” As a Managing Director at Vida, Stefan serves on the Board of Directors for Vigil Neuroscience (“VIGL”), Tectonic Therapeutic, Volastra Therapeutics, and Souffle Therapeutics. He was previously a Board Director or Observer at Praxis Precision Medicines (“PRAX”), Kyverna Therapeutics, Oyster Point Therapeutics (“OYST”), Dyne Therapeutics (“DYN”), Sutro Biopharma (“STRO”), Biomet, and Aptalis Pharma.
In his career, Vitorovic has been guided by the principle that great communities enable success. This extends to his investment philosophy: “What gets us excited is…a team that has the requisite skills to develop an impactful medicine. I really emphasize team because we don't believe in “hero ball”—to develop a drug takes a village.”
In biotech, success is never guaranteed, of course. Yet, if success comes, it is to an exceptional group of individuals pushing forward in the same direction. Stefan sums it up: “Biotech is just really hard… but if you treat people well, work hard and stick to your principles, things will work out—of course a little bit of luck goes a long way too.”
Below is an interview with Stefan Vitorovic, co-founder and Managing Director of Vida Ventures from February 2023:
1. What was your first taste of science and medicine—briefly, what drew you in?
I have always had a passion for understanding how the human body works. Even from an early age, I was a tinkerer and experimenter. In elementary school, I remember experimenting on earthworms that I used for fishing: I exposed them to different nutritional conditions and recorded their growth. Around this time, I was also very into Bill Nye the Science Guy. Even before we had formal science classes I was the kid that was digging things up and playing with animals and bugs.
I was very lucky that I had many people who encouraged my passions early on, some great teachers, in particular. I went to a school that was focused on science, and we were taught to do experiments, and pursue the scientific method of inquiry. Some of those early experiences showed me that in science you could be an explorer—discovering new cells, molecules or novel interactions that can impact human health.
I went to a science and engineering magnet school: Blanche Ely High School, and they had a program for early exposure to science and research. In my sophomore year, I was admitted into a summer research program at the University of Florida, where I had my first real lab experience. I worked on non-viral delivery of gene therapy; we were using a rat model of glioblastoma multiforme [GBM] and seeing whether or not different cationic lipids, tweaked in various ways, could be capable of crossing the blood brain barrier and preferentially take up by the tumor cells. I was only there for a few months, but it was great to see all of the tools and technology in the lab—the experience got me excited about doing more.
The following year, I wrote an email to a researcher at SUNY Stony Brook—she was doing research on epidermal stem cells. Maja Matic took me into the lab, and I literally lived at her house, while I worked as a research assistant in the lab. She taught me how to think through experiments, and it was just a really cool and formative summer. I would wake up very early and go to the hospital to pick up fresh human foreskin samples. We would then harvest the pluripotent epidermal stem cells, which was the substrate for a lot of the lab’s work.
Later on, in high school, I was also involved in Intel sponsored science fairs. I came from a public school that was in an underprivileged area, and we weren't as well resourced, but [participating in these competitions] I realized I enjoyed the communication of science a lot. I went to the National Science and Engineering Fair on two or three occasions and traveled to Taiwan to represent the US in the biochemistry and biology. We brought home gold for the States, and it was just a cool experience to see people from all different countries excited about science. I realized that science is universal.
[On discovering an interest in business in college]
I really enjoyed my time in the lab in undergrad [Stanford] and grad school. Originally, I thought I would follow a similar path to you and get an MD-PhD. That was always my base case, even before going to undergrad. So, during college I never really looked up—I finished undergrad early, didn't do a lot of extracurriculars or travel. I was very focused. But after meeting some MD-PhD’s I thought: “I'm signing up for something that's going be another 10 to 12 years of training. I should make sure I really want to do this.”
Since I had never tried anything else, I just spoke with some of my friends at school. The ones interested in business were doing general training programs at either consulting or investment banking firms. I remember one afternoon, I was riding my bicycle between classes and saw a bunch of people uncharacteristically [at Stanford] dressed in suits. I realized it was a career fair. So I walked around, and didn't know any of the companies, but the one I did recognize was Genentech. The lady at the booth asked me for my resume, and I didn't have a resume. But even so, she seemed excited about me working there in a research capacity. So, it was an early realization that I could get a job without doing a decade of additional study.
Over the next few weeks, I started to read more about business, and decided to apply for some internships—something to show me what life looks like outside the lab. Without really knowing any of the names, I applied to 42 investment bank internships. The first two months I didn’t get a single interview, and then finally I got one. I started to prepare [for the interview] and I realized that they were going to grill me on stuff I didn't know anything about. So, I just went in and was pretty transparent and said: “I know science pretty well. I work really hard, and I'm pretty cheap labor. I promise I'll do my best.”
I guess they took a bit of a risk on me, partly because they were recruiting for a life science focused group. I think they saw that maybe I could add value beyond just the finance side. I took that internship for three months. It was a whirlwind; I worked on a leveraged buyout by the Blackstone Group—initially I didn't even know what Blackstone, private equity or debt were; I could barely find a bathroom. But I was there, and I was learning how to spread comps and read income statements. I was lucky that I had a lot of people help me along the way. At the end of that time, they gave me an offer. It was very humbling, and I am still friends with a lot of the folks that I worked with. They wanted me to sign on the spot, but I asked for some time to consider.
So I went back to the lab and thought about it. Personally, I was thinking: am I going to practice medicine? Do I want to be a researcher and PI? I was trying think not only in 12 years, but about the rest of my life. I find research and medicine to be so noble, but I realized my passion was trying to integrate or apply science to business. At the time, I didn't know anything about investing. But I did ultimately decide to pursue business, at least for a year or two, with the idea of potentially coming back to science. But, I never did end up coming back.
2. When you look back on your former training in science and investment banker—how did these experiences shape your current process as a biotech investor?
I think a large component of my path has been serendipitous—perhaps it only makes sense now looking backwards. I initially moved into private equity [TPG], because I wanted to learn how more complex businesses operate. I think life sciences are extremely complex in terms of the basic science, translational and clinical development and regulatory sciences--but many of the companies are pre-revenues. From a pure “business model” standpoint, they're not as complex. Working in PE I got exposure to large hip and knee manufacturers like Biomet, or vertically integrated spec pharma companies, healthcare services providers or hospital systems.
So, this was an interesting experience to really understand how mature companies operated. However, it also reaffirmed that I really liked the earlier, creative and more research and development side. In business school [HBS] I was fortunate to get introduced to Third Rock Ventures [TRV].
3. Prior to starting Vida Ventures, you were at TRV as a principal. Who were some key mentors there, and what lessons did you learn about investing?
When I first heard about TRV, I was intrigued because there were folks there who had seriously impressive backgrounds and had done important work. At the same time, they didn't seem to take themselves too seriously. They had a culture about them that was very inclusive and team oriented.
It was again serendipity that they were looking for someone who had a combination of science and finance background. At TRV I had the great fortune of meeting amazing people, including the founders and partners, but also excellent principals, associates and venture partners. So TRV was my first foray into biotech. TRV, while it is a “venture capital shop” is very different in that many folks are very operational. It's not just making things look pretty in a PowerPoint deck, it's actually about enacting plans. I got the fortune of working on a few companies, including helping to launch Decibel Therapeutics. I also had the great fortune of joining one of the companies for about a year and a half, and learning from the amazing management team, board and scientists—I learned what it was really like to be in a biotech company.
At TRV I reported to Kevin Starr. He's one of the co-founders of the firm and has an incredible ability to synthesize complex information. He’s also a very passionate leader who is driven by unmet need for patients, but is also a really fun person. I also worked with Mark Levin, who's one of the most creative people I've ever met and was very supportive in celebrating the uniqueness of individuals. Alexis Borisy—a fierce entrepreneur who's also incredibly creative and hardworking. I also worked with Kiran Reddy who I learned so much from on the CNS side, along with Steve Paul. I would also call out Frank Gentile, who helped me think about putting everything into context, and about pacing and building sustainably. At TRV I met so many of the folks that I still count as some of my closest relationships—both in business and personally. It’s very much a team sport there, and they often refer to the concept of “group genius.” I really bought into that idea [of group genius] and am really grateful for my experiences there.
4. Now looking back as a more seasoned investor—what would 2023 Stefan tell his younger, former self?
Investing in biotech is not for the faint of heart. Biology is incredibly complex. With the tools we have today, it is hard to take a reductionist approach and isolate the variables that drive success. It's also very hard [in science and medicine] to discriminate between causation and correlation. You can have all the best people, with all the best intentions, work incredibly hard for four years, and the outcome can be a zero or seem like failure.
I think that it is important is to view science and biotech as noble pursuits. Of course, we want to optimize our probability of success; but when we do reach roadblocks and failures--I think everyone in biotech has those scars—you have to find the value or “nobility” in those failures, and extract lessons learned. Just like in science, failed experiments or negative data can lead to future success. Of course, negative results are not as satisfying as having a great outcome—for the company or for patients. Nonetheless I wish I had viewed the industry with this mindset earlier on.
The other thing I would have told myself is that: operating a biotech is just really hard. It's easy to critique decisions from the outside [as an investor]. But when you are an entrepreneur faced with limited information, time ticking down, substantial burn and a limited pool of resources –it is really tough. Founding teams must be nimble and do the best they can with somewhat scarce information in front of them. Early on [at TRV] I found myself saying: “Well, could they have had 300 patients rather than 200, in that study? Or: “Should they have used this better control?” Or I would focus on some other issue that may or may not obfuscate the data. There are so many potential pitfalls, and even the best teams don't always think of everything. So, I would tell my former self to be just a little bit less critical of those decisions, and to not play Monday morning quarterback from my “ivory tower.” Now [at Vida] I am more often in the trenches with management teams, operators, and scientists—we are all doing the best we can with limited information and capital.
5. When you co-founded Vida in 2017, what was it like to be a fledgling fund amidst the bigger shops in Boston or the West Coast? What helped you win those early deals?
We were very fortunate that [in 2017] the biotech community welcomed us with open arms. We had built a lot of the relationships from academia and in our careers as investors, which transferred over to Vida. We [Vida founders] always had the attitude of wanting to prove that we were worthy of being at the table and could contribute—beyond just the capital. That has always been the ethos of Vida, which is a hybrid firm of entrepreneurs, operators, and investors. We [Arjun Goyal and I] had the good fortune of partnering with co-founders who had been operating businesses for decades, had gotten drugs approved and had previously started funds [Arie Belldegrun and Fred Cohen].
So, Arjun and I had a lot of support from our co-founders and other scientific advisors. I have found that if you do things the right way: if you treat people well, work hard and stick to your principles, things will work out—of course a little bit of luck goes a long way too, and we definitely had our fair share. Pretty soon after we started the fund [2017] people recognized what it was about, and that we are trying to be here for the long run. Most importantly, we are trying to do things for the benefit of humanity and patients—as well as our stakeholders or co-investors. In the beginning, it was definitely not easy—there were many curveballs and unexpected shoals that we would not have predicted. But overall, it was a very welcoming industry and community; I think our story resonated with a lot of the operators and founders of other firms, and they understood what we were trying to do.
6. Today, what gets you really excited about an investment opportunity? As you construct a model in your head of a company and gather data through diligence, what are the elements you are looking for?
I’ll mention some key ingredients that I think a lot of people would agree with. First, there is no doubt that you need a great scientific foundation and phenomenal people. From that base, you also need to have a realistic plan that you can finance. Companies come in various shapes and sizes; at Vida we decided to be stage agnostic at the get-go, which meant that at times we look at basic science around new targets or pathways. At other times, we are evaluating clinical data and think about funding phase three trials. So there has been a decent amount of breadth within the science and medicine, and also different stages of financing: from first institutional seed financings to scale transactions and carve outs. What gets us excited is when you can find that intersection of great science and a team that has the requisite skills to develop an impactful medicine. I really emphasize team because we don't believe in the “hero ball” philosophy—to develop a drug takes a rich mosaic of individuals including the management team, but also VPs and scientists, advisory board members, friends of the firm and even CROs and patient networks. It really does take a village.
We also want to make sure that the science has the potential to really dent the standard practice of medicine and is worth all of this effort. We spend a good amount of time thinking about sort of the sequencing programs, the stacking of risk and how to de-risk with the right integration of business development and finance strategy, and finding the best human capital. When you see examples of all of these pieces working together—it really clicks. Unlike other spaces, where you are thinking about the last 12-month revenues and projecting the coming 12, our business is not necessarily linear. It requires a lot of work and daily, arduous contributions from the team. Sometimes it’s difficult to tell if you're on track for success. Investors and teams need to have a component of belief and be optimistic.
Biotech is this weird industry where you have to be optimistic, but also paranoid about asking questions like: “What are you missing? What is the data showing, and its it robust? What needs to be replicated? How is the standard of care or competitive landscape changing?” There is this yin and yang of hope/optimism and critique/rigor. We really look to find management teams that resonate with our philosophy [paranoid optimism].
There are ways to make money in biotech without making medicine, which we saw over the last few years when things were largely up and to the right. But that is not satisfying for anyone on our team. There have also been times when [companies] might be able to make a drug, but could not generate sustainable profit—due to a lack of differentiation, crowded space, IP issues etc. What we try to create are sustainable businesses, which make medicines and generate returns over time. I wish there was like “one key ingredient” that you could identify—but all components are important. There is also an art to investing—even if the valuation isn’t where you have modeled it to be, there are times when you have a gut feel, because you think the management will figure it out. Or, you've just got a sense that in a given area, some breakthroughs will come. That's the art, which cannot be reduced to an Excel file or PowerPoint deck. Learning this “art” requires a little bit of repetition, and a little bit of belief and guts.
7. What are a couple areas of science and medicine you are very excited about seeing develop in the next couple years? Which are interesting companies playing in this space? Any validating trial readouts/results to look out for in 2023 or 2024?
I'm excited about CNS. The unmet needs in neuroscience are massive. Our ability to understand the brain is getting meaningfully better every few years with the tools at our disposal—this includes our ability to measure biomarkers from blood and CSF, effectively utilize PET scans and MRIs, and perform single cell analyses to deconvolute complex pathways. With advances in genetics we can now stratify more homogeneous patient populations for clinical trials. Neuro certainly is not where oncology is, but the area as a whole is making strides. If you look in just the last few years: we now have a medicine that will be approved for Alzheimer's disease. It [lecanemab] is not a panacea or a cure, but it does clearly change the progression of the disease and slow decline. We are studying a number of genetic CNS disorders, and have developed the ability to alleviate some of these [e.g. spinal muscular atrophy]. I am excited about cell therapy indications for Parkinson’s disease, and going beyond symptomatic therapies like L-DOA. In ALS there is finally some hope, coming from oligonucleotides, gene therapies, and even some small-molecule agents [Amylyx] that have been trialed at the MGH. Neuropsych and schizophrenia, remain very complex and extremely debilitating disorders. But there have been some major breakthroughs for companies like Karuna and Cerevel. There have been some new depression treatments as well: Sage in particular is compelling, especially in the post-partum space. In neurodegeneration, I mentioned Biogen, but Eli Lilly also will soon have a big read out [anti-amyloid mAb]. In the long term, I think the understanding of immune system interactions in the brain is going to be a ripe area for discovery. The role of microglia in driving disease has been understudied, and we're excited Vigil Neuro’s work in showing how microglia drive both rare and common neurologic disease. Lastly, in epilepsy there has been a huge amount of activity and very exciting new drugs approved from a number of companies--developing ASOs or brain penetrant small-molecules that are more selective for particular ion channels. Praxis, Xenon and GW Pharma [Jazz] are some companies leading these efforts.
People have always referred to neuro as a “graveyard” or “blackbox.” I think we're starting to shed some light in that box and are seeing some life in that in that graveyard. I'm optimistic about CNS in the coming years.
8. It is hard to get a job (or even fellowship) as an investor. What is a piece of advice for someone trying to break into VC? What are a couple proactive things they can do to put themselves in a good position?
I think it all starts with a passion. The passionate will be the ones that overcome the hurdles to getting there—in any industry. I think educating yourself in science and medicine is helpful, no matter what stage of investor you want to be or what your background is. The flip side of that is educating yourself in the business is also helpful. The biotech industry itself also has its own set of news flow and companies and activities. I would recommend people follow along and read publications like Fierce Biotech, Endpoints and BioCentury.
Interacting with people who are practitioners--whether they're research scientists, IP attorneys, investment bankers, consultants, executives, CMOs, regulatory folks, people at the FDA, CROs, or patient groups, is helpful to gain a wider perspective. Biotech is a rich, diverse and complex industry that has so many different inputs. Ultimately you can be an investor, or BD executive or research scientist. There are so many avenues for entering our industry—don’t become myopic in your goals.
There's a myriad of different backgrounds that sort of people have come from in a place like Vida and other top institutions. Following your passion, reading voraciously, understanding the language of IP or regulatory, commercial, basic science or medicine, can help point you in the right direction and highlight ways that you can contribute.