5 Questions with Sara Nayeem, M.D., a Partner at New Enterprise Associates (NEA)

“5 Questions With……” is a weekly BioBuzz series where we reach out to interesting people in the BioHealth Capital Region to share a little about themselves, their work, and maybe something completely unrelated. This edition features Sara Nayeem, M.D., a Partner at New Enterprise Associates (NEA)

Sara Nayeem, M.D. is a Partner at New Enterprise Associates (NEA), a large diversified venture capital firm.  Sara joined NEA’s healthcare team in 2009 and focuses on investments in biopharmaceutical companies. She serves on the boards of Centrexion, Complexa, Cydan, Imara (IMRA), Tiburio, and a stealth targeted oncology company. She previously served on the boards of Vtesse (acquired by Sucampo), Mersana (MRSN) and Therachon and as a board observer for Loxo Oncology (LOXO, acquired by Lilly), Tesaro (TSRO, acquired by GlaxoSmithKline), Clementia (CMTA, acquired by Ipsen), Nightstar (NITE, acquired by Biogen), Ziarco (acquired by Novartis), Omthera (OMTH, acquired by AstraZeneca), Epizyme (EPZM), Millendo (MLND) and Zyngenia.  She also serves on the boards of the New England Venture Capital Association and BioHealth Innovation Management, and on the Advisory Council of Incubate Coalition. She was included on Fierce Biotech’s 2019 list of the Fiercest Women in Life Sciences and was selected three times as one of GrowthCap’s Top 40 Under 40 Growth Investors. Prior to joining NEA, Sara was an investing banking Associate with Merrill Lynch’s Global Healthcare Group, and previously, she worked as an investment banking Analyst at Morgan Stanley. Sara concurrently earned her MD (cum laude) and MBA from Yale University, where she was a Yale MBA Scholar. She received her AB (magna cum laude) in Biology from Harvard University.

1. What was your first job/role in biotech?

My first job in the industry was as a Summer Associate in Merrill Lynch’s healthcare investment banking group. Merrill Lynch is now part of Bank of America, but at the time it was an independent, bulge bracket investment banking firm. I was at Yale in the joint MD / MBA program and I was beginning to wrestle with the question of whether I should pursue a primarily clinical career or consider a career in healthcare finance. While I had spent two years as an investment banking Analyst at Morgan Stanley before matriculating to medical school, it was a much more satisfying experience to be part of a healthcare-focused team. That summer I worked on the acquisition of a company in the age-related macular degeneration space, which was also the area of my thesis research at Yale. I enjoyed seeing the medical and financial worlds overlap in our support of biopharma and medical technology clients who were developing novel drugs and devices. Ultimately, I realized that I was more drawn to the strategic and innovative aspects of the life sciences industry than to clinical practice, and I decided to return to Merrill Lynch following graduation rather than pursue a residency.

2. Tell us about your current role and your current employer.

New Enterprise Associates (NEA) is a global venture capital firm focused on helping entrepreneurs build transformational businesses across multiple stages, sectors, and geographies. The firm is more than 40 years old, with nearly $24B in cumulative committed since inception. We are currently investing out of NEA 17, which is a ~$3.6B fund.  NEA’s biopharma practice invests in all therapeutic areas, across all stages, in both private and public biopharma companies.  I have been at NEA on the biopharma team for more than eleven years and have invested/been involved in companies across all stages and therapeutic areas, but with particular concentration in the rare disease space and oncology.  It is a great privilege to get to work with incredible founders and management teams, helping to finance both early research work and clinical development in rapidly evolving areas of science.

3. In your opinion, how has COVID-19 impacted the Venture capital world?

I think initially COVID-19 was a shock to the system – to individuals struggling with the risks to themselves and their families, in addition to the changes in their work and travel routines; to VC-backed companies which endured, in the biopharma space, delays in trial recruitment and CRO activities, and in industries with commercial-stage companies such as consumer technology, sometimes even more dramatic disruptions to revenue and cash flow; and to VC firms, which had to quickly pivot to understand the impact of the pandemic on potential liquidity events and required reserves across their portfolios. Some firms didn’t experience much of a chilling effect on their investing activities; but overall I think investors slowed down a bit in the spring, and some companies slowed their financing activities as well as they tried to get a handle on timing for clinical milestones. I think we’ve reached an acceptance of the status quo now, with investors and entrepreneurs recognizing that deals will need to get done even if we can’t meet in person, or tour lab space and manufacturing plants.
Within the biopharma space, we’ve also now pivoted to a period of remarkable exuberance for public biopharma stocks. This in turn has had a positive impact on private financings. Biopharma has become a defensive sector; while the pandemic has impacted clinical development activities, investors recognize that the healthcare industry will continue to exist and that clinicians will continue to seek new drugs to help patients. The medium and long-term outlooks for industries such as travel, hospitality, restaurants, and retail continue to be murkier. In addition, the public is more aware of the importance of pharmaceutical innovation than ever before. We’ve also seen a decrease in drug pricing pressure, which had the potential to have a long-term chilling effect on the availability of venture capital for biopharma. This is an important moment for the biopharma industry to step up with COVID-19 therapeutics and vaccines, as well as to demonstrate that it can price drugs rationally.

4. What area of the BioHealth world do you feel has the biggest potential for improvement (ex: Equality, Technology, Regionally, etc.) and why?

Post the horrifying murder of George Floyd, widespread protests, and current movement against social injustice, it has been encouraging to see leaders across many industries finally grappling with issues of equity, diversity, and inclusion. There are well-documented disparities in health and health care across many dimensions, including race/ethnicity, immigration status, socioeconomic status, gender, age, sexual orientation, and disability status. The biopharma industry is one step removed from healthcare delivery, but we do have the opportunity to improve diversity within clinical trials, as well as within our own workforce. Increasing funding for and attention on new drug candidates in under-resourced areas such as mental health and substance abuse would also help reduce health disparities. We must also take on the challenging task of addressing drug pricing.

VC-backed biopharma companies occupy a different niche in the innovation ecosystem than large pharma companies, and entrepreneurs and investors must be vocal in the dialogue around how to solve issues of access and cost while avoiding the “blunt force” methods (such as international reference pricing) that would quickly produce a chilling effect on the industry. We also need to do a better job of highlighting the value of our “generic stockpile” of inexpensive, effective drugs that have gone off-patent and serve to benefit society indefinitely in most cases. Peter Kolchinsky’s recent book, The Great American Drug Deal: A New Prescription for Innovative and Affordable Medicines, is a great primer on the topic of drug pricing for those in the industry who want to join in the debate.

5. What are you interested in that most people haven’t heard of? Tell us about it.

I’m really intrigued by digital therapeutics – that is, software-driven, clinically-proven interventions that are prescribed, covered by insurance, and have a claim to prevent, manage, or treat a medical disease.  These therapeutics have great potential in areas such as mental health, substance abuse, and management of chronic diseases.  Thus far only a few digital therapeutics have garnered FDA approval.  The first was Pear’s reSET program, approved in 2018 for people struggling with substance use disorder; more recently, the FDA approved EndeavorRx, a prescription-only game-based device for children with attention deficit hyperactivity disorder.  And there have been a handful of other FDA-approved apps, such as a birth control app and an Apple Watch ECG app used to detect irregular heart rhythms.  Given the broad move to telemedicine as a result of the COVID-19 pandemic, I think clinicians and patients are more open to thinking about digital applications for health than they were previously.  While work in this space is still nascent, I think it raises interesting questions: how do FDA-approved apps intersect with popular consumer health apps, such as Noom for weight loss, or apps to track fertility?  In some cases, companies (such as newcomer Calibrate in the metabolic health space) may combine prescription medicines and an app that offers health coaching.  Artificial intelligence is already being used to help clinical decision-making (e.g., to identify hospitalized patients who are at risk of a precipitous decline in health, to spur clinicians to have an end of life conversation) – how will AI impact the development and real-life assessment of digital therapeutics?  Do long-standing privacy concerns and the multiple stakeholders between pharma and patients pose hurdles to pharma companies being able to “go digital”?  How will the proliferation of genetic information and gene / RNA editing tools intersect with AI and machine learning technologies?  Those who watched the latest season of Westworld would have seen some creepy, futuristic digital therapeutics on display.  We have a long way to go (thankfully) before we reach that point, but it’s worth considering the pros, cons, and implications of digital therapeutics at each step along the path.

Thank you to Sara Nayeem for participating in the ‘5 Questions with BioBuzz’ series and stay tuned for more interviews with others from across the BioHealth Capital Region.