The Life Cycle of a Biotech Startup

Have you ever wondered how a discovery in the lab becomes a real-world therapeutic? We all know it takes a lot more than a genius idea to build a successful start-up. In the highly-regulated biotech and pharmaceuticals space, it is an expensive and time-consuming process. After all, biology can’t be rushed. Let’s look at the different stages in the life cycle of a biotech startup.

Stage 1 – Discovery

The discovery stage starts with a novel scientific observation that has the potential to translate into a therapeutic product to address unmet clinical needs. This phase typically occurs in academic laboratories and involves identifying novel drug targets, elucidating disease mechanisms, or discovering new biologicals with therapeutic potential. Success at this stage requires not only deep scientific rigor but also an understanding of the current clinical landscape and translational potential of the discovery.

Take the example of ‘Mounjaro’, a prescription drug called tirzepatide, primarily approved for managing blood sugar levels in adults with type 2 diabetes. More recently, it has also been approved as ‘Zepbound’ for its ability to promote weight-loss. These drugs are GLP-1 receptor agonists and function by increasing insulin secretion after eating, helping to move sugar into cells, slowing digestion, and promoting feelings of fullness. This leads to reduced calorie intake and weight loss.

This discovery started in the early 1980s with research on the proglucagon gene. Proglucagon is a precursor protein that the body cuts into smaller pieces to create several different hormones, including glucagon (which raises blood sugar) and GLP-1 (which lowers it).

TIMELINE – Key Scientific Discoveries

GLP-1 Discovery (1982-1996)

1. Proglucagon Processing in the Gut (1983-1984)

Dr. Daniel Drucker during his postdoc in the Habener lab in 1984 demonstrated that Proglucagon is broken down into Glicentin, GLP-1 and GLP-2 in the gut. This was distinct from the pancreas, where it did not give rise to GLP-1 or GLP-2. This tissue-specific processing was revolutionary as it showed that the same gene could produce hormones with opposite effects depending on which enzymes cut it apart.

• GLP-1 Stimulates Glucose-Dependent Insulin Secretion (1985-1987)

Further investigation showed that a shortened form of GLP-1 directly stimulated glucose-dependent insulin secretion from pancreatic beta cells. Importantly, this only occurred under conditions of elevated glucose, providing an inherent safety mechanism against unwanted drop in blood sugar.

• The Anorexigenic Discovery (1996)

The transformative moment came in 1996 when Stephen Bloom’s group at Hammersmith Hospital in London, along with Tang-Christensen and colleagues in Denmark, independently discovered through animal studies that GLP-1 administration reduces food intake.

This discovery expanded the therapeutic potential of GLP-1 from just diabetes to obesity and metabolic syndrome, conditions affecting over 2 billion people globally.

Stage 2 – Pre-clinical Development

Pre-clinical development transforms a biological target or lead compound into a clinical candidate suitable for human testing. This stage involves iterative testing and refinement of the product. Three key areas of focus for developing typical drugs are: how the drug works in the body (pharmacology), whether it’s safe (toxicology), and whether it can be produced at scale (manufacturing). The goal is to generate sufficient data with pre-clinical models, including animal models, or cells, to prove safety and efficacy of the drug. The researchers can then file applications to investigate their identified biological as a new drug, which varies from country to country. For example, in the United States, researchers would file an Investigational New Drug (IND) application with the Food and Drug Administration (FDA), which permits human clinical trials.

BLURB – Most researchers can also apply for a patent in Stages 1 or 2 to safeguard their novel product from being commercialized by others. Interestingly, the GLP-1 story followed a different model. The foundational discoveries were published openly without restrictive patents on the basic biology. This allowed multiple companies (e.g., Novo Nordisk, Eli Lilly, Amgen, AstraZeneca) to develop different GLP-1-based therapeutics.

Stage 3 – Clinical Trials

Clinical trials represent the most critical and expensive phase of drug development. The FDA requires a phased approach: Phase 1 (safety in healthy volunteers or patients), Phase 2 (proof-of-concept in patients), and Phase 3 (pivotal efficacy and safety trials) before approval. Each phase has distinct objectives and endpoints, and given high failure rates, for many potential therapeutics this is where their story ends.

TIMELINE – Tirzepatide Clinical Trials:

Phase 1: First-in-Human Studies (2016-2018)

Phase 1 trials for tirzepatide were conducted in healthy volunteers and patients with type 2 diabetes leading to dose selection for Phase 2/3 and establishing speed of action, persistence in the body, safety and tolerability.

Phase 2: Proof-of-Concept (2018)

316 patients with type 2 diabetes participated in the phase 2 trial for a 26-week period conducted by Frias et al. leading to proof of concept and approval for Phase 3.

Phase 3: SURPASS Program (2018-2022) – Type 2 Diabetes

Eli Lilly conducted five global Phase 3 trials (SURPASS-1 through -5) and two regional trials in Japan, collectively enrolling over 10,000 participants, which strengthened their case for regulatory approval. This trial demonstrated statistical superiority over the leading competitor, a critical finding for market positioning.

Phase 3: SURMOUNT Program (2019-2024) – Obesity

To gain approval for weight management in non-diabetic individuals, Eli Lilly conducted the SURMOUNT program. This trial demonstrated that tirzepatide maintains and extends weight loss achieved through lifestyle modification, compared to placebo, addressing a major challenge in obesity treatment.

Stage 4 – Regulatory Approval

Regulatory approval is the gatekeeping step between clinical development and commercialization. In the United States, the Food and Drug Administration (FDA) Center for Drug Evaluation and Research (CDER) reviews New Drug Applications (NDAs) for small molecules and Biologics License Applications (BLAs) for biological products. The European Medicines Agency (EMA) performs analogous functions in the European Union, and Health Canada for Canadian approval.

The review process is rigorous, with regulatory body reviewers independently analyzing all clinical trial data, manufacturing processes, and proposed labeling. Approximately 90% of drugs entering clinical trials never receive FDA approval!

(TIMELINE) Mounjaro and Zepbound’s Journey towards Regulatory Approval:

Eli Lilly engaged in extensive pre-submission interactions with the FDA through formal meetings since 2019. After the NDA was submitted in May 2021, it took a whole year until FDA approved it in May 2022. It was later approved by the EMA in July 2022, followed by Health Canada in November 2022, Australia in December 2022, and finally in Japan in April 2023.

(BLURB) Eli Lilly made the strategic decision to brand tirzepatide differently for obesity (Zepbound) versus diabetes (Mounjaro). This helped them differentiate indications of the drugs for marketing and allowed separate pricing strategies. Zepbound’s NDA was granted a fast-track designation by the FDA, given Mounjaro was already approved. It still took a whole year to approve Zepbound for obesity in November 2023.

Stage 5 – Commercialization

Commercialization represents the culmination of 10-15 years of development efforts. This stage involves scaling up production to make millions of doses, building a sales team to reach doctors and patients, negotiating with insurance companies to get the drug covered, and managing the product strategically to maximize its impact and value over time. For most biotechnology startups, commercialization is handled by partners or acquirers, as building commercial infrastructure requires hundreds of millions in capital and medical commerce expertise.

Launch Strategy for Mounjaro:

Prior to FDA approval, Eli Lilly invested heavily in manufacturing capacity, spending US$2.5B+ in capacity expansion from 2020-2023. Despite this preparation, demand exceeded supply. In December 2022, just a couple months after Mounjaro’s approval, FDA declared tirzepatide in shortage. This shortage was resolved only in October 2024. Demand coupled with Eli Lily’s strategic pricing in different countries, patient support programs, partnerships with Medicare/Medicaid programs, and direct-to-consumer marketing has yielded astounding results. From a revenue of 274M in 2022, to an estimated revenue of 13B in 2024, Eli Lily’s two tirzepatide drugs are among the fastest growing drug launches in pharmaceutical history!

The tirzepatide that traveled from a Toronto laboratory to medicine cabinets around the world tells an inspiring and unusual success story of Eli Lily’s journey from a biotech startup turned pharma giant.

References:
1. https://www.v-bio.ventures/from-lab-to-market-the-life-cycle-of-a-biotech-startup/

2. https://biobostonconsulting.com/key-milestones-in-the-lifecycle-of-biotech-innovation-bioboston-consulting/

3. Drucker, D.J., Habener, J.F., & Holst, J.J. (2017). Discovery, characterization, and clinical development of the glucagon-like peptides. Journal of Clinical Investigation, 127(12), 4217-4227

4. Drucker, D.J., Mojsov, S., & Habener, J.F. (1986). Cell-specific post-translational processing of preproglucagon expressed from a metallothionein-glucagon fusion gene. Journal of Biological Chemistry, 261(21), 9637-9643.

5. Mojsov, S., Weir, G.C., & Habener, J.F. (1987). Insulinotropin: glucagon-like peptide I (7-37) co-encoded in the glucagon gene is a potent stimulator of insulin release in the perfused rat pancreas. Journal of Clinical Investigation, 79(2), 616-619.

6. Turton, M.D., O’Shea, D., Gunn, I., et al., & Bloom, S.R. (1996). A role for glucagon-like peptide-1 in the central regulation of feeding. Nature, 379, 69-72.

7. Frias, J.P., Nauck, M.A., Van, J., et al., & Haupt, A. (2018). Efficacy and safety of LY3298176, a novel dual GIP and GLP-1 receptor agonist, in patients with type 2 diabetes: a randomised, placebo-controlled and active comparator-controlled phase 2 trial. Lancet, 392(10160), 2180-2193.

8. Frías, J.P., Davies, M.J., Rosenstock, J., et al., & SURPASS-2 Investigators. (2021). Tirzepatide versus semaglutide once weekly in patients with type 2 diabetes. New England Journal of Medicine, 385(6), 503-515.

9. Jastreboff, A.M., Aronne, L.J., Ahmad, N.N., et al., & SURMOUNT-1 Investigators. (2022). Tirzepatide once weekly for the treatment of obesity. New England Journal of Medicine, 387(3), 205-216.

10. U.S. Food and Drug Administration. (2022, May 13). FDA approves novel, dual-targeted treatment for type 2 diabetes [Press release]. https://www.fda.gov/news-events/press-announcements/fda-approves-novel-dual-targeted-treatment-type-2-diabetes

11. U.S. Food and Drug Administration. (2023, November 8). FDA approves new medication for chronic weight management [Press release]. https://www.fda.gov/news-events/press-announcements/fda-approves-new-medication-chronic-weight-management

12. Eli Lilly and Company. (2025, February 6). Lilly reports full Q4 2024 financial results and provides 2025 guidance [Press release]. https://investor.lilly.com/news-releases/news-release-details/lilly-reports-full-q4-2024-financial-results-and-provides-2025