Tell us more about Scailyte and your business model.
We are a 4-year-old startup, a spinoff from ETH Zurich, that is now based in Basel. Our focus is on analysing single-cell data, which is a new type of biomedical data.
Our business model is rather unconventional. The first 2 years saw us focusing on developing our software, which is our discovery engine and the core asset of the company. For the last 2 years, we have been focusing on building a portfolio of biomarker projects.
By utilising the single-cell data and clinical data from our global network of hospitals for discoveries as input, we obtain the output of gene or molecular signatures that could be used as biomarkers. These biomarkers are the prototypes for diagnostic assays, which we protect by filing patent applications on the gene signatures and the diagnostic methods.
We then seek licensing partners who would take them further into the next or final step of development, before putting them on the market. In a way, it has a similar model to what biotech companies are doing in drug discovery, but this is not as common in diagnostics.
One reason why this doesn’t exist much in diagnostics is because the technologies used for biomarker discovery are rather conventional and less complex. In terms of genomics and single-search genomics, the expertise required for discovery was similar to the development expertise. Now, the discovery technologies have evolved and they allow us to discover even more sensitive biomarkers, but it comes with a certain level of complexity and skill set.
At Scailyte, as we are really good at interpreting single-cell data, we decided to build a biomarker portfolio instead of putting all our resources into only one biomarker, to capture all the value that we’ve created.
I don’t know any other company that is doing that. We need to validate this model and show that it works. We are about 2 years away from getting our first revenues based on the licensing agreements that we now have.
Had you always known you would build a biomarker portfolio?
No. As with any startup, it’s never obvious from the start what your business model will end up looking like. Initially when we started, we had a Software-as-a-Service business model in mind. That was four years ago, and these single-cell technologies were rather new and the major bottleneck was in data analysis.
We developed a software that can analyse the data and make the process much faster and more efficient in terms of computational resources. We could accelerate R&D work at universities and pharma companies. Our target group would be biomedical scientists who designed projects, without the need for third parties to interpret results.
However, we realised that this business model was not great. It was undervalued and researchers were not ready to pay too much in licence fees for research software. On the other hand, you would need to continuously develop new features and functionalities for the users, which means that the development costs for such a software would be rather high.
2 years down the road, the profit margin was small. We had to rethink the whole concept for a new long-term business model. That’s when we came up with this idea to make the software our internal R&D engine, and to use it to build a portfolio—not by monetising the software, but the results of the software.
Why did you decide to found Scailyte?
During my PhD, I had the chance to develop some of the first single-cell methods and to generate the first single-cell data. I realised that it’s a really radical new type of biomedical data that’s different from bulk sequencing. They had to develop custom tools to analyse the sequencing data, but it didn’t work because this data had different properties. What we do with single-cell data can change biomedical research, with the potential for clinical applications.
In genomics, the first human genome was sequenced in the year 2000 or 2001. It took another 10 years for this technology to be established and robust, whilst being affordable for clinical applications. Now we have a lot of companies that are using genomics for sequencing, diagnostics and screening.
Following the same trajectory here, 5 years from now we may have a situation where companies will be using single-cell technologies for diagnostics and other clinical applications. In the end we decided to focus on the software because this is really the key part that is missing.
Another driver is how better diagnostics could ultimately have an impact on the whole patient journey. My father got diagnosed with a type of leukemia and unfortunately, he passed away just before I started Scailyte. He went through several treatment cycles over the course of 4 years. By the time they managed to properly diagnose the condition, he was already at a very late stage and there was no way to treat it.
We need to put more effort in the diagnostics and stratification of patients, especially in diseases like oncology and immune disorders where differences in patients can be huge, in terms of how they respond to different treatments.
Also, the amount of money that is put into R&D for drug discovery versus discovery diagnostics is very imbalanced. If this shifts and there is a composite model where patients have complementary biomarkers and diagnostics for all the different drugs that are being developed, they could receive the right treatment in the first place.
Can you share some challenges you faced?
Raising funds is always a challenge especially in the European landscape. The market here is more fragmented compared to the US. It is a challenge for many European startups because we spend a lot of energy fundraising rather than developing our product and commercialising it.
Have you always known that you would become an entrepreneur?
No. At the beginning, I was on an academic path doing a PhD in genetics. Upon completing my PhD, as with many others, I contemplated whether to stay in academia or to move into an industry-specific career. Before starting Scailyte, I worked for another company for a few years in single-cell technology as well.
As an entrepreneur, the discoveries that we do motivate me. It’s scientifically interesting, and although it may take 10 – 20 years to see the impact in our society, I wanted to get into a position where I could expedite this.
Best and worst part of being a CEO?
The best part is you can shape the course of the company in the early stages. For me, as somebody who came from a scientific background, stepping into the business field as a CEO of a biotech meant I learned a lot of other things, and this constant learning motivates me.
Fundraising, for example, can be challenging and exhausting at times, but the fulfilment balances things out.
Can you share a highlight?
One of the highlights was the first biomarker that we discovered. This was the proof of concept to show that this approach really works. Another was attracting big investors, as having their support fulfills our long-term vision. A third key achievement was when we signed our first commercial contract earlier this year. Now we are getting closer to the market.
I am also amazed that the candidates responding to our job vacancies are really highly qualified, from a good pool of top talents, even though we are just a small company. People are attracted by what Scailyte has to offer and what we do.
What is your view on failure?
To experience failure is important and one should not be afraid of failure, but rather embrace it. Especially when you are working in the startup field, you’re taking a lot of risks and many things will not work, that is just the nature of it.
Instead of ignoring these failures or trying to avoid it, we could really analyse the situations to improve our processes and avoid making the same mistakes.
Some lessons learned along the way?
So many lessons ☺.With the software business model for example, whatever you do, you’d want to develop, and potentially validate it, very early on with the end users, such as customers or patients. The feedback that you get, even if it’s just an idea, can allow you to better shape the team and business model. It is really important to do this as early as you can.
Another one would be the value of an international environment and a team of people from many different countries. For example, at Scailyte we have 15 people from 10 or more different countries. I think this gives a certain richness and allows us to look at the same problem from different perspectives to find solutions much faster.
What is your hope for Scailyte?
My hope is that with research and the discoveries that we are making, we will be able to make an impact in patients’ lives very soon, in the next two to three years. I really want to see some of the biomarkers that we’ve now discovered being used to support clinicians to make decisions in the near future.