Finance Watch: Semma Raises $114m As VC Funding Keeps Up Brisk Pace

Semma closed a $114m Series B round to fund development of insulin-producing cells. Also, Tesaro and Catalyst are among recent public company financings, while Otonomy shifted gears, laying off sales staff.

The recent $114m Series B round raised by Semma Therapeutics Inc. reflects two positive trends about the venture capital environment for biopharmaceuticals companies – both the number of companies and the amount of money raised by new and early-stage firms are rising.

Cambridge, Mass.-based Semma launched in 2015 with a significant amount of venture capital – a $44m Series A round to support the development of stem cell-derived beta (SC-beta) cells that produce insulin when transplanted into type 1 diabetes patients. (Also see "Diabetes start-up brings in cash and a partner" - Scrip, 24 Mar, 2015.) The company will use its new cash to create an encapsulation device for the delivery of these cells to patients and to take the treatment into human studies. The money is expected to fund the development program through clinical proof of concept and exploration of other regenerative medicine therapeutics.

"Our team is laser-focused on preparing for our first human clinical trial. We are actively working on preparing our [investigational new drug (IND)] application for our first clinical trial," Interim CEO Elizabeth Stoner said.

Since Semma's combination product contains both cells and a device, the company will pursue regulatory approval via the US FDA's Center for Biologics Evaluation and Research (CBER) division.

"Semma's device for cell encapsulation is made of proprietary porous biomaterials that integrate with the host while providing physical separation from the immune cells of the body," Vice President, Delivery, Christopher Thanos explained. "Prototype devices have shown minimal foreign body response when implanted into a variety of rodent models and are currently being evaluated in large animals. The device has been designed to be implanted as a single unit with a minimally invasive procedure into an area of the body where it will be well tolerated physically."

The Series B round to fund the company's novel product candidate and future regenerative medicine programs was co-led by Eight Roads Ventures and Cowen Healthcare Investments. Prior investors – including MPM Capital, F-Prime Capital Partners and ARCH Venture Partners – also participated in the round along with existing strategic partners Novartis, Medtronic and the Juvenile Diabetes Research Foundation's T1D Fund. New investors included ORI Healthcare Fund, Wu Capital, 6 Dimensions Capital and SinoPharm Capital. The details of Semma's relationship with Novartis are undisclosed.

The company has about 40 employees now and with its substantial new funding Semma "will certainly be growing in the coming year," Stoner said.

Big Money All Around

Semma's $114m funding round is indicative of the rising amount of capital flowing in to VC firms, which is rapidly is making its way into fledgling life science and health care companies. Frazier Healthcare Partners, Aisling Capital and Partners Healthcare System all announced new funds in November.

The Pitchbook-NVCA Venture Monitor, a quarterly report produced by the VC-tracking firm Pitchbook for the National Venture Capital Association (NVCA), revealed that 427 pharma and biotech companies raised $8.27bn during the first three quarters of 2017 versus 534 companies that raised $8.09bn throughout all four quarters of 2016. Biopharma companies have raised $19.4m each this year, on average, versus $15.1m per firm last year.

The average number of companies that raised money is 142 per quarter in 2017, which recovered from 133 per quarter in 2016, but this year's quarterly average remains below 2015 levels when 621 biopharma firms (155 per quarter) raised $9.99bn or $16.1m per company.

However, companies are raising more per funding round than they have since 2012. Before the big surge in 2015, 577 companies (144 per quarter) raised $6.92bn ($12m each) in 2014; 550 companies (137 per quarter) raised $5.04bn ($9.1m each) in 2013; and 492 companies (123 per quarter) raised $4.77bn ($9.7m each) in 2012.

In other new private company financings:

• YmAbs Therapeutics Inc. said on Nov. 29 that it added $30m to a $50m private equity placement announced in October, bringing the total to $80m with new backing from Sofinnova Ventures and Scopia Capital Management. (Also see "Finance Watch: NDA-Ready Impact Gets Commitment For Another $90m" - Scrip, 30 Oct, 2017.) The total equity investment will fund late-stage development and commercial preparations or the New York-based company's lead pediatric cancer drug candidates burtomab and naxitamab; the US FDA granted burtomab a breakthrough therapy designation for the treatment of neuroblastoma this year.
• Codiak BioSciences Inc. in Cambridge, Mass. revealed on Nov. 29 that it closed a $76.5m Series C round, bringing its fundraising total since its launch two years ago to $168.5m, including a Series A totaling more than $80m in 2015. (Also see "Former Biogen R&D Chief Surfaces With Exosome-Focused Startup" - Scrip, 17 Nov, 2015.) Prior investors ARCH Venture Partners, Flagship Pioneering, Fidelity Management and Research Co., the Alaska Permanent Fund and Alexandria Venture Investments participated in the Series C along with new investors Qatar Investment Authority, Boxer Capital of the Tavistock Group, Sirona Capital, EcoR1 Capital and Casdin Capital. Codiak will use the new funding to advance its first exosome therapeutics – drugs that use exosomes to deliver their payloads to cells – into the clinic.
• San Mateo, Calif.-based Medeor Therapeutics Inc. came back from Thanksgiving break with an announcement on Nov. 27 that it raised a $57m Series B round to fund early- to late-stage clinical development for its personalized cellular immunotherapies. RA Capital Management led the round with participation from other new investors Sofinnova Ventures and 6 Dimensions Capital and existing investors Vivo Capital and WuXi Healthcare Ventures. The capital will fund a Phase III clinical trial for MDR-101 in living donor HLA-matched kidney transplant patients and a Phase IIb trial of MDR-102 in the same population. The company also plans to begin development for MDR-103 in delayed immune tolerance and MDR-104 for transplant patients receiving a kidney from deceased donors.
• OrbiMed led a $40m Series B round for Boston-based resTORbio Inc. with participation from Fidelity Management & Research Co., Rock Springs Capital, Quan Capital and Nest Bio. The financing announced on Nov. 30 will support late-stage development of the TORC1 inhibitor RTB101 as an immunotherapy to reduce the incidence of respiratory tract infections in elderly patients and mid-stage development in another aging-related indication. (Also see "resTORbio's Age-Related RTI Program Picks Up Further Funding" - Scrip, 30 Nov, 2017.)
• Torque Therapeutics Inc. in Cambridge, Mass. said on Nov. 14 that it closed a $25m Series A round provided by Flagship Pioneering. The company is developing Deep Primed cell therapies that direct and evoke immune responses in the tumor microenvironment. Torque's platform was designed to anchor stimulatory cytokines, antibodies and small molecules to immune cells to direct their activity and improve efficacy and durability in the tumor microenvironment.
• Fortuna Fix Inc., which operates from London as well as Montreal, Canada, said on Nov. 8 that it closed a $25m Series B round with backing from new investors Amgen Ventures and Macnguyen Family Office as well as prior funders, including Salamander Invest. The company is developing reprogrammed autologous neural stem cells to replace lost neuronal tissue in neurodegeneration and neurotrauma. The new funding will support Phase I/IIa trials in Parkinson's disease and spinal cord injury, among other expenses. Fortuna also will continue to build out a second platform called Regeneration Matrix, which provides an off-the-shelf product for the treatment of acute neurotrauma.
• Paris-based Horama SAS, which is developing gene therapies for rare inherited retinal diseases, said on Nov. 8 that it closed a €19m ($22.6m) Series B round led by Kurma Partners with participation from other new investors Fund+, Pontifax and Idinvest. Prior backers Omnes Capital, GO Capital and Sham Innovation Sante/Turenne also invested in the round. (Also see "Horama's Gene Therapies For Retinal Diseases: Fast Followers?" - Scrip, 31 Jul, 2017.) Lead product candidates are HORA-PDE6B for retinitis pigmentosa, which will be tested in a Phase I/II study, and the preclinical asset HORA-RLPB1 for retinitis punctata albescens.
• Oyster Point Pharmaceuticals Inc. emerged on Nov. 7 with $22m in Series A capital to fund development through Phase II for novel therapies to treat dry eye and other ocular surface diseases. New Enterprise Associates and Versant Ventures led the San Francisco-based company's round.
• Kirkland, Wash.-based Mavupharma said on Nov. 29 that it closed a $20m Series A round led by Frazier Healthcare Partners and joined by Alpine Bioventures to fund development of oral modulators of the stimulator of interferon genes (STING) pathway for the treatment of cancer and infectious diseases. Mavu will use the capital to take its lead drug candidates into the clinic.
• Locus Biosciences Inc. in Research Triangle Park, NC will file an investigational new drug (IND) application with the US FDA and initiate the first clinical trial for one of its novel antimicrobial drug candidates now that it has raised a $19m Series A round. The financing was led by ARTIS Ventures with participation from Tencent Holdings Limited, Abstract Ventures and the North Carolina Biotechnology Center. Locus is building a CRISPR-Cas3 platform for the development of precision antimicrobials designed to kill antibiotic-resistant pathogens by destroying the bacterial DNA.
• Paris-based Step Pharma's Series A round now totals €14.5m ($17.2m) after the developer of oral immunomodulators targeting cytidine triphosphate synthase 1 (CTPS1) completed an €8.6m ($10.2m) second closing led by Kurma Partners. Bpifrance (Fonds Biothérapies Innovantes et Maladies Rares), Inserm Transfert Initiative, Idinvest, Sygnature Discovery and the Imagine Institute also invested in the extended round, which was announced on Nov. 21. CTPS1 is a novel target discovered at the Imagine Institute in certain rare genetic diseases where patients have a deficiency of the enzyme, which is involved in CTP nucleotide production. The new funding will allow Step Pharma to take its first program into clinical studies for the treatment of autoimmune diseases.
• PhaseBio Pharmaceuticals Inc. secured $15.6m to support clinical development of its recently expanded pipeline of treatments for orphan diseases. The new funding announced on Nov. 29 includes a $7.5m term loan facility with Silicon Valley Bank, which will be received in three tranches – $3.5m upon closing and two additional $2m tranches. The company also drew down the remaining $8.1m of a prior convertible note financing, which was backed by New Enterprise Associates, AstraZeneca PLC, Johnson & Johnson Innovation – JJDC, Hatteras Venture Partners, Fletcher Spaght Ventures and Syno Capital. The financing will support a Phase II clinical trial for PB1046 in pulmonary arterial hypertension and a Phase I trial for PB2452, a recently acquired reversal agent for AstraZeneca's anticoagulant Brilinta (ticagrelor). PhaseBio revealed on Nov. 28 that it licensed PB2452 from AstraZeneca's MedImmune subsidiary.
• Cincinnati, Ohio-based CinRx Pharma said on Nov. 28 that it completed a $10m Series B round backed by new and existing investors. The company previously raised a $26m Series A round in 2015. The company is developing a wide range of drug candidates for both large and orphan indications, and it plans to file an investigational new drug (IND) application during the first half of 2018 for CIN-102 (deuterated domperidone), which is a dopamine 2 receptor antagonist for the treatment of gastroparesis. CinRx also has preclinical drug candidates for irritable bowel syndrome with diarrhea and for cardiovascular and dermatology indications.

Two Public Company Financings

While venture capital and other private financings were numerous during the last week or two of November, public companies took an extended Thanksgiving break from major financings.

However, Tesaro Inc. said on Nov. 21 that it entered into a definitive term loan agreement with Biopharma Credit PLC and Biopharma Credit Investments IV Sub LP, which are investment funds managed by Pharmakon Advisors LP, for $500m of borrowing capacity. The first $300m tranche will be received upon closing of the debt facility in early December and the second $200m tranche may be drawn down any time through Dec. 20, 2018. The debt will mature in December 2024.

The funds primarily will pay for continued development and commercialization of the PARP inhibitor Zejula (niraparib) in ovarian cancer and other tumor types, but also will be used to develop Waltham, Mass.-based Zejula's immuno-oncology pipeline. Zejula is approved in the US for second-line maintenance treatment of ovarian cancer and won its first EU approval in November. (Also see "Tesaro Shakes Up EU PARP Market With Zejula Launches" - Scrip, 22 Nov, 2017.)

Catalyst Pharmaceuticals Inc. wasted no time seeking additional capital after it announced plans on Nov. 27 to resubmit Firdapse (amifampridine) for US FDA approval to treat Lambert-Eaton myasthenic syndrome (LEMS) after completing a second Phase III trial. (Also see "Phase III Data Support Catalyst's NDA Resubmission For Firdapse" - Scrip, 27 Nov, 2017.) The company priced 14.3m shares at $3.50 on Nov. 28 for net proceeds of $46.6m before overallotments to fund pre-commercialization activities and studies in additional indications.

Otonomy, Proteostasis Reveal Reorganizations

Two months after cutting a third of its non-commercial staff, Otonomy Inc. said on Nov. 27 that it immediately discontinued sales and is seeking a buyer for Otiprio (ciprofloxacin otic suspension) in order to focus financial resources on the development of preclinical and clinical drug candidates for the treatment of disorders and diseases on the ear, including Otividex for Meniere's disease. (Also see "Finance Watch: Genocea, Mateon Shift Strategies, Cut Jobs To Preserve Cash" - Scrip, 27 Sep, 2017.) The move will cut annual costs by $20m in 2018. San Diego, Calif.-based expects its cash balance to total $118m to $123m at the end of 2017.

Proteostasis Therapeutics Inc. in Cambridge, Mass. said on Oct. 31 that it will focus the company's development of small molecule therapeutics on cystic fibrosis, including clinical trials for PTI-428, PTI-801 and PTI-808. (Also see "Cystic Fibrosis: Successes, Opportunities And Challenges" - In Vivo, 22 Feb, 2017.) Work also will continue on a discovery-stage program with Astellas Pharma related to unfolded protein response (UPR). Proteostasis will cut its research and development organization from 46% of its total workforce to 34% of its total workforce by cutting 13 jobs, providing annual cost savings of $3m. Severance and other related costs will total $200,000.