Finance Watch: Mysterious Gossamer Raises $100m As VC Deals Surge Ahead of J.P. Morgan

Gossamer Bio, led by former Receptos CEO Faheem Hasnain and CMO Sheila Gujrathi, revealed $100m in seed and Series A funding during a week in which 17 companies revealed VC rounds totaling $891.2m, giving them good news to discuss during the J.P. Morgan Healthcare conference.

The annual J.P. Morgan Healthcare Conference seemed to be all anyone in the biopharmaceutical industry could talk about in the week preceding the meeting, being held Jan. 8 to 11 in San Francisco, and certainly was top of mind for companies announcing new venture capital financings, such as the mysterious Gossamer Bio Inc., which disclosed $100m in seed and Series A funding on Jan. 4.

Gossamer is keeping details about its pipeline close to the vest. However, Otello Stampacchia – managing director of the company's seed investor and Series A co-lead investor Omega Funds – referred to the San Diego, Calif.-based firm's lead drug candidate as a "pipeline in a drug," because the late-stage asset could be used to treat many different diseases.

Omega acquired the asset against an undisclosed target from an unnamed European company, which unsuccessfully tested the compound in large indications. Stampacchia told Scrip that the asset was attractive to the investment fund, because of its potential in more targeted populations. He said the drug needs appropriate funding for the necessary clinical trials to move it forward – the kind of money that can be difficult for a European company to raise – and an executive team that has experience taking drugs into later-stage development.

That's why Omega enlisted the help of Faheem Hasnain and Sheila Gujrathi – CEO and chief medical officer, respectively, of Receptos Inc. in 2015 when it was acquired by Celgene Corp. for $7.2bn. (Also see "Celgene diversifies with $7.2bn Receptos buy" - Scrip, 15 Jul, 2015.) Hasnain is Gossamer's chairman and CEO while Gujrathi serves as president and chief operating officer. They began talking in detail with Omega and the other Series A co-lead investor ARCH Venture Partners during the last year; ARCH was previously invested in Receptos.

Gujrathi indicated in an interview with Scrip that the new company is interested in inflammation and immunology – in line with the team's focus at Receptos – including drugs that also target fibrosis or have applications in oncology, neurology, rheumatology, dermatology, gastrointestinal diseases or transplant.

"It's quite a lot of breadth, but the areas we're looking at we have experience in," she said. "Our lead is in the autoimmune disease area and others we’re looking at are in that area."

Receptos' lead drug candidate ozanimod, a selective sphingosine 1-phosphate (S1P) receptor modulator, was in Phase III for the treatment of relapsing multiple sclerosis and in early- to mid-stage development for ulcerative colitis and Crohn's disease when Celgene acquired the San Diego company. A new drug application (NDA) filing with the US FDA is expected any day now for ozanimod in relapsing multiple sclerosis.

The clinical development plans for Gossamer's lead drug candidate are being kept under wraps for a few more months while the company determines which indications to pursue first, but Gujrathi said more details will be released during the first half of 2018. She said Gossamer thinks about its lead program with potential to treat multiple diseases as "similar to how we thought of developing ozanimod at Receptos. We're hoping to do that again with our lead program."

As for additional assets in Gossamer's pipeline, another undisclosed asset has been acquired and is in Phase I testing, and the company is in the process of bringing in more assets.

Gujrathi said she and Hasnain began looking for assets to acquire for a new company while Receptos was in the process of closing its acquisition by Celgene. Working at Receptos was "the best job I ever had," she said, so Gujrathi and Hasnain were eager to build something similar from scratch along with some of their colleagues from Receptos. Gossamer will continue to acquire external assets, but the company will build a research group to develop its own novel compounds as well.

Gujrathi also noted that she and Hasnain "were focused on staying in San Diego, because there's a lot of great talent here and great research institutions."

She said the company chose the name Gossamer to represent "the invisible threads between networks" of employees, investors, investigators, patients and others involved in the development of new drugs.

The company's founding and continuing investor Omega has $1bn under management, including its most recent fund totaling $300m, with a primary focus on biopharma companies. Omega mostly participates in drug development opportunities as part of a venture capital syndicate, but Stampacchia said the venture investment firm starts one or two new companies as the sole investor each year.

BioNTech Leads Recent VC Financings

To put the first week of January's $891.2m in VC fundraising by 17 biopharma companies into perspective, Pitchbook and the National Venture Capital Association reported that pharma and biotech companies raised $8.27bn in venture capital during the first three quarters of 2017 – or about $919m per month. (Also see "Finance Watch: Semma Raises $114m As VC Funding Keeps Up Brisk Pace" - Scrip, 4 Dec, 2017.)

A large slice of that fundraising was done by Mainz, Germany-based cancer immunotherapy developer BioNTech AG, which revealed a $270m Series A round on Jan. 4 (see sidebar). BioNTech has raised $950m to date in seed capital, grant funding and fees from partners.

Among other major VC funding rounds announced in the new year:

Early January VC News also covered by Scrip:

Boehringer's Expanded Venture Fund: Innovation First, Returns Second

Oculis Raises CHF20M ($20.5m) To Advance Topical DME Therapy And Turn Swiss

EU Supports Microbiome R&D Via Enterome €32m ($38.5m) Series D

• Jinan, China-based KBP Biosciences raised a $76m Series A round to move its global headquarters to Philadelphia, Penn., to take the mineralocorticoid receptor antagonist KBP-5074 for cardiovascular disease into Phase IIb studies in early 2018, and to develop other pipeline programs. Advantech Capital and SDIC Venture Capital led the Series A announced on Jan. 5 with participation from at least nine other investors. KBP uses its platform to identify candidates with known mechanisms of action that could be used to address unmet medical needs in cardiovascular, infectious, respiratory, inflammatory and autoimmune diseases. The company also has a Phase I antibacterial agent and a Phase I-ready CRTH2 receptor antagonist for asthma and chronic obstructive pulmonary disorder (COPD).
• Centrexion Therapeutics Corp. said on Jan. 2 that it closed a $67m Series D round to support the development of non-opioid, non-steroidal treatments for chronic pain. The Boston-based company reported Phase IIb results from the TRIUMPH clinical trial for CNTX-4975 in chronic pain associated with knee osteoarthritis (OA) in November, showing improvements in pain, stiffness and function that occurred soon after a single injection and lasted for up to six months. (Also see "Pipeline Watch: Kisqali, SI-6603, Cosentyx Phase III Readouts" - Scrip, 13 Nov, 2017.) Centrexion's new cash will fund a Phase III knee OA program for CNTX-4975, which is described as a synthetic, ultra-pure injection of trans-capsaicin, and other pain drug candidates. New Enterprise Associates led the Series D round with participation from new and existing investors.
• San Diego, Calif.-based Expansion Therapeutics Inc. closed a $55.3m Series A round co-led by 5AM Ventures, Kleiner Perkins Caufield and Byers, Novartis Venture Fund and Sanofi Ventures with participation from RA Capital Management and Alexandria Venture Investments. The financing announced on Jan. 3 will fund the development of RNA-targeting small molecules with an initial focus on expansion repeat disorders, such as myotonic dystrophy type I. The technology is based on research from the lab of Matthew Disney at Scripps Research Institute was incubated within 5AM's 4:59 Initiative and hatched with seed funding from the venture firm and Sanofi Ventures.
• Scholar Rock Inc. of Cambridge, Mass. raised a $20m Series A in September 2014, followed by a $36m Series B in January 2016, and the company said on Jan. 3 that it closed a $47m Series C led by new investor Invus with participation from another new backer, Redmile Group. (Also see "Scholar Rock Secures $36m Investment And Janssen IO Option" - Scrip, 11 Jan, 2016.) Prior investors also pitched in: ARCH, Polaris Partners, Timothy Springer, EcoR1 Capital, The Kraft Group, and Fidelity Management and Research Co. Scholar Rock is developing drugs that selectively modulate growth factor activation. The company's Series C cash will support initiation of clinical trials for SPK-015 in spinal muscular atrophy (SMA) and other neuromuscular disorders in the first half of 2018. Scholar Rock also will put its new capital to use in the advancement of preclinical candidates for fibrosis, immuno-oncology and anemias associated with iron restriction. SPK-015 is a selective inhibitor of the supracellular activation of myostatin, a member of the TGF-beta superfamily of growth factors.
• Boston-based Neurogastrx Inc. announced on Jan. 4 that it closed a $45m Series A round co-led by 5AM, OrbiMed and venBio to fund the discovery and development of treatments for gastrointestinal disorders affecting the enteric nervous system. The company will use the money to build out the rest of its management team and achieve proof of concept for lead asset NG-101 in gastroparesis. The drug candidate modulates receptors within the gut-brain axis.
• Apple Tree Partners provided a $40m Series A round for Bedford, Mass.-based Stoke Therapeutics Inc. to fund multiple preclinical programs designed to increase gene expression in diseases caused by genetic insufficiency, the company announced on Jan. 4. Stoke is led by CEO Edward Kaye, the former CEO of Sarepta Therapeutics Inc., which developed Exondys 51 (eteplirsen), the exon-skipping antisense oligonucleotide approved for Duchenne muscular dystrophy. (Also see "DMD Pipeline: After Sarepta’s First-Ever Approval, Are Combinations Next?" - Scrip, 25 Sep, 2016.) Stoke is using antisense oligonucleotides to increase the expression of proteins with reduced function in genetic diseases with a specific focus on modulating RNA splicing to increase the production of messenger RNA that can be translated into the targeted protein in central nervous system, liver and eye diseases. The technology comes from the lab of Stoke scientific founder Adrian Krainer of Cold Spring Harbor Laboratory, who was an inventor of Biogen/Ionis Pharmaceuticals Inc.'s antisense drug Spinraza (nusinersen). (Also see "Biogen/Ionis’s Spinraza Approved; Second Antisense Drug For Neurodegeneration In 2016" - Scrip, 28 Dec, 2016.)
• Apple Tree also provided a $39m Series A round for Cambridge, Mass.-based Elstar Therapeutics, which was announced on Jan. 3, to fund the development of multi-functional antibody therapies for the treatment of cancer. Molecules developed with Elstar's Universal Targeted Immunotherapy (UniTI) platform have up to four functional domains to regulate immunological activities, thereby limiting systemic toxicity. The company plans to rapidly move its first programs in hematologic malignancies and solid tumors into the clinic.
• Atlas Venture provided a $25m Series A round for Cambridge-based Generation Bio in 2016, but the company wasn't launched publicly until Jan. 4. Generation is developing genetic medicines that can be titrated and that may be dosed multiple times versus traditional gene therapies that are designed for a single administration. The company uses its GeneWave technology to develop capsid-free and viral vector-free gene therapies that are delivered intravenously to the liver for the treatment of liver diseases or to turn the liver into a "biofactory" that expresses systemic proteins for a variety of diseases.
• NexImmune Inc. in Gaithersburg, Md. said on Jan. 2 that it closed a $23m Series A round co-led by new investor ArrowMark Partners and prior backer Barer & Son Capital with participation from Piedmont Capital Partners. The company is using its Artificial Immune Modulation (AIM) nanotechnology platform developed at Johns Hopkins University to enrich, activate and expand endogenous T-cells directed at multiple tumor antigens for the treatment of hematological malignancies and solid tumors. Lead product candidate AIM ACT is a cell therapy that will be tested in a Phase I/II trial as a treatment for patients with acute myeloid leukemia or myelodysplastic syndromes who relapsed after allogeneic hematopoietic stem cell transplant.
• In a handful of smaller financings: Rewind Therapeutics of Leuven, Belgium raised a €15.2m ($18.3m) Series A round for the development of small molecule remyelinating therapies that may soon move into the clinic for multiple sclerosis and other myelin-related diseases; the Austrian firm Themis Bioscience GMBH closed a €10m ($12.1m) Series C round to advance preclinical and clinical vaccine programs, including its lead candidate against chikungunya virus that's in Phase II; Auburn, Ala.-based Vitruvias Therapeutics Inc. raised an $11.5m Series A round to fund ongoing development, approval and commercialization of generic sterile injectables; and Immusoft Corp. in Seattle, Wash. closed an initial $3m tranche of a Series B financing to support development of gene therapies, including an ongoing Phase I/II study of a candidate for mucopolysaccharidoses type I. Immusoft concurrently announced the appointment of Chairman and CEO Sean Ainsworth, who previously was CEO of the clinical-stage RetroSense Therapeutics LLC when it was acquired by Allergan PLC for up to $555m, including $60m up front, in 2016. (Also see "Allergan’s RetroSense Buy Marks Move Into Gene Therapy" - Scrip, 6 Sep, 2016.)