Finance Watch: Biomatics Closes Second VC Fund; SVB Buys Leerink To Expand Life Science Services

Scrip spoke with Managing Director Julie Sunderland about Biomatics' new $300m fund. Also, Silicon Valley Bank reveals its surprising Leerink buy, Perceptive Advisors raises $675m, Roivant brings in another $200m, and cell and gene therapy financings surge in the third quarter.

Biomatics Capital Partners closed its second fund focused on breakthrough science and technology in health care, bringing in $300m to fund the development of therapeutics, diagnostics, research and development tools, and digital health.

Biomatics Managing Director Julie Sunderland told Scrip that the second fund will follow the same overarching investment thesis as the Seattle-based firm's $200m first fund to back drug and diagnostic developers, R&D tools including drug discovery and genomic data-mining platforms, and digital health platforms to improve patient outcomes at a lower cost. (Also see "Finance Watch: Two New VC Funds Raise $500m; One New US IPO; And Galena's 'Strategic Review'" - Scrip, 17 Mar, 2017.)

"We're at a pretty significant time in health care in terms of just breakthroughs in science and technology very much driven by data, meaning our understanding of genomics data as well as clinical data, and our ability to then understand biology and design technologies that allow us to deliver better outcomes," Sunderland said in an interview.

In the biopharmaceutical arena, Biomatics has invested in gene-editing and neuroscience firms, including Editas Medicine Inc. and Denali Therapeutics Inc. The venture capital firm announced Nov. 8, along with the second fund, that it has brought in Mike Poole as a venture partner to seek out investments in neurology.

Poole previously led investments in Alzheimer's disease diagnostics and treatments for the Bill & Melinda Gates Foundation, after serving as vice president and head of neuroscience innovation at AstraZeneca PLC. He's also worked in neuroscience and neurodegeneration at Pfizer Inc., Link Medicine Corp. and Hypnion Inc..

"We think understanding the complexity of neuro [is important] – both in terms of understanding the biology, but also neural circuitry; understanding patient populations and nuance around patient populations; linking that to the genetic basis of disease," Sunderland said. "There's a lot of complexity there, but we think that over the next decade we are going to make advances in neurodegenerative and neuro-behavioral areas."

Poole, she said, has a lot of experience in the ups and downs of neurology product development – making him both a skeptic and an optimist, because "he understands the great science that is happening and now he's going out and proactively looking for those early, promising opportunities in neuro."

Biomatics also has hired Errik Anderson as a venture partner. The founder and managing partner of start-up advisory firm Ulysses Diversified Holdings will work in Biomatics' new Boston office. Anderson – a biotechnology and digital health specialist – also is founder and executive chairman of Alloy Therapeutics and a co-founder of Adimab LLC, Compass Therapeutics LLC and Alector Inc.

Sunderland explained that Biomatics is not overly concerned about recent stock value declines and the prospect of a slowdown in biopharma initial public offerings, because the VC firm tried to fund its companies to reach R&D milestones regardless of the market for IPOs, mergers and acquisitions, or other types of financing.

"If we invest against that 'great science with great people' thesis then our companies will find a pathway towards financing," Julie Sunderland said.

"We very much view IPOs as fundraising events rather than exits," she said. "Access to the public markets to help our companies through the lifecycle of development is obviously a really good thing and when that does become more challenging it does create challenges for our companies."

"Our fundamental belief is if we invest against that 'great science with great people' thesis then our companies will find a pathway towards financing," Sunderland continued. "We are careful to think about how we support our companies through the lifecycles of the markets. We've seen it before, it will happen again, where markets have more or less appetite for these types of investments. Fundamentally, we believe that this continues to be a really great period to invest in science and data-enabled technologies in the health care space and that will sustain us through the ups and downs of the market."

Silicon Valley Bank Gets Into IPOs Via Leerink Buy

SVB Financial Group, the parent company of life science funder Silicon Valley Bank, said on Nov. 13 that it has entered into a merger agreement to acquire Leerink Holdings LLC, parent company of the health care and life science-focused investment bank Leerink Partners LLC, in a $280m cash transaction closing during the first quarter of 2019.

The merged financial institution will be known as SVB Leerink, combining Silicon Valley Bank's commercial banking and lending with Leerink's full range of investment banking services. SVB will set up a $60m retention pool for employees to be paid over five years as a means for keeping bankers and analysts with SVB Leerink for the long term.

Silicon Valley Bank is known largely for funding early- to mid-stage private life sciences companies, so the Leerink acquisition will expand its offerings to include IPOs and other public stock and debt offerings as well as merger-and-acquisition services complemented by equity research. The combined investment bank will serve biotech, pharmaceutical, medical device, diagnostic, life science tools, health care services and digital health companies.

Among other new pools of life science capital:

• Perceptive Advisors LLC said on Nov. 5 that it completed the final closing of Perceptive Credit Opportunities Fund II totaling $675m, which will be used to provide debt financing to help innovative health care companies – including biopharma, medical device, diagnostics, life science research and health care information technology firms – grow and pursue new R&D opportunities. New York-based Perceptive Advisors now has more than $1bn in capital under management, including its first credit opportunities fund that totaled $323m and closed in late 2016. (Also see "VC Roundup: October Brings Several New Venture Funds, Including Third Rock’s Fourth" - Scrip, 1 Nov, 2016.)

• Roivant Sciences GMBH said it completed a $200m equity financing that brought in some new investors, including NovaQuest Capital Management, RTW Investments and other large institutional asset managers, who invested in Roivant alongside the company's prior institutional backers. Roivant said on Nov. 13 that the financing brings its market value to about $7bn. The capital will be used primarily to launch new subsidiary companies – or “Vants” – focused on specific disease areas. Roivant said its portfolio has grown from six Vants with 14 drug candidates to 14 Vants with 34 therapies in development since the firm raised $1.1bn in August 2017. (Also see "Finance Watch: Roivant Raises $1.1bn, Relying On Private Equity To Fund New Companies" - Scrip, 14 Aug, 2017.) Roivant now employs 750 people across its subsidiaries versus 350 a year and four months ago.

• Dana-Farber Cancer Institute in Boston and New York-based investment management firm Deerfield Management announced a collaboration on Nov. 13 to create the Center For Protein Degradation at Dana-Farber with up to $80m to build and advance a portfolio of targeted protein degraders. The center will develop new biological targets for protein-degradation therapies and develop small molecule drugs based on the work of scientists at Dana-Farber and Harvard Medical School.

Cell And Gene Therapies And Other Biopharmas Raise New Cash

The Alliance for Regenerative Medicine (ARM) said in its quarterly financing, deal-making and clinical activity report on Nov. 1 that cell and gene therapy companies raised more than $2.8bn globally during the third quarter of 2018, which was 59% more than during the same period in 2017. The total for the first three quarters was $10.7bn, which was 40% more than raised during the like period last year. Both tallies include private and public company financings as well as licensing fees.

Year-to-date as of Sept. 30, cell and gene therapy firms raised $2.7bn in venture capital versus $1.4bn for all of 2017, $1.2bn in IPOs ($254m in 2017), $4.1bn in follow-on public offerings ($4bn in 2017), $962m in private placements of public equity ($635m in 2017), and $1.1bn from corporate partnerships ($1.1bn in 2017). Upfront payments from M&A deals totaled $18.9bn through the third quarter of this year versus $13.5bn for all of 2017.

Among cell and gene therapy VC financings in the fourth quarter, Cabaletta Bio revealed a $38m Series A round on Nov. 8. The Radnor, Penn.-based firm is developing cellular therapies for B-cell-mediated autoimmune diseases. It has a license agreement and two multi-year sponsored research agreements with the University of Pennsylvania (Penn) for the discovery and development of engineered T-cell therapies for B-cell-mediated autoimmune diseases.

Penn researchers Michael Milone and Aimee Payne are co-founders of Cabaletta. Milone is a co-inventor of the Novartis AG chimeric antigen receptor T-cell (CAR-T) therapy Kymriah (tisagenlecleucel). Penn, Adage Capital Management and another large US-based health care fund participated in the Series A round led by 5AM Ventures.

Cabaletta's engineered T-cell therapies use chimeric autoantibody receptors (CAARs) to bind to and destroy disease-causing B-cells; mucosal pemphigus vulgaris (mPV) is among the first indications to be treated with this technology. The company's lead therapeutic candidate is designed to selectively eradicate B-cells that produce autoantibodies to desmoglein 3 (DSG3), which cause mPV.

In other recent VC financings:

• San Diego-based Mirum Pharmaceuticals said on Nov. 7 that it closed a $120m Series A round to fund the development of drugs that treat rare cholestatic liver diseases with plans to take lead candidate maralixibat into Phase IIb for Alagille syndrome. The portfolio comes from Shire PLC via the acquired company Lumena Pharmaceuticals Inc.; former Lumena executives founded Mirum to move the assets forward. New Enterprise Associates led the Series A. (Also see "Newly Hatched Mirum To Focus On Rare Liver Disease Candidates Shelved By Shire" - Scrip, 7 Nov, 2018.)

• NextCure Inc. revealed a $93m Series B round on Nov. 13 just days after the Beltsville, Md.-based company and Eli Lilly & Co. announced a deal worth $40m up front to co-discover and develop immuno-oncology drugs. (Also see "Deal Watch: Amgen Outsources Celiac Drug To Provention; Lilly, NextCure Will Co-Discover IO Drugs" - Scrip, 8 Nov, 2018.) Hillhouse Capital Management and Quan Capital led the round, which follows a $67m Series A financing in 2016. (Also see "Immuno-Oncology Startup Snatches $67m In Series A" - Scrip, 8 Jan, 2016.) NextCure will use the new capital to fund discovery and development of immunomedicines for cancer and other diseases, and to advance its preclinical programs, including NC318. One of two lead drug candidates, NC318 is directed against a novel immunomodulatory target found on a restricted set of myeloid cells in the tumor microenvironment and on certain tumor types, including lung, ovarian and head and neck cancers.

• South San Francisco-based Harpoon Therapeutics Inc. closed a $70m Series C round on Nov. 11 to develop its novel class of T-cell engagers based on its Tri-Specific T-cell-Activating Construct (TriTACO) and Protease-Activated TriTACO (ProTriTACO) technology platforms for the treatment of cancer and other diseases. Harpoon closed a $45m Series B in May 2017. (Also see "Finance Watch: Bicycle Spins Toward Clinic With $52m Round; Stock Spikes Spur Offerings" - Scrip, 1 Jun, 2017.) The Series C round led by OrbiMed will fund ongoing development of four TriTACO candidates, including HPN424, which is in Phase I for prostate cancer. Phase I trials also will be initiated in 2019 for HPN536 in mesothelin-expressing tumors and for BCMA-targeting HPN217 in multiple myeloma.

• Kymera Therapeutics Inc. in Cambridge, Mass., said on Nov. 13 that it raised $65m in Series B cash to take its lead targeted protein degrader into the clinic. The round was led by 6 Dimensions Capital, Bessemer Venture Partners and Pfizer Ventures. Kymera launched in 2016 and raised a $30m Series A round in 2017. (Also see "Finance Watch: NDA-Ready Impact Gets Commitment For Another $90m" - Scrip, 30 Oct, 2017.) It entered into a two-year collaboration with GlaxoSmithKline PLC in April of this year. (Also see "Deal Watch Asia Focus: Pfenex Licenses Asian Rights To Forteo Copy To NT Pharma Group" - Scrip, 24 Apr, 2018.)

• San Francisco-based InCarda Therapeutics Inc. revealed a $42m Series B round led by new investors Sofinnova and HealthCap on Nov. 8 and said that it initiated a Phase II clinical trial for InRhythm (flecainide for inhalation), its self-administered, inhaled antiarrhythmic therapy for the treatment of paroxysmal atrial fibrillation (PAF). PAF currently is treated with chronic administration of oral antiarrhythmic drugs or on an emergency basis with intravenous drugs or procedures administered in hospital settings. Top-line results from InCarda's Phase II study are expected in the second half of 2019. The company raised a $5m Series A in 2015. (Also see "Venture Funding Deals, June 2015" - Scrip, 4 Jun, 2015.)

• Cadent Therapeutics in Cambridge, Mass,. said on Nov. 15 that it closed a $40m Series B round led by Cowen Healthcare Investments and Atlas Venture to fund development of treatments for movement and cognitive disorders. The company is developing novel allosteric modulators of ion channels, including lead drug candidate CAD-1883, a positive allosteric modulator of SK channels for treatment of essential tremor and spinocerebellar ataxia that is being tested in a Phase I dose-escalation trial. Cadent's second candidate is designed to positively modulate NMDA receptor hypofunction in schizophrenia. The company also has an exclusive license and collaboration agreement with Novartis AG for the development of NMDA receptor modulators for treatment-resistant depression.

• V-Bio Ventures announced on Nov. 15 that it led a €37m ($41.9m) Series A round for Camel-IDS, which is developing radiopharmaceuticals for the treatment of cancer. The Belgian company will use the funds to conduct a Phase Ib/II clinical trial for CAM-H2 in the treatment of HER2-positive brain metastatic breast cancer and to advance its preclinical programs. Camel-IDS' technology platform involves camelid-derived, single-domain antibodies linked to radionuclides.

• Geneva, Switzerland-based Amal Therapeutics SA closed the second and final tranche of a Series B round, the peptide-based therapeutic cancer vaccine developer said on Nov. 12, raising an additional €21.2m and bringing the round's total to €29m ($32.9m). The first tranche closed in September 2017. (Also see "Finance Watch: Lilly Cuts 3,500 Jobs Globally To Drive Growth" - Scrip, 7 Sep, 2017.) Amal plans to take its lead product candidate ATP128 into the clinic in the summer of 2019 for the treatment of colorectal cancer. Boehringer Ingelheim Venture Fund, BioMedPartners and Helsinn Investment Fund led the Series B.

• Ribometrix Inc. of Durham, N.C., disclosed a $30m Series A round led by M Ventures, the corporate venture capital arm of Merck KGAA, on Nov. 13 to advance its discovery and development of small molecule drugs that directly modulate RNA activity, hire more people and engage in business development activities. The company is specifically focused on targeting RNA molecules that fold into complex 3D structures to yield pockets amenable to small molecules. It closed a $7.5m seed round a year ago. (Also see "Venture Funding Deals: From ADC To Y-mAbs, Capital Flows For New Platforms, Novel Approaches" - Scrip, 10 Nov, 2017.)

• New Haven, Conn.-based Kleo Pharmaceuticals Inc., which closed a Series A round in September 2016, said on Nov. 13 that it raised a $21m Series B to fund development of bispecific small molecules that emulate or enhance the activity of biologics in the treatment of cancer. Kleo's development partner PeptiDream Inc. led the new round, which will fund preclinical and initial clinical studies for multiple drug candidates; human studies are expected to begin in 2020. The company also will pursue early development of its immuno-oncology technologies. PeptiDream and Kleo began working together in July 2017. (Also see "Deal Watch: Valeant Continues Divestment Spree By Selling Obagi At A Loss" - Scrip, 25 Jul, 2017.)