Finance Watch: A Plethora Of Big Rounds, Led By Gossamer's $230m Series B

Private Company Edition: Gossamer, Ascentage and Alector continued the trend of large venture capital rounds, recently raising $230m, $150m and $133m, respectively. Led by former Receptos executives, Gossamer has multiple clinical trials planned, but continues to keep details of its drug candidates under wraps.

One of the reasons that venture capital investment in biopharmaceutical companies is booming is because of mega-deals exceeding $100m in a single round – often at the Series A level – and the trend continues even in the lazy, hazy days of summer.

This year's biopharma VC total is on track to beat the 2017 total even before the end of the third quarter, especially with big rounds like Gossamer Bio Inc.'s recent $230m Series B. Big money is flowing ex-US as well, with China-based firms bringing in astonishing amounts of money, such as Ascentage Pharma Group Corp. Ltd. in Rockville, Md. and Hong Kong with a $150m Series C round. And then Alector Inc., developing therapies that are designed to harness the immune system for the treatment of neurodegenerative diseases and cancer, recently closed a $133m Series E.

Gossamer remains in semi-stealth mode – revealing few details about its multiple drug candidates – but has been able to share enough information with investors to triple its money seven months after closing a $100m Series A round. (Also see "Finance Watch: Mysterious Gossamer Raises $100m As VC Deals Surge Ahead of J.P. Morgan" - Scrip, 6 Jan, 2018.)

Investors are banking on the San Diego-based company's management team, who ran Receptos Inc. until its acquisition by Celgene Corp. for $7.2bn in 2015. (Also see "Celgene diversifies with $7.2bn Receptos buy" - Scrip, 15 Jul, 2015.) But in the seven and a half months since Gossamer's debut in January, the private firm has revealed few new details about the drug candidates acquired to build its research and development portfolio focused on immunology to treat autoimmune and inflammatory diseases as well as allergies and cancer.

Gossamer was co-founded by former Receptos CEO Faheem Hasnain and former Receptos Chief Medical Officer Sheila Gujrathi, with Hasnain as the new company's chairman and CEO and Gujrathi as president and chief operating officer. Alongside the Series B funding announcement on July 23, Gossamer said Hasnain is now executive chairman and Gujrathi has taken over as Gossamer's CEO.

The Series B round was led by Hillhouse Capital with participation from new investors – a wholly-owned subsidiary of the Abu Dhabi Investment Authority (ADIA), Invus, The Baupost Group and Polaris Partners – and Series A backers ARCH Venture Partners and Omega Funds.

Gossamer's big bank balance will fund early- to late-stage clinical trials and further business development opportunities. The company said when it launched that it is building an R&D portfolio primarily with acquired assets, including a mid-stage candidate with potential to treat multiple diseases that Omega licensed from a European company, and a Phase I candidate. The specific drug targets and indications for the two programs have not been disclosed.

To date, the Gossamer portfolio includes the Phase II drug GB001 with an undisclosed target and at least three planned indications. The indications and targets also have not been revealed for Phase I candidate GB002 and the preclinical program GB003, but GB004 is described as a first-in-class HIF-1 alpha stabilizer in Phase I for the treatment of inflammatory bowel diseases.

Gujrathi told Scrip in January that while Gossamer is seeking most of its drug candidates from outside the company, it will also set up an R&D team to work on internal discovery programs.

Ascentage Continues Trend Of Big VC Rounds In Asia

Following on from Shanghai-based I-MAB Biopharma's $220m Series C round at the end of June, Ascentage continued the trend of big venture capital investments in China-based biopharmaceutical firms with its $150m Series C round on July 17.

With billions of dollars in venture capital flowing into the country fueled in part by regulatory changes that make China more attractive for drug developers and their investors, mega-VC financing rounds are not expected to stop anytime soon. (Also see "Mehta Analysis: China, A Populist Pharma Power" - Scrip, 20 Jul, 2018.) Firms like Ascentage will continue to raise capital and rapidly advance development programs while cash is available from both local and global investors.

Ascentage is developing small molecules targeting protein-protein interactions to restore apoptosis for the treatment of cancer and other diseases, such as hepatitis B and age-related diseases. The company, which has seven clinical candidates and 16 trials under way, has raised $237m in venture capital to date, including its $72m Series B in January 2017 and a $15m Series A round in 2015. (Also see "VC Roundup: Infectious Disease Startup Snags $150m And Former Biogen CEO Scangos" - Scrip, 8 Jan, 2017.);

The Ascentage Series C round was co-led by existing investors YuanMing Prudence Fund and Oriza Seed Venture Capital as well as new investor Teng Yue Partners with additional participation from ArrowMark Partners, HDY International Investment, CTS Capital and CCB International.

Alector's Series E To Pursue Novel Alzheimer's Targets

South San Francisco-based Alector will use its $133m to advance its clinical programs, which include a treatment for frontotemporal dementia (FTD) and two novel Alzheimer's candidates, and to expand its drug discovery efforts.

The Series E round's backers include venture capital and institutional investors as well as pharma and biotechnology companies' corporate VC funds: Deerfield Management, AbbVie Ventures, Federated Kaufmann Fund, Section 32, Euclidean Capital, Foresite Capital, Lilly Asia Ventures, New Leaf Venture Partners, Perceptive Advisors, Casdin Capital, Polaris Partners, OrbiMed, MRL Ventures, GV, the Dementia Discovery Fund, Mission Bay Capital, and Amgen Ventures and others.

Alector's lead drug candidates are based on findings from genetic studies showing that immune system dysfunction in the brain contributes to the development of neurodegenerative diseases. CEO Arnold Rosenthal said in a company statement that drugs targeting immune system dysfunction "could provide as much benefit for patients suffering from neurodegeneration as immuno-oncology therapies have demonstrated for cancer patients." (Also see "A Virtuous Cycle: What The Immuno-Oncology Revolution Means For Other Disease Areas" - In Vivo, 31 Jan, 2018.)

To that end, Alector's AL001 for FTD targets proteins known to cause FTD when they mutate, AL002 targets a triggering receptor expressed on myeloid cells (TREM2) that contributes to development and progression of Alzheimer's and other neurodegenerative diseases, and AL003 targets SIGLEC-3 – a transmembrane receptor expressed on cells of myeloid lineage – that has been identified as a risk factor for Alzheimer's disease.

Alector's prior investors include the Dementia Discovery Fund, which supported a $29.5m Series D round at the start of 2016. (Also see "VC-Run Dementia Discovery Fund Plays It Safe With First Investment " - Scrip, 7 Jan, 2016.) That round closely followed a $32m Series C in September 2015. (Also see "FINANCE ROUNDUP: Will VC Be Last Man Standing If Biotech Bubble Bursts?" - Scrip, 29 Sep, 2015.) The company's collaborators include Series E investor AbbVie Inc., which paid Alector $205m up front in October to co-develop drugs for Alzheimer's and other diseases. (Also see "AbbVie Goes Boldly Into Immuno-Neurology With Alector" - Scrip, 24 Oct, 2017.)

Among other venture capital financings announced in the second half of July:

• Just two days after disclosing a deal with Merck & Co. Inc. on July 24 worth $60m up front and as much as $1.6bn in milestone fees to co-develop immune-modulating treatments for cancer and autoimmune diseases, Sutro Biopharma Inc. revealed a Series E round totaling $85.4m. Samsara BioCapital and Surveyor Capital (a Citadel company) led the Series E with participation from prior investors – Alta Partners, Amgen Ventures, Celgene, Lilly Ventures, Skyline Ventures and SV Health Investors – and several first-time backers: Eventide, Nexthera Capital, Vida Ventures and funds managed by Tekla Capital Management LLC. Merck also contributed and committed to making a future investment. Sutro, which has raised $175m since 2003, has the antibody-drug conjugates (ADCs) STRO-001 in Phase I for lymphoma and multiple myeloma, and plans to take STRO-002 for ovarian and endometrial cancers into the clinic by early 2019. The Series E proceeds also will fund earlier-stage programs and ongoing platform technology development.
• Cambridge, Mass.-based HotSpot Therapeutics Inc., which says it is developing drugs that target nature's "regulatory hotspots," closed a $45m Series A round backed by co-founding investors Atlas Venture and Sofinnova Partners on July 17. The start-up claims to be the first company with a drug discovery engine that harnesses regulatory hotspots – allosteric sites used by nature to regulate protein function. The goal is to target pockets on a protein that are remote from active sites on the protein to develop selective, yet potent, drugs. Initial development programs target PKC-theta in autoimmune diseases and S6 kinase in metabolic and mitochondrial diseases, including nonalcoholic steatohepatitis (NASH).
• Neuraly Inc. in Germantown, Md. launched on July 18 with $36m in Series A cash to develop a pipeline anchored by NLY01, a brain-penetrant, long-acting glucagon-like peptide-1 receptor (GLP-1R) agonist that may be a neuroprotective agent in Alzheimer’s, Parkinson’s and other diseases. Clinical trials for NLY01, which slowed neurodegenerative progression in preclinical Parkinson's studies, are expected to begin later this year. The company has a separate early-stage collaboration with the South Korean firm 1ST Biotherapeutics Inc. in similar diseases. (Also see "1ST Bio Bets On BBB-Penetrating C-ABL Inhibitor As Potential Disease-Modifying Parkinson's Drug" - Scrip, 31 May, 2018.) Neuraly's Series A round was backed by its holding company, D&D Pharmatech, with participation from various Korean venture funds, including Smilegate Investment, InterVest, LB Investment, Magna Investment, Geon Investment and Dongkoo Bio & Pharma.
• Boston-based IFM Therapeutics LLC, which was spun out of the original IFM Therapeutics after its acquisition by Bristol-Myers Squibb Co. for $300m up front nearly a year ago, launched a subsidiary called IFM Tre on July 19 with $31m in Series A cash to develop NLRP3 antagonists that may block inflammatory responses in various diseases. (Also see "An Inflammatory Deal: Bristol Commits Up To $2.3bn To Buy IFM Therapeutics" - Scrip, 4 Aug, 2017.) Atlas Venture, Abingworth, Bristol and IFM Therapeutics' management participated in the Series A round. Additional subsidiaries under the IFM umbrella are focused on other pathways in the innate immune system; the primary programs acquired by Bristol targeted STING and NLRP3 for the treatment of cancer. Abnormal activation of the NLRP3 inflammasome can drive metabolic, fibrotic, autoimmune and neurodegenerative diseases. IFM Tre has three small molecule programs under way with plans to take its first drug into the clinic in 2019.
• Another Shanghai-based firm, Lyvgen Biopharma, said on July 16 that it raised a $30m Series B round led by 6 Dimensions Capital with participation from Winfair Global, Runling Capital and Series A backer Morningside Ventures. Lyvgen, founded in 2016, has platforms for developing cross-linked antibodies and co-stimulation agonist antibodies to treat cancer and other diseases. Its PD-1 inhibitor was out-licensed to Anhui Anke Biotechnology for development in China, but Lyvgen remains focused on combination therapy regimens that include immune agonist antibodies and cancer immunotherapy, including cross-linked antibodies that selectively target sites in the tumor microenvironment. The Series B cash will fund ongoing preclinical development and preparations for clinical trials.
• Sanofi Ventures led a $17m financing announced on July 23 by Click Therapeutics Inc. in Cambridge, Mass. and New York; the company is developing prescription digital therapeutics for a range of diseases. Click's commercial product Clickotine is marketed for smoking cessation, but it also has CT-152 for depression, CT-141 for insomnia, CT-111 for acute coronary syndrome and CT-130 for chronic pain. These treatments are regulated as Class II medical devices, but they're also of interest to Sanofi, which invested in Click as a means for working together across various therapeutic areas. The company's software is designed to work as both cognitive and neurobehavioral therapy on its own or in combination with biopharmaceuticals.
• The Canadian firm Inversago Pharma Inc. said on July 25 that it closed a $7m Series A round to develop next-generation cannabinoid-1 (CB1) receptor inverse agonists for the treatment of severe metabolic diseases, including Prader-Willi Syndrome and type 1 diabetes. The Montreal-based firm's Series A was co-led by Genesys Capital and Amorchem with participation from the JDRF T1D Fund, Accel-Rx, Anges Québec Capital, Anges Québec, Tarnagulla Ventures and angel investors. Inversago will use the money to take its peripherally-restricted CB1 inverse agonist/antagonist program into clinical trials.
• Takeda Pharmaceutical Co. Ltd. and Celgene led a $6m Series D round for Presage Biosciences Inc., which brings equity investments in the nine-year-old Seattle-based company to a total of $26m to date. Presage is developing its CIVO device for intratumoral micro-dosing of cancer therapies or combinations of cancer drugs in living tumors to assess the feasibility of novel treatments. (Also see "Presage Biosciences Inc." - Scrip, 23 Apr, 2013.) Its partners include Celgene under a 2013 agreement. (Also see "Presage eyes drug, diagnostic development with fresh cash from Celgene" - Scrip, 7 Mar, 2013.)