Financings of the Fortnight And the Neverending Venture Round

Somewhere out there, perhaps, is the end of NovImmune's Series B round.

More than a year ago, our friends at START-UP examined the fates of biotechs that had reeled in huge private financing rounds. Giant biotech venture rounds are back with a buzz in 2014 thanks to Juno Therapeutics, which launched in December with a $120 million Series A commitment. Last month it added on with cash from Venrock and Bezos Expeditions, aka Amazon.com chief Jeff Bezos' private money stash.

But in raw coinage, Juno's A round doesn't hold a candle to what NovImmune has raised in its Series B. Novi-who? It's a Swiss antibody developer founded 16 years ago that in 2006 first notched CHF 58 million ($46 million at the time) for its Series B. Eight years and three extensions later, the Series B now stands at CHF 200.5 million, most recently boosted by a CHF 60 million ($67 million) tranche announced February 18 and led by London life science specialists Rosetta Capital, whose partner Jonathan Hepple is joining the NovImmune board.

That makes NovImmune's Series B the largest biopharma venture round with at least one extension raised in the past decade, according to our Strategic Transactions database. FOTF reached CEO Jack Barbut via email, and he said NovImmune has kept the round open this long to create fairness for all shareholders. "This makes the share structure very easy," Barbut wrote. "For employees, common stock options (sweat equity), and for investors, preferred shares, all [have] the same liquidation rights and thus comply with Swiss statutes, which are very stringent on equal treatment for ALL shareholders." 

CEO since 2000, Barbut said when the Series B started, he didn't expect it to carry on this long. He doesn't know if this recent tranche will be the last.

We went back a decade into our Strategic Transactions database to see what kind of precedent there might be for NovImmune. We found 59 private companies whose extended rounds reached at least $50 million. Here are the handful, other than NovImmune, that topped $100 million:

Four of those companies have since gone public and one (Sangart) has gone under, shut down by its main investor, as first reported by Fierce Biotech. Meanwhile, Symphogen is in no hurry to go public, as its CEO told Start-Up in this feature last year.

NovImmune is not only top of the charts for money raised, but it also has no peer in the length of time of the round. None of the companies with blockbuster rounds took more than two years to secure their extensions. A few smaller rounds took longer. For example, Theraclone Sciences began raising its Series B in 2007 as Spaltudaq (we applaud the name change) and brought the total to $50 million about a year ago. Endocyte took five years to raise a nearly $80 million Series C before going public in 2011. And Alvine Pharmaceuticals spent more than four years building its Series A and is now waiting to find out if AbbVie will exercise an option to buy its lead Phase II program in celiac disease or the entire company outright. (If AbbVie does, it would be one of the very few corporate investors to buy out one of its portfolio companies.)

NovImmune's Barbut said his investors expect "some sort of liquidity event" too, of course, but in the nearer term he said the company is focused on finding a partner for NI-0101, its anti-TLR4 monoclonal antibody that has entered Phase I. It would also like to advance its NI-0501 program, an anti-interferon gamma antibody, and commercialize it solo. NI-0501 has orphan status in the US and EU in hemophagocytic lymphohistiocytosis, a deadly pediatric autoimmune disease, and has completed a Phase I study.

NovImmune doesn't seem to have cushioned its cash with a lot of non-dilutive funding. Its biggest deal to date is the outlicensing of an anti-IL17 antibody to Genentech in 2010, no financials disclosed. The candidate completed Phase I in 2013.

So we've got an orphan disease-focused biologics company with multiple, wholly owned clinical assets, a partnership with one top-tier biopharma, and the kind of cash runway that seems to attract more investment these days from the public markets. The IPO market has welcomed every stripe of biotech, from still-preclinical platforms to heavily capitalized specialty plays, in the past year, so NovImmune seems like an inevitable "ask." If its cards are well played -- keep in mind several banks are in NovImmune's investor pool -- an IPO could provide a nice bump for those who didn't have to ride the traditional valuation escalator (or be forced off of it) through later rounds.

We offer a bump, too -- a fist bump to Maureen Riordan, who did much of the work behind the scenes for this column. Without her this week, there would be no...

Melinta Therapeutics: Known as Rib-X Pharmaceuticals until last fall, antibiotic developer Melinta hasraised a $70 million Series 3 round led by existing investor Vatera Healthcare Partners. New investors included Falcon Flight, an affiliate of the Santo Domingo Group, and undisclosed backers. As Rib-X, the firm raised more traditionally named A, B and C rounds last decade. But a failed IPO try in 2011, and a set of new investors led by Vatera, have led to a housecleaning. In November 2012, the company disclosed a $67.5 million "Series 2" funding led by Vatera. Last fall, it unveiled its new name and new executive team, led by CEO Mary Szela. The Series 3 cash will help fund its Phase III study of antibiotic delafloxacin, a differentiated flouroquinolone in testing as an oral, single-dose therapy for uncomplicated gonorrhea. Melinta is aiming for an NDA filing in late 2014. In addition, the money will finance a two-trial Phase III program of delafloxacin in acute bacterial skin and skin structure infections, as well as lead-candidate selection from the firm’s RX-04 discovery program seeking to address serious and life-threatening Gram-negative infections via targeting of novel binding site on the bacterial ribosome. – Joseph Haas

Argos Therapeutics: Immunotherapy is hot, right? Well, yes and no. While the likes of Juno can command above and beyond $100 million in a single financing, cancer and infectious disease immunotherapy play Argos raised a mere $45 million in its February 7 IPO, its second try at launching onto the public markets. And that’s only after it had to dramatically cut the price to $8 a share from a $14 mid-point of its proposed range. It also had to increase the dilution, selling 5.6 million shares rather than the 4.3 million it had proposed. Existing investors bought 1.4 million shares of the IPO, or roughly a fourth of the deal. No word yet if the underwriters will exercise the overallotment, but the share price has largely treaded water since the offering. Argos investors can take some solace knowing the bargain-priced IPOs of 2013 ended up as top performers of the year. What's discounted now might have legs later, as Argos is one of many biotechs with notable clinical milestones in reach this year, as START-UP explored in January. Argos might see a boost later this year when it reports Phase IIb data for AGS-004 for treatment interruption in HIV/AIDS patients, although data due in 2016 -- Phase III survival data in renal cell carcinoma -- is more likely to be game-changing for Argos. The firm also expects this year to start two Phase II HIV eradication studies, one in adults and another in pediatric patients. Argos aims in these trials are ambitious – to eliminate the HIV virus or to reduce it to negligible levels. – Stacy Lawrence

Arrowhead Research: RNAi therapeutic developer Arrowhead said February 19 it grossed $104 million in a follow-on offering, selling 5.5 million shares at $18.95 a piece. Of the several public biotechs that sold $100 million-plus in stock this fortnight -- Ironwood Pharmaceuticals, Macrogenics, PTC Therapeutics and Puma Biotechnology were the others -- Arrowhead's inclusion would have been unthinkable this time last year, when it was bumping along in microcap land and had just a few million dollars in cash remaining. Arrowhead isn't strictly an RNAi developer; it has a peptide-drug conjugate in the clinic, too. But there's no doubt RNA interference, riding a revival of sorts highlighted by Alnylam Pharmaceuticals' giant deal last monthwith Sanofi/Genzyme, is driving the Arrowhead agenda. It's also worth noting that RA Capital, the hedge fund that helped propel the big Dicerna IPO, is also a key investor at Arrowhead as of last spring, having led a $35 million offering at $1.83 a share that recapped the company. With its stock now worth more than 10 times as much (it closed February 20 at $21.90) Arrowhead is pushing hard to get its lead RNAi compound, against Hepatitis B, into Phase II.  While RA, now a 9.9% owner, led a turnover in the company's cap table, it wasn't a bloodbath. Arrowhead's longtime CEO Chris Anzalone is still at the helm, and the board remains the same. – Alex Lash

Pronutria: Pronutria revealed February 13 a $12.5 million Series B round, with unnamed private investors participating alongside Flagship Ventures. CEO Robert Connelly told our colleagues at "The Pink Sheet" that Flagship provided less than half of the new round, while “business entities, individuals and family offices” supplied the remainder. Flagship created Pronutria within its VentureLabs program in 2011, quietly funding it with a $10.8 million Series A round over a two-year period before lifting the lid last October. Much of the Series B, which Connelly said is probably Pronutria's final venture round, will be used for clinical trials on two muscle-protecting candidates that preserve strength in frail, elderly people with sarcopenia, the loss of muscle mass that can occur during periods of hospitalization. The candidates, PN-107 and PN-365, are formulations of the amino acid leucine delivered as small “shot”-sized beverages similar to bottled energy products found on supermarket shelves. The specific pharmacokinetics and efficacy of each candidate, and the effects of their specific balances of amino acids, will be compared with each other in the trials. The company is still deciding on a regulatory pathway for each one, including possibly developing them as nutritional supplements, medical foods or pharmaceutical products, each of which has its own requirements. Initial clinical trials, now underway, are scheduled for completion by mid-year; Connelly said the company also is mulling parallel development of drug and non-drug formulations of similar product candidates. Further down the line, Pronutria is aiming for products addressing the metabolic, gastrointestinal, immune and renal disease areas, as well as beneficial products for patients with rare diseases and those going through chemotherapy. Whatever drug products Pronutria develops will reside in a separate business unit, which will help ease eventual sales or spin-outs. – Paul Bonanos

Best of the Rest (Highlights of Other Activity This Fortnight): Endocrine disease-focused Versartis raised $55M in Series E financing, and concurrently filed for an IPO…to support the launch of opioid dependence drug Bunavail in the second half of this year, BioDelivery Sciences grossed $60M in a registered direct offering…PTC Therapeutics publicly sold $126M in a FOPO to complete Phase III development and gain regulatory approval of ataluren in Duchenne muscular dystrophy and cystic fibrosis caused by nonsense mutations, in the wake of last month’s EMA/CHMP negative opinion on that candidate’s MAA…Concert Pharma priced its IPO at $14, the top end of its range, to net $78 million...three Israeli biotechs – Galmed, Bio Blast, and MediWound – are all hedging their bets and trying to float on Nasdaq…and PDL BioPharma, which manages patents and royalty assets, completed a $261M convertible notes offering. – Amanda Micklus

Photo courtesy of Mike Mantin  on flickr, via a Creative Commons license. 

These Days, You Can't Spell Financings Of The Fortnight Without "I-P-O"

It turns out a lot of the words that contain the letters "IPO" are biomedical words:

Pluripotent. Liposomal. Adiposis. Gallipot.

And it turns out a lot of biomedical companies have IPO in them, too. Since we last met 14 days ago, dear reader, a stunning 13 biotechs have made their public debuts, although if not for Eleven Biotherapeutics, it would have been 12.

There are all kinds of ways to slice and dice this baker's dozen; one way is to look at first-day pops. Indeed, our colleagues at "The Pink Sheet" will soon have a detailed look at the crazy first-day run-up of RNAi developer Dicerna Therapeutics; the 207% gain was the biggest in biotech since Antigenics jumped 241% in February 2000, according to Renaissance Capital.  (More on Dicerna's IPO in the roundup below.)

But with the momentum that began in earnest last spring showing no signs of tapering off, we're curious about a different indicator: insider purchases. As soon as IPOs began to rebound from the financial crisis, insiders often did heavy lifting to get the deals off the ground.

But those levels began to decline in 2013, as Atlas Venture partner Bruce Booth noted on his blog last fall. He also noted that insider participation could signal a cooling of the market. Well, yes, but as we noted on this blog in early 2012, it's hard to draw conclusions about deal-by-deal participation. Is heavy insider presence a sign of desperation to get a deal done, or is it a sign of singular enthusiasm? With crossover investors already on the cap table and wanting more at IPO, and with some VCs playing more frequently on the public side of the fence, it can be hard to tell. What's more, SEC filings don't always divulge the true level of insider participation.
 
With all that, let's round up what this year's IPOs have revealed:

Here are the 13 IPOs the past two weeks, plus GlycoMimetics on January 9, and the percentage of insider participation noted in the regulatory filings:

Company Name	Insider Participation at IPO
Dicerna	57%
GlycoMimetics	29%
Celladon	25%
Eleven	24%
Trevena	23%
uniQure	22%
Genocea	21%
Egalet	20%
Auspex	12%
Cara	7%
Ultragenyx	0%
Acucela	0%
Revance	0%
Biocept	0%

That's an average of 16% raised from insiders, but with caveats: some of these numbers (highlighted green) are based on filings which note that insiders indicated an interest of purchasing a certain amount. At the time of this writing, it's not clear whether they actually pulled the trigger, but often those indications don't change much. Other caveat: The percentages don't factor in the green shoe. In other words, some of the numbers you see above will change as more information emerges.

For what it's worth, our own IPO data show insider participation in 2013 averaged 14%. 

It's hard to say what all this means. Two years ago, when insiders shouldered heavy IPO loads -- taking on more risk instead of getting to precious exits -- it was easier to wonder about the desperation of it all. But now, more early stage biopharma investors (Third Rock Ventures, Flagship Ventures, OrbiMed Advisors, 5am Ventures and so on) are squaring the circle, from fundraising to new investment to IPO and back again, and biotech's boom means those extra IPO shares, if you can afford them, could be a lucrative proposition. And as our START-UP colleagues noted last year, biotech VCs haven't been shy about holding... and holding... and holding their shares well past IPO.

Is it worth mentioning that you also can't spell "ripoff" without IPO? Or perhaps we should leave you with this lighter linguistic play: The only anagram of IPO is "poi." A select few find the ancient Hawaiian staple of taro root mush delicious, but other people just need some time to appreciate it. Hmm, sounds like a recipe for what we cook up every two weeks, except we call it...

Dicerna Pharmaceuticals: RNA interference specialist Dicerna more than tripled in its first day of trading, making it the largest post-IPO pop since 2000. Demand for the offering was almost unprecedented with over $1 billion in orders, thanks in part to the RNAi-validating $700 million deal between Alnylam Pharmaceuticals and Sanofi's Genzyme that stole the show at January’s JP Morgan Healthcare conference. But unlike many IPO candidates going into 2014, Dicerna can't count on near-term milestones to support the stock. It expects to start clinical trials for the treatment of primary hyperoxaluria in 2015, with proof-of-concept data due later that year. It also expects to advance DCR-M1711 for cancers driven by the MYC oncogene in the first half of 2014, with proof-of-concept data in 2015. The biotech originally targeted $60 million, but by increasing its price to $15 and shares sold to six million, it ended up raising $90 million. The overallotment could add another $13.5 million. Last July, Dicerna raised a $60 million Series C round at $7 a share with crossover investors RA Capital, Deerfield Management and Brookside Capital Partners, as well as VCs Domain Associates, Skyline Venture Partners, Abingworth Bioventure, SROne and Oxford Biosciences Partners. At market close on February 6, Dicerna’s share price had settled to $33.98, down from its first-day high of $46, but still more than double the IPO offer price.  – Stacy Lawrence

uniQure: The groundbreaking Dutch company gained the first regulatory approval for a gene therapy in the Western world, but it isn’t the first to go public. The company followed bluebird bio and, just by a few days, Celladon into the public markets with its February 4 listing on the Nasdaq, pricing 5.4 million shares at $17 apiece, above the anticipated range of $13 to $15. uniQure netted $81.9 million in the transaction, net of discounts and expenses; a greenshoe option could add $13.8 million more to the offering’s value. uniQure made history in November 2012, when EMA approved its Glybera (alipogene tiparvovec) to treat rare metabolic disease lipoprotein lipase deficiency. It’s part of a renaissance of interest in the field of gene therapy, once considered overly risky, and VCs have stepped up investment in new treatments in the field. After meeting with US regulators, uniQure plans to file an IND for Glybera by midyear. The company will also use its IPO proceeds to complete its Lexington, Mass. manufacturing facility and advance pipeline candidates including Phase I/II hemophilia treatment AMT-060. The company is planning a 2014 commercial launch of Glybera in Europe, in conjunction with regional partner Chiesi Farmaceutici. – Paul Bonanos

Lumos Pharma: Two years after paying $695 for a crowdsourced logo, Lumos has reeled in real cash: a $14 million Series A round led by Sante Ventures and New Enterprise Associates. The Austin, Texas firm is working on a small molecule therapeutic for the rare disease Creatine Transporter Deficiency (CTD), which is in preclinical studies. Lumos was among the first companies to gain support from the National Institutes of Health's "TRND" program, or Treatments for Rare and Neglected Diseases. As our sister publication START-UP noted in late 2011, CEO Rick Hawkins, a serial biotech entrepreneur, turned to TRND for help in what he called the worst disruption in the capital markets he'd seen in 35 years. CTD is an inborn error of metabolism that results in a profound lack of creatine in the brain. It's an x-linked disorder, which means boys are more affected than girls, with severe autism-spectrum symptoms such as language and speech delay, epilepsy and destructive behavior. Lumos is repurposing a drug -- what it calls a kinetically similar analog of creatine -- previously studied as a solid tumor treatment, and tested in knockout mice at the University of Cincinnati. Kevin Lalande, Managing Director of Sante Ventures, and NEA Partner Ed Mathers will join the Lumos board. – Alex Lash

NightstaRx: We admit we first thought about writing up NightstaRx to poke gentle fun at its name. (It apparently is pronounced "Nightstar," which makes for the first silent "X" in the English language.) But we would never be that shallow; the firm merits a write-up for other, more legitimate reasons. First, the company is the initial therapeutic investment from Syncona Partners, the new £200 million ($325 million) evergreen venture fund of the mighty Wellcome Trust, which has been rather slow to get cranking (it was first announced nearly two years ago). Once known as Project Sigma, Syncona aims to fund private biotechs and keep full ownership, at least for a while. It's for-profit and although fully funded by Wellcome, it's separate from the Trust's investment division, which has billions of pounds of private equity holdings. Now that Syncona is truly up and running, it should b be a significant source of early stage funding for European biotechs. Our second reason to highlight NightstaRx, a spinout from the University of Oxford, is that Syncona's £12 million ($20 million) will help move forward a gene therapy treatment for choroideremia, an inherited form of progressive blindness. It's the latest entry in a venture-backed field of ocular gene therapy companies, as The treatment uses a small modified virus, AAV.REP1, to deliver the correct version of the mutated gene that causes to cells in the retina of the eye. Six months after treatment with this therapy, the first six patients showed improvement in their vision in dim light and two of the six were able to read more lines on the eye chart, according to a January 16 paper in the British medical journal Lancet. The vector is currently in Phase I trials and follow-on tests are expected to begin in 2016. – Sten Stovall and Alex Lash

Best of the Rest (Highlights of Other Activity This Fortnight): Cancer MAb company Igenica announced a second closing of $14 million to its June 2012 Series C round, raising the total proceeds to $47 million…In another add-on, Sialix, which is focused on sialic acids to treat cancer and inflammatory-mediated diseases, tapped angel investors to supplement its August 2011 Series B financing with a $1.2 million tranche, bringing the round total to $4 million…Through a public offering, renal drug developer Keryx Biopharmaceuticals netted $108.2 million (including the overallotment)… Large FOPOs were also completed by other cancer-focused biotechs: Geron ($97.3 million) and Tesaro ($94.8 million)… While numerous initial public offerings were completed, there are still an abundance of filers in the wings, hoping to go public soon; among them is UK biotech Circassia, intending to float on the London Stock Exchange's Main Market, which, if successful, would be the first UK-market IPO since Clinigen Group’s £6.6 million flotation on AIM in October 2012 (UK biotech Egalet just completed its $50 million IPO, but on Nasdaq)… Canadian spec pharma Aptalis Holdings withdrew its December 2013 IPO filing on Nasdaq in favor of a $2.9 billion buy-out by Forest Laboratories… Through the sale of debt, Emergent BioSolutions raised $250 million to fund its acquisition of Cangene… Also through a debt offering, Fluidigm brought in $170 million to finance its takeover of DVS Sciences. – Maureen Riordan

Many thanqkxs to Mr. Thomas for the Scrabble photo via a Creative Commons license.

Return to Seller: GlycoFi Next Tech to Exit Merck?

As the J.P. Morgan conference began to clog the San Francisco streets and restaurants on Sunday night, Alnylam Pharmaceuticals got the party started with a bang. In industry's first major deal of the year, Alnylam signed a broad agreement with Sanofi’s Genzyme Corp. and, separately and perhaps more dramatically, bought Merck & Co.’s RNA interference assets (essentially the remnants of Sirna Therapeutics) for $175 million ($25 million was cash and $150 million in Alnylam stock).

The latter deal unleashed the schadenfreude. Merck paid $1.1 billion for Sirna, then Alnylam’s biggest RNAi rival, back in 2006. It had been predictably if annoyingly tight lipped about any progress (or lack thereof) it was making with RNAi therapeutics ever since. And with 200 people within Merck working to surmount the therapeutic modality’s famous delivery challenges and more or less build an RNAi franchise for most of the past seven years, $1.1 billion was likely just the tip of the iceberg.

Why Alnylam wanted Sirna goes beyond (figuratively of course) putting the stuffed head of its former rival on the wall in the Cambridge company’s boardroom (but sure, on some level, that’s gotta be part of it?). Merck apparently did make some progress on sub-q delivery of RNAi and it had some IP that Alnylam likely wanted to tie up.

The broader point is that technologies once coveted by pharma but now seen as dead-end cost centers or just gathering dust may have utility – and potentially a lot of value – back out in the broader world. That’s been true for drug candidates for a long time – and we’ve seen plenty of deals where a company has acquired valuable drug compounds and eventually sold them off, even back to the VCs and executives that offloaded them in the first place (think Esperion, Vicuron, etc.).

Those originators are often the best placed to understand the compounds or technology and make another go at driving value. And Merck’s decision to part ways with Sirna and RNAi (and the ongoing reorganization the company’s R&D group) got us thinking about what other technologies the pharma may offload. One that comes to mind was another high-profile 2006 acquisition: the yeast-based antibody manufacturing play GlycoFi.

Allow us to speculate:

In May 2006 Merck plunked down $400 million to buy the technology. On a Sirna-scale, that’d mean a $10 million (or less!) down payment might be enough to extricate the technology. And GlycoFi founder Tillman Gerngross and his venture backers are now at the center of myriad antibody discovery partnerships via the decidedly profitable Adimab and a small handful of drug development start-ups enabled by the Adimab technology. They would be a logical set of suitors (Gerngross wouldn’t comment).

GlycoFi’s glycoengineering and optimization technologies would surely complement Adimab’s yeast-based antibody discovery tech. The company was never fully integrated into Merck and is still based in Lebanon, NH, home to Adimab and Gerngross’s other ventures (if the two companies don’t share an address, they’re at least within walking distance to each other near Dartmouth). GlycoFi was meant to enable Merck’s follow-on biologics strategy, but the big company’s ambitions around what is now biosimilars have shifted over the past several years. Biosimilars leadership specifically and R&D leadership more generally has turned over. GlycoFi’s ‘internal champion’ at Merck is likely gone. Merck is, like other big companies, shrinking its R&D footprint.

Adimab has somewhat famously – famous for the set that converges around Union Square in San Francisco this time of year, anyway – advertised its technologies and successful partnerships on the Powell-Mason cable cars that roll up the hill out front of JPM’s epicenter St. Francis hotel. The current biotech boom feels very much like a throwback and so it’d be fitting: maybe next year we’ll see GlycoFi on those cars instead?

Technology Marches On, And Financings Of The Fortnight Is There!

Digital future? Sounds expensive.... and confusing! Instead, let's talk about the recent past. What stood out for us in this latest fortnight-plus – extended a bit to accommodate the Thanksgiving holiday and our expanded waistlines – were two vast sums of money for companies plying cutting-edge biomedical technologies that, despite some successes in previous permutations, are still high risk. 

We’ll start with the second, because it’s a more obvious case. The company is Juno Therapeutics, which has rounded up a few programs of cancer immunotherapy under one corporate roof. None of them use the infused-antibody paradigm of Yervoy (ipilumumab), the Bristol-Myers Squibb product approved for melanoma treatment, but the much more complicated dance of autologous cell therapy that Dendreon, with its prostate cancer treatment, showed a few years ago could make it to market. Dendreon also ran into trouble, however, because the dance – removing blood from patients, isolating T-cells, shipping them to a lab, re-engineering them, shipping them back, and re-infusing them into the patient – was more than just putting your feet on the floor in the right sequence. Juno’s backers, to the tune of $120 million and, soon, a lot more (see our blurb below), think the Seattle/New York startup has all the right moves, including improvements to the process and stunning (but small sample size) Phase I data from one of its programs. (Xconomy's Luke Timmerman got the early access and the jump on everyone this week for an excellent long-take on the company.)

The other technology-driven story is the second massive cash infusion for Moderna Therapeutics, the Flagship company that wants to inject modified messenger RNA into patients to spur them to produce their own therapeutic proteins. Moderna simmered sotto vocce within Flagship for a couple years until late 2012, when it emerged with a $40 million commitment. Still years away from clinical proof of concept, it almost immediately secured a licensing deal with AstraZeneca with a $240 million upfront that gives AZ rights to cardiovascular and metabolic programs that emerge from Moderna. 

Which brings us to the week before Thanksgiving, when Moderna added to the pile with a $110 million Series B round from Flagship and a raft of undisclosed backers. We’re a long ways from learning if Moderna’s ambitious idea works, but if it does, it will have to overcome a hurdle that has bedeviled many other companies – often extremely well-funded, too – using RNA-based therapeutics. Those oligos don’t hold up well in the body. Delivery is hard. 

When two researchers won the Nobel Prize in 2006 for their discovery of RNA interference, the biotech world seemed well on its way to developing therapeutics based on the gene-silencing technique. Two companies in particular, Sirna Therapeutics and Alnylam Pharmaceuticals, seemed poised to battle for years. Not quite. Merck & Co. bought Sirna for a cool billion dollars, and it was never heard from again. Alnylam’s rich alliances with Big Pharma came to a crashing halt at the end of last decade.

Alnylam was left to clean up the mess with a big restructuring, but it has steadily rebuilt value, and it recently scored notable Phase I data for a program based on its subcutaneous delivery technology. Its share price has rebounded and at $62.98, it’s nearly twice as high as it flew in the heady days of the ‘00s, before its pharma partners abandoned ship. 

So what to make of these new blockbuster financings? Juno is building upon the rollercoaster experience of Dendreon, even hiring Dendreon's former COO as its CEO. Its investors apparently think nothing short of a full financial blitz will make autologous cell therapy 2.0 a winning version. And Moderna has enough cash now to hand-deliver every dose to every patient on a gold-embossed platinum serving tray. And to get into patients' bodies, they might be able to use a subcutaneous approach, too. 

What will be the next frustrating biotechnology to spur a new round of hopeful spending? When the money flows, you'll certainly be able to read about it in....

Juno Therapeutics/Argos Therapeutics: Hello, cancer immunotherapy. The big Series A financing news this week – this year? – was Juno’s $120 million haul to help the company develop and commercialize not one, not two, but three autologous immunotherapy platforms from two rival research institutions. Autologous is like the high-profile Dendreon: T-cells are removed from the patient, genetically souped up in a lab to recognize and kill cancer cells, then re-infused into the patient. The top-line investors in Juno are ARCH Venture Partners and the Alaska Permanent Fund, which invests that state’s oil revenues. Which means Juno – perhaps a clever way to give Alaska and its capital city naming rights? – is cashing in on former Governor Sarah Palin’s successful campaign to raise taxes on oil companies. That tax hike is now the subject of a major political battle, by the way. But we digress. Alaska’s fund managers won’t have a Juno board seat, which means ARCH’s Robert Nelsen is the main money man to herd cats as Juno’s riches are disbursed to folks at Memorial Sloan-Kettering Cancer Center, the Fred Hutchinson Memorial Cancer Center, and Seattle Children's Research Institute. Nelsen tells us that the groups will continue to run their own cancer immunotherapy programs under Juno’s roof, and “may the best data win.” (The Sloan-Kettering folks are unveiling at ASH this weekend a study that brings the percentage of Phase I patients treated with MSKCC’s CART-19 immunotherapy who had a complete response to 88%, or 15 of 17: basically their cancer disappeared.) What’s more, Nelsen says a Series B round “larger than the Series A” is about six months away. We’ll have more on Juno in this week’s issue of "The Pink Sheet", and in the upcoming Start-Up magazine. Meanwhile, at the other end of the funding rainbow, Juno competitor Argos Therapeutics, which has been plugging away at autologous immunotherapy for more than a decade, also had funding news. It topped up its Series E round to $60 million as it continues a pivotal trial in renal cell carcinoma. The first tranche of the E round came in August and included warrants. Argos withdrew an IPO bid in 2012 and instead brought in a Series D round. Other than both working on autologous immunotherapy systems, Argos and Juno have another connection: Argos’ recent backers included Russian and South Korean pharma companies, which mean Juno’s investors can see Argos’ investors from their kitchen window.  – Alex Lash
 
Xencor: Dilution was the headline for the IPO of antibody company Xencor. It priced December 3 at one-third of the mid-point of its original range, and to compensate it doubled its shares sold, and then some. It first filed to raise $75 million by selling 5 million shares at a mid-point of $15 each; it actually raised $70 million by selling 12.7 million at $5.50. That’s despite existing investors, which include MedImmune Ventures and HealthCare Ventures, committing to buy about $20.5 million, or 29%, of the IPO. Investors are demanding deep discounts as the biotech IPO market has softened this fall, so much so that it was a bit of a surprise Xencor made it out at all. Before it got the deal done, Xencor postponed its IPO, as did at least five other biotechs leading up to Thanksgiving. The Xencor offering was originally slated for Nov. 14. The worry for investors is that bankers are now scraping the bottom of the barrel. Perhaps the typical momentum of January’s JPMorgan conference can breathe a bit of life back into IPOs – if the right companies come along. (For a detailed look at the 2013 IPO strategies of OncoMed Pharmaceuticals, bluebird bio, and Ophthotech, check out this Start-Up feature.) At least for Xencor, the immediate investor upside of a deep discount is the potential for money left on the table. In its first day of trading on Dec. 3, Xencor got a 52% bounce, to $8.64 per share. Longer term, Xencor’s fate likely hangs on lead candidate XmAb5871 to treat rheumatoid arthritis, which won’t see a significant milestone until Phase Ib/IIa data due in the second half of 2014. A Phase IIb proof-of-concept trial would follow in the first half of 2015, with partner Amgen Inc. having data in hand in 2017 to determine if it will exercise its option. – Stacy Lawrence
 

Sitari Pharmaceuticals: The joint venture that Avalon Ventures and GlaxoSmithKline announced this spring hatched its first company November 22. The two staked Sitari, which will focus on developing a drug therapy for celiac disease based on research at Stanford University, to a $10 million Series A financing. The $10 million is not a straight cash investment, Avalon Managing Director Jay Lichter told "The Pink Sheet" DAILY. Avalon provides $3 million in cash, while GSK will provide up to $7 million in both cash and in-kind services. Using intellectual property licensed from the Stanford lab of Chaitan Khosla, Sitari will attempt to address celiac, an autoimmune digestive disease caused by intolerance to gluten, by inhibiting the transglutaminase 2 (TG2) pathway. Avalon will transfer tools from the Stanford labs to Sitari’s La Jolla, Calif., location where the GSK chemical libraries will be screened for potential TG2 inhibitors. That will be the starting point of the discovery work, along with considering compounds discovered by Khosla’s team, to determine which chemical scaffold might work best along with other pharmacodynamic factors, Lichter said. The company is years away from selection of a clinical candidate, however. At the time of selection, GSK will have the option to acquire the company or let Avalon take it forward on its own, said Pearl Huang, GSK’s global head of Discovery Partnerships with Academia (DPAC) unit. Huang said $10 million likely will be the standard A round for the companies co-founded by GSK and Avalon, based on both partners’ experience of what it takes to get to candidate selection. – Joseph Haas
 
5am Ventures: The San Francisco Bay Area firm said December 3 it has closed a $250 million fund, its fourth. It’s 20% larger than the group’s third fund, which closed in 2009. Four years between fund closes isn’t bad for an early-stage investor, although as managing partner Andy Schwab told Start-Up last year, “We’re realistic that not all of our companies can be two professors and an early-stage idea.” The firm has reached exits through investments in new companies that were vehicles for mature technologies, such as the Alza pain patch that was spun out and re-jiggered by Incline Therapeutics. 5am cashed out when The Medicines Co. bought Incline in 2012. It’s also had success extending a franchise. It sold Ilypsa in 2007 for $420 million to Amgen, which wanted the startup’s phosphate binder to treat chronic kidney disease. 5am and its syndicate partners spun out of Amgen some of the extra Ilypsa assets into a new company called... Relypsa. (They’re not called 5am for nothing; you’ve got to get up early to be that clever.) Amgen eventually shelved the Ilypsa program, but Relypsa made steady progress and raised north of $150 million in venture cash. It went public this fall, six years after its spin out. Relypsa also dampened its IPO ambitions, going out at $11 a share instead of $16 to $19, and raising $80 million (with insiders buying about a quarter of the shares) instead of roughly $120 million. (Shares closed at $19.60 on Dec. 5.) The new fund keeps the same managing partner lineup of Andy Schwab, Scott Rocklage, and John Diekman.  – Alex Lash
 
Best of the Rest (Highlights of Other Financing Activity This Fortnight): Continuing its focus on drug assets, Versant Ventures will create the biotech incubator Blueline Bioscience, which will spin off start-ups to which Celgene holds an option to buy... Versant also funded the latest Inception spin-off, Inception 4, an ophthalmic company that secured a joint research and option agreement with Bayer...Visterra added $8.1M to its Series A, which now totals $34.2M, and concurrently in-licensed dengue fever IP from MIT…Despite losing GSK as its Fabry disease partner, Amicus Therapeutics was busy: the company restructured its financial and corporate structure, announced $40M in new equity and debt financing, and acquired a lead ERT for Pompe disease in its takeover of Callidus Biopharma…Horizon Pharma netted $144M in a private senior notes sale, $35M of which will fund the purchase of exclusive US rights to AstraZeneca’s pain drug Vimovo…and Gilde Healthcare closed a $200M third fund dedicated to home- and digital-health, diagnostics and medtech, and pharmaceuticals. -- Amanda Micklus

Financings of the Fortnight Gets Comfortable In Genes

Twenty-three years after the first gene therapy clinical trial began, investors are finally showing confidence in the sector. The field still isn’t without risks, but some of its most daunting challenges are being resolved as clinical data broadens, regulators show support, and manufacturing improves.

The promise of gene therapy, which entails replacing a malfunctioning gene with a properly functioning copy delivered by a viral vector, is that its treatments are administered once with long-lasting, potentially curative results. That has tantalized scientists since the first gene therapy trials began in 1990, even as clinical research endured a standstill in the early 2000s after the deaths of several trial subjects. Their first big payoff came late last year, when European regulators approved uniQure’s Glybera (alipogene tiparvovec) to treat the rare disease lipoprotein lipase deficiency.

Since April, VC syndicates have backed two new companies studying new gene therapy treatments. First, Novartis Venture Fund, Abingworth, Versant Ventures and Index Ventures committed €32 million ($41.4 million) in GenSight Biologics’ springtime Series A round. Then Versant doubled down last month, contributing to Audentes Therapeutics’ $30 million Series A alongside OrbiMed Advisors and 5AM Ventures. Ophthalmological treatment developer GenSight and muscle-wasting specialist Audentes join a field of private companies that includes Celladon, Finland’s FKD Therapies, and uniQure.

More notably, gene therapy developer bluebird bio took advantage of the appetite for biotech listings in June, blowing past expectations with a $116 million IPO. In the aftermarket, bluebird shares touched $35, more than double their opening value; they currently trade above $27, giving the company a market capitalization of about $620 million.

Why has interest been renewed? “In terms of the investment community, the barriers to gene therapy as a therapeutic modality are being erased,” Celladon CEO Krisztina Zsebo told “The Pink Sheet” last month.

The body of evidence has grown significantly since 2006, with proof-of-concept shown across a variety of diseases. The manufacturing process has been industrialized and, while still expensive, occurs at a scale that appears sustainable. And in the wake of Glybera’s approval overseas, U.S. regulators have revised their guidance for clinical trials on therapies, suggesting cautious procedures but implying a willingness to approve a product when the time is right. It may be soon, as uniQure pursues Stateside approval.

It’s not just investors getting into the act. Several pharmas have their own programs, and others are striking high-profile deals. Celgene paid bluebird $75 million up-front in May, as the two inked a cancer research partnership, while uniQure teamed with Chiesi Farmaceutici for a territorial rights deal. Novartis and Boehringer Ingelheim have also licensed vector-related technology that could lead to new products as well.

Some risks are still very present. Many therapies pose a danger of “insertional oncogenesis,” the accidental triggering of a nearby gene that leads to cancer, although the vectors most commonly used today (adeno-associated virus and Lentivirus) are believed to be safer than the ones that led to patient deaths more than a decade ago. For now, the trailblazing companies are mostly operating in rare-disease fields where alternatives are scarce; as data sets grow, the treatment modality could soon be used in broader areas.

And although bluebird’s investors have reached liquidity, it’s tough to assess the value of gene therapy companies because of unresolved questions around product pricing. uniQure appears to be targeting a price of €1.2 million ($1.6 million) per injection, payable over a period of five years. That could induce sticker shock, but Versant venture partner Tom Woiwode argues that it’s quite reasonable, since a single, potentially curative treatment could ultimately cost less than a lifetime of chronic pharmaceutical use.

In the longer term, it’s also unclear whether gene therapies will really be permanently curative, or will need to be re-administered periodically. Moreover, a handful of early successes in rare diseases won’t necessarily carry over to more widespread disorders. Payer relationships haven’t yet been established, nor is there a precedent for a high-priced, one-time treatment before uniQure’s market entry. But each additional step offers a little more clarity for investors willing to risk their money on a treatment modality that holds so much promise.

We can't promise you, dear reader, a curative therapy, but if you don't mind a biweekly dosing schedule, we're always happy to bring you...

Edimer Pharmaceuticals: The tiny Cambridge, Mass. firm said July 30 it has raised an $18 million Series B round to test its protein replacement therapy EDI200 in newborns with X-linked hypohidrotic ectodermal dysplasia (XLHED), a rare genetic disease that can lead to fatal hyperthermia, as well as loss of hair and teeth in older patients. The Phase II trial, scheduled for six to ten newborns, comes on the heels of a Phase I trial in adult patients. The final data are still under analysis, Edimer CEO Neil Kirby told our Pink Sheet colleagues. Kirby is unsure what Edimer’s strategy will be for Phase III if EDI200 is successful in Phase II study, but said a partnership would likely be necessary to commercialize the drug if approved. New Enterprise Associates led the round, with Sanofi-Genzyme BioVentures also a first-time investor. NEA gets a seat on the board, while Sanofi-Genzyme, which can offer considerable expertise in rare disease drug development, will provide a board observer. Third Rock Ventures and VI Partners, which funded Edimer’s $22 million Series A in 2009, also are participating. -- Joseph Haas

aTyr Pharma: The San Diego biotech pulled in a $49 million Series D round as well as $10 million in venture debt to fund clinical trials of treatments for rare immune disorders. aTyr is developing protein therapeutics based on physiocrines, which are extracellular fragments of the tRNA synthetase family of enzymes. (You can find a deeper discussion of aTyr here in a recent START-UP feature on companies pursuing more phenotypic inquiry in the drug discovery process.) The firm's work on physiocrines -- which were first called "resectins" -- spun out of Scripps Research Institute and was backed by Alta Partners, Cardinal Partners, and Polaris Ventures, all of which participated in the new Series D. Domain Associates, which led aTyr's Series C, also participated, as did an unnamed global investment fund. The $10 million loan comes from Silicon Valley Bank and puts aTyr's total cash raised through equity and debt past the $100 million mark. tRNA synthetases have been well known for decades as humble helpers with protein synthesis within cells. No one gave them much thought as disease-modifying agents. Scripps reseachers realized the synthetases were also getting outside cells and being cleaved; part of the outcome of that cleavage were physiocrines, and that these fragments have extracellular signaling function that might also have disease implications. aTyr's focus on rare immune disease is fairly recent; in 2011, it quietly shelved its previous lead candidate, a thrombocytopenia treatment. -- Alex Lash

Dicerna Pharmaceuticals: This alumnus of the 2011 A-List said August 1 it has raised a $60 million Series C round, its first venture round in three years. The Boston-area biotech was part of the wave of companies to launch last decade, led by Alnylam Pharmaceuticals, to pursue therapies based on the breakthrough of RNA interference. Alnylam has had early clinical success, but generally the field's high expectations have been tempered because of drug-delivery limitations and other problems. Dicerna, however, has attracted a roster of new backers generally regarded as "crossovers," or public investors looking to buy into private companies to gain a foothold in a pre-IPO round. Dicerna's Series C was led by RA Capital and included Brookside Capital, Deerfield, and Omega Funds, which often buys shares from venture investors looking to cash out. The round also included all five of Dicerna’s existing institutional investors: Abingworth Management, Domain Associates, Oxford Bioscience Partners, Skyline Ventures and SR One. -- A.L.

BioMotiv: The drug-development accelerator based in Cleveland said August 5 it has raised $25 million from Nationwide Mutual Insurance and other investors, bringing its total cash raised to $46 million. That's about half of the firm's goal of $100 million to bring to fruition an asset-centric development model that looks to in-license preclinical compounds, work them into the clinic, and sell them to pipeline-hungry buyers with Phase Ib or IIa data. The only previously disclosed investors, which provided BioMotiv’s first $21 million, are University Hospitals of Cleveland and the Harrington family. BioMotiv is one piece of a $250 million initiative – The Harrington Project for Discovery and Development – spurred by the family to accelerate biomedical research into new therapies. Like many asset-based schemes, the BioMotiv structure allows returns from individual projects to pass through to investors. But as CEO Baiju Shah told our sister publication START-UP, which featured BioMotiv in its June Capital Matters column, the for-profit's investors are not limited partners; they function as direct investors with a certain amount of operational control, just as would the shareholders in a corporation. So when a return from a project comes in, investors will decide whether to distribute those earnings to themselves and management in an 80/20 split, or to plow them back into company operations. BioMotiv has already brought in eight compounds: two in oncology, three autoimmune-related, and one each in inflammation, ophthalmology, and infectious disease. The goal is 20 projects in hand at any one time. To maintain that steady state, the firm will have to reach another goal: an "evergreen" flow of capital to pour back into projects from successful exits. Shah hopes to have the first in the clinic in 2014.  -- A.L.

All The Rest: To support a clinical study of icaritin in advanced hepatocellular carcinoma, Shenogen raised $30M in Series C funds…Imperial Innovations led a £13.5M investment in the newly merged PolyTherics/Antitope…antibody company Apexigen completed a $20M Series A…vaccine player Vaxart raised $20M in a Series C financing...Karyopharm added $19M on to its Series B round, bringing the total to $67.2M…developing a Pfizer-discovered compound for premature ejaculation, Ixchelsis raised $14M from TVM Life Science Ventures VII…Merck Lumira Biosciences Fund led a $13.2mm investment in enGene…Rhythm Pharmaceuticals completed a second $11M tranche on its Series B, which now totals $44M…to advance monoclonal antibody linker technology, Meditope Biosciences closed a $3.6M Series A…Sialix, which is researching the role glycans play in cancer and inflammatory diseases, raised $1M in Series B funds from angel investors…AuraSense Therapeutics added on an undisclosed amount of money to its $5.4M Series B…days after completing reverse merger with Marathon Bar Corp., Lipocine privately raised $37.8M…to pay for clinical trials of cancer candidates Validive and Livatage, BioAlliance Pharma completed a €8.7M PIPE…Transition Therapeutics grossed $11M, enough funding to finish three major Phase II studies…cell therapeutics company TiGenix closed a €6.5M capital increase….Aeterna Zentaris raised $7.8M in a private placement to advance its zoptarelin doxorubicin (AEZS108) program in prostate cancer…CNS disorder-focused Vanda Pharmaceuticals closed on a $52.3M FOPO…Organovo, developer of 3D human biological disease models, publicly raised $40.5M…Opexa Therapeutics grossed $18M in a FOPO and plans to spend the money on Phase IIb studies of immunotherapeutic Tcelna...to pay for Phase I trials of BCX4161 for hereditary angioedema, BioCryst completed a $17.6M secondary offering…synthetic biology company Intrexon priced its IPO at $16, the top end of its range, to gross $160M...small-molecule cancer drug developer Onconova grossed $89M in its IPO…Conatus, focused on hepatic diseases, raised $66M in its IPO…stem cell manufacturer Cellular Dynamics completed its $45.6M IPO…Sophiris Bio set IPO terms at 5M shares…Acceleron Pharma, Five Prime Therapeutics, and Foundation Medicine filed for their initial public offerings…Emmaus Life Sciences, Paratek Pharmaceuticals, and Iroko Pharmaceuticals withdrew their IPO filings…through the offering of three series of senior unsecured notes, Celgene grossed $1.5B…and Telegraph Hill Partners closed on a $310M fund dedicated to life sciences and health care. -- Amanda Micklus

Many thanks to Paul Bonanos, who authored this fortnight's introduction on gene therapy. 

Photo courtesy of Flickr user certified su, who also has cool pictures of Australia.