A Rush And A Push And The Financings Of The Fortnight Is Ours

Meet us at the St. Francis, and bring your own damn water!

Happy Morgan's Eve, everyone. If you’re like FOTF, you’ve been preparing for the week ahead by breaking your day into 25-minute conversations. If our kids need to talk to us, we tell them to take the stairs to the tenth floor, run down the hall, squeeze past 120 people coming out of the bathroom, steal some bottled water left outside a partnering suite, and find Room 1450. Come in, sit down, just  wait while we finish a few emails on our phones. Yes? You can’t sleep? Not exactly an unmet medical need. We’ve also wondered a few times if a toddler’s point blank sneeze into one’s mouth counts as a new form of immunotherapy.

For those of you with older children, you might be practicing for JPMorgan this week when the conversation inevitably turns to financing. Hit your yard-work milestones to trigger the next allowance tranche. That’s the way it is as long as you live under my term sheet, er, roof. 

Whatever the year, there’s always a sensation of falling out of a holiday tree, or warm cozy bed, directly into the boiling JPMorgan cauldron. This year, organizers gave us a bit of a break, pushing the conference back one week, but the slight lag was immediately filled up by a breakneck filing of IPO documents: Six so far in the new year alone, adding to several that squeezed their paperwork through before the ball dropped on New Year’s Eve. (We have details on one of those filers, Flexion Therapeutics, in our roundup below.) A few of those, plus others still in the IPO queue after filing in the back half of 2013, have significant Phase II or Phase III clinical milestones. Yet others that haven’t declared publicly their IPO intentions also have big milestones upcoming, and we can’t help but think their S-1’s won’t be too far behind if a few companies currently in the queue make their debuts soon.

In the next Start-Up, our colleague Stacy Lawrence previews several private companies with upcoming late-stage clinical data, and one thing’s clear: There’s not a lot of 100% novel technology working up the pipeline. That’s not to say the companies in question aren’t doing important or technically difficult work. But many of the products due for data have an element of de-risking that made for faster development and a more reasonable investment thesis, especially worth noting when the company is making a push in an indication where approval has been an elusive target.

For example, Intarcia Therapeutics is delivering an off-patent diabetes drug, exenatide, via a subcutaneous pump that carries a year’s worth of treatment. Intarcia hasn’t filed an S-1 yet, not publicly anyway, but its deep roster of crossover investors makes one hear a ticking clock -- or is that the beat of the subcutaneous pump?

We can’t help but pump Start-Up's upcoming A-List, the annual roundup of the year’s top Series A financings. The 2013 winners include entrants from the fields of gene therapy, immunotherapy, epigenetics and food allergies, and a few have had very unusual financial backers. Learning who's who will be your reward for surviving next week.

And a year from now, perhaps the 2014 A-Listers will include a biotech that has launched with equity crowdfunding. That would be a first. One crowdfund platform that we’ve reported on before, Poliwogg, will try to make a splash in San Francisco next week, so stay tuned to our colleagues from "The Pink Sheet" and Start-Up for more on that. We regret to inform, however, that splashing is generally frowned upon these days in California. Unlike IPOs, raindrops are in short supply, and 2013 was the driest year on record. So we ask you out-of-towners to think twice before showering while you’re here, and if a stranger on the street looks longingly at your Evian, be kind. We’re parched. Better yet, you can save water by drinking your fill of 2014’s first installment of...

Flexion Therapeutics: As its clinical candidates for treating osteoarthritis inch closer to pivotal studies, Flexion has joined the IPO parade. In case anyone’s knees hurt from all that marching, Flexion’s three compounds are formulated for long-lasting pain relief and injection directly into the knee joint. FX006, Flexion’s lead product for front-line use, is a formulation of a common steroid, triamcinolone, that in 2013 posted solid Phase IIb results, but the company still has work to do: it plans a second Phase IIb trial that is set to begin in the second quarter of 2014, to determine the drug’s optimal dose before Phase III. A second product, FX005, is a sustained-release p38 inhibitor; Flexion is positioning the product for end-stage (pre knee replacement) osteoarthritis pain. The company aims to file an IND for a third product, the TrkA antagonist FX007 for post-op pain, later this year. Both ‘005 and ‘007 were licensed from AstraZeneca PLC, in separate deals. Flexion’s founders, Michael Clayman and Neil Bodick, famously institutionalized “A-Team”-style rapid and inexpensive to-proof-of-concept drug development at Eli Lilly & Co. as creators of that company’s ‘Chorus’ model, and struck out on their own in 2007 to monetize POC assets as a stand-alone biotech. At the time, they anticipated that by licensing in pharma assets they could develop and flip them quickly. But the economics they were offered weren’t going to provide the kind of returns they originally anticipated. The company’s reinvention underscores the difficulty of timing biotech models to pharmaceutical tastes, and – at least during the comparably leaner years of 2011-12 – pointed to industry’s increased avoidance of clinical risk. Flexion’s private backers – Versant (~30%), Sofinnova (~19%), Pfizer (~17%), 5AM (~16%), and Novo AS (~11%) – surely hope that timing public investors’ enthusiasm for biopharma is an easier task. – Chris Morrison

AC Immune: When the big Alzheimer’s Phase III trials featuring anti-amyloid treatments failed in 2012, many eyes in the field turned to AC Immune. With arguably the deepest Alzheimer’s pipeline of any private biotech, the Swiss firm said January 9 it has raised a Series D round of 20 million Swiss francs ($22 million) from existing investors. It also said it has launched a Phase I trial of a vaccine to stimulate a patient’s antibodies against phosphorylated tau, a protein that accumulates in tangled formations within neurons. Tau tangles, along with amyloid plaques, are considered two signposts of Alzheimer’s disease, but much debate remains whether the pathologies are treatable or simply an effect of disease progression. Meanwhile, one of the world’s most closely watched Alzheimer’s trials has just begun dosing patients with AC Immune’s monoclonal antibody crenezumab. The trial is funded by Genentech, the Banner Institute, and the US National Institutes of Health, and it involves people in Colombia with high genetic risk of Alzheimer’s who have yet to show cognitive decline. If successful, it would be one of the first signals that anti-amyloid therapy has a preventative effect if administered before symptomatic onset. Dosing began in December, according to AC Immune. The firm has raised 84 million Swiss francs since its 2003 inception, all from individual investors. – Alex Lash

Receptos: Seven months after completing its IPO, Receptos turned back to public shareholders to raise more money, grossing $102 million in a follow-on public offering on January 8. The biotech sold 3.3 million shares for $30.75, a 120% increase from its $14-per-share IPO price. Days before the offer closed, Receptos started enrolling patients in the Phase III portion of its RADIANCE trial of lead candidate RPC1063 for relapsing multiple sclerosis. RPC1063 is being tested in a separate Phase II trial in ulcerative colitis, and Receptos plans to release top-line data on both indications in mid-2014. Recently the USPTO issued composition-of-matter patents on RPC1063, giving the compound patent coverage until at least May 2029. Receptos is busy with others in the pipeline too: it’s designing a Phase II study of RPC4046 in active eosiniphilic esophagitis. AbbVie partnered the anti-interleukin-13 antibody with Receptos in May. Once the study results are published, AbbVie has an option to enter into a worldwide co-development deal with Receptos, which would retain co-promotion rights and split US profits. In addition, this year Receptos expects to select a lead agent from its glucagon-like peptide-1 receptor small-molecule positive allosteric modulator program and start IND-enabling studies in Type II diabetes. -- Amanda Micklus

Blueprint Medicines: The Cambridge, Mass. biotech said January 7 it had secured a $25 million Series B round as it pushes its selective kinase inhibitors, aimed at specific mutations mapped through its platform, toward the clinic. It says its lead compounds should enter the clinic in 2015. They are an inhibitor of the mutation that drives both systemic mastocystosis, an overproduction of mast cells in various organs and tissues, and a subset of gastrointestinal stromal tumors; and an inhibitor of a mutation that leads to a specific type of hepatocellular carcinoma. The firm was initially funded by Third Rock Ventures and Fidelity Biosciences, but neither of those deep-pocketed groups has taken the lead for the B round. Instead, Swiss oncology investment specialists Nextech Invest led the round, with crossover investors Biotech Value Fund and Casdin Capital, Third Rock, and Fidelity, and other undisclosed investors joining in. The crossovers could be a sign that Blueprint is gathering itself for a run at the public markets this year. The firm has been led since last spring by an interim CEO, Third Rock partner Alexis Borisy, who took over for co-founder Chris Varma without an announcement. – A.L.

Best of the Rest (Highlights of Other Activity This Fortnight): Alexar Therapeutics, the latest biotech to come out of asset-based financing entity NeXeption, closed on a $21.5 million Series A round led by New Science Ventures and Third Point Ventures to support work on a topical liver X receptor agonist for inflammatory cutaneous disorders…Auspex, which has a S-1 on file to go public, raised more venture dollars: the orphan disease-focused biotech received $20 million in Series E financing and $15 million in a venture loan...Neuralstem will advance cell therapeutics and small molecules, including lead spinal cord stem cell-derived NSI566 for ALS, thanks to a $20 million registered direct offering…after postponing its IPO in November, GlycoMimetics revived the offering and set terms at 5.75 million shares for $8…and GW Pharmaceuticals, maker of cannabinoid prescription drug Sativex, raised $88 million in a FOPO. -- AM

Stampeding wildebeests (heading to the Celgene presentation?) courtesy of t3rmin4t0r under Creative Commons license.

Financings Of The Fortnight Spreads Some Cheer

Well, that flew by. Unlike the little elf in the video above (and if you don't know Nick Lowe, 'tis the season to make your acquaintance), no one in biotech has had time to wait around this year, it seems. The calendar has been marked by several trends that we and our colleagues have followed closely, but none as important as the rush to jump through the IPO window.

It’s fitting, then, that we kick off our final 2013 column with a chat about initial public offerings. TetraLogic went through some contortions to go public this fortnight (see blurb below), but it was more a stumble than a sprint for what was likely the sector's final IPO of the year. Activity hit its peak this spring and summer, then fell off sharply in the fall as the federal government bumbled its way into a shutdown and a botched launch of the “Obamacare” insurance exchanges. We’re not implying causality, mind you, although the shutdown did absolutely nothing positive for the economy. More likely, the sheer volume of IPOs (38 through October 31) skimmed the cream off the pot.

Can the pipeline reload for 2014? Public investors will return after the ball drops looking for late-stage, near-commercial (or near-approval) companies, of course, but we saw in 2013 a certain appetite for higher risk bets like bluebird bio and OncoMed Pharmaceuticals, whose paths to the public markets we chronicled recently in Start-Up.

And the prospect pool for biotech should be stronger than it’s been for several years. This is a bit counter-intuitive, so bear with us. The MoneyTree report, a collaboration between PricewaterhouseCoopers and the National Venture Capital Association, said recently that through September 30, the 541 publicized biotech and device venture deals comprised the lowest nine-month total since 2005. And only 104 life science companies raised first-time venture capital, the worst showing since 1996.

So what’s all this about a strong pool of prospects? By our near-final count, life science Series A fundings have already topped 2012’s count, both in deal flow and dollars committed. Note the difference: MoneyTree counts first-time venture raises; we count Series A’s, but not seed rounds, because we feel it’s a better gauge of companies with real promise. (See Bruce Booth’s description this week of Atlas Venture’s seed-funding program for a glimpse of the fragility of seed-stage biomedical companies.)

Landing Series A cash is obviously no guarantee of permanence, but the gatekeepers are ever more vigilant. For cutting-edge science, groups like Atlas, Flagship Ventures and Third Rock Ventures spend a year or more hammering on an idea, forcing it through iterations, proving its worth, before committing serious dollars. And if the ideas aren’t truly novel, there are other de-risking strategies; many Series As these days are for programs spun out of other companies, run by trusted management teams, or both.

In other words, there’s still plenty of risk in a Series A investment, but perhaps not as much as you’d think. And by our count, Series As particularly on the biopharma side are doing well. OK, maybe the $120 million A round for Juno Therapeutics has skewed the dollar figures just a wee bit, but the deal flow is still on track for well more than 100 financings in 2013, on top of the 100 or so in 2012. We’ll have the final count and a deeper dive into the Series A class of 2013 in the upcoming Start-Up, right around the time the JP Morgan conference is in full swing.

What do you think? Do the 200-plus companies that have had their Series A stockings stuffed in the past couple years represent a healthy pipeline? Since the Great Recession faded, the investors who've had cash to make bets with have insisted there's been no better time. In 2014, we should start to see if they're right.

Meanwhile, there's no better time for you to spend a few days unplugged from your screens, relaxing with friends and family. May your holidays be safe and warm, and here's your first present: A delicious, sustainable, locally sourced, gift-wrapped edition of...

Atara Biotherapeutics: With news of Atara’s new $38.5 million Series B round also comes news of its $20 million Series A, quietly completed in March. The Brisbane, Calif.-based company was established in fall 2012 via a partnership between Amgen and venture stalwart Kleiner Perkins Caufield & Byers, and endowed with a portfolio of six former Amgen assets, all in the transforming growth factor (TGF)-beta family of compounds. First-time backers in the new round included Amgen Ventures, Celgene Corp., and crossover fund EcoR1; they joined Series A investors Alexandria Venture Investments, DAG Ventures and Domain Associates, as well as KPCB. The Series B remains open, and Atara CEO Isaac Ciechanover told “The Pink Sheet” DAILY it hopes to bring in a final investor within 90 days. The corporate venture units’ investments were “purely financial,” he said; Amgen itself holds equity but did not invest cash during the Series A. Atara is an umbrella company that operates three “sister company” subsidiaries named for Christopher Columbus’s three ships used in 1492. Its most advanced drug, PINTA745, is a myostatin inhibitor already in Phase II for a muscle-wasting disorder found in end-stage renal disease patients; it’s housed in Pinta Biotherapeutics. The company also hopes to submit an IND for activin inhibitor STM434, one of Santa Maria Biotherapeutics’ three compounds, and begin trials in ovarian cancer during 2014; farther along will be Nina Biotherapeutics’ antibody NINA842 for cancer cachexia, which Ciechanover said is about 18 months from the clinic. – Paul Bonanos

Crescendo Biologics: The UK firm has raised £17.5 million ($28 million) in a Series A financing to pursue development of its variable heavy-chain antibody fragments as therapeutics. The round was led by new investor Imperial Innovations Group, and included for the first time Astellas Venture Management. Sofinnova Partners (the European group) also participated in the round after providing seed funding to Crescendo, which was formed in 2009. The funds are expected not only to support development of the platform technology but also proof-of-concept clinical studies of its antibody fragments, applied topically in psoriasis. The firm will also pursue studies in oncology. Crescendo makes its fragments by first eliminating antibody production involving genes located in three chromosomal regions in mice, and then adding DNA-containing genes for the human antibody heavy chain. Marianne Brüggemann and colleagues at the Babraham Institute in Cambridge, UK, pioneers of the first wave of transgenic technology exploited by Medarex and Regeneron Pharmaceuticals, were involved in this work, Crescendo CEO Mike Romanos told “The Pink Sheet” DAILY. Psoriasis has been selected as the first target for Crescendo’s fragments as they can be formulated into creams and penetrate into the relevant region of the skin following topical application, Romanos said. Although systemic monoclonal antibodies have had a tremendous impact on severe psoriasis, milder cases are poorly served with current therapies, and a non-immunosuppressive treatment should be useful, Romanos said. The first fragment should enter clinical trials at the end of 2015 in psoriasis, and if successful, the work could be expanded to include atopic dermatitis and other inflammatory dermatological disorders. – John Davis

Acucela: The Seattle biotech filed on December 17 to raise up to $125 million in an IPO on the Tokyo Stock Exchange’s Mother’s Market. The company has a partnership with Otsuka under a 2008 deal for lead compound, emixustat, which is in Phase IIb/III testing to treat dry age-related macular degeneration (AMD). Acucela started the trial in the first quarter of 2013 and expects that if 12-month study results warrant, it will submit to FDA and EMA for approval. There is no FDA-approved treatment for dry AMD. If you’re not familiar, biotech offerings on the Mother’s Market are for the most part relatively small, and like the London Stock Exchange’s AIM market, often raise tiny subsequent offerings. They typically suffer from chronic low liquidity and languish with little investor attention as small caps. Retail investors, and their whims, are a big factor on the Mother’s Market, which specializes in high growth and emerging stocks. That combination makes it very volatile. This year, some biotechs have proven hugely popular. For example, peptide therapeutic company Peptidream, which isn’t in the clinic yet but has several discovery partnerships, conducted a $68 million IPO on the Mother’s Market in June and is now worth about $1.6 billion. Acucela founder, President and CEO Ryo Kubota is a Japanese ophthalmologist who has trained, practiced and taught in both the US and Japan. In addition to its Seattle headquarters, the biotech also has a Tokyo office. – Stacy Lawrence

TetraLogic: The Phase II cancer company closed on December 12 with what was likely the final IPO of the year, but that was only after it had slashed its price in half to $7 per share from a range of $13 to $15. Even with the discount, its shares have remained flat in early trading. That’s with existing investors Amgen and Pfizer as well as company executives agreeing to purchase most of the shares offered at IPO. Not just some, but most: That’s a first in our IPO experience. Was this a venture round or an IPO? Insiders bought a whopping 4.6 million shares of 7.2 million sold.  (TetraLogic hasn’t yet fared as well as another recent discount IPO: Relypsa, which priced in November and is now up 137%.) Overall the biotech IPO class of 2013 is holding its own. The 44 IPOs this year are up 41% as a group with more winners than losers. Only about one-quarter of them have lost ground or are flat from their IPO prices. That’s better than coin-toss odds – and that’s saying something in biotech. TetraLogic hopes to gain some traction with its small molecule mimics of Second Mitochondrial Activator of Caspases technology (SMAC-mimetics). Its lead program is birinapant, which is in Phase I and Phase II testing in hematological malignancies and multiple solid tumors. The biotech plans to start a randomized Phase II trial for birinapant and azacitidine versus azacitidine alone to treat myelodysplastic syndromes in the first half of 2014. – S.L.

Best of the Rest (Highlights of Other Activity This Fortnight): In the second Xention spin-off following Provesica three years ago, Ario Pharma completed a $3M Series A round to pursue TRPV1 antagonists in chronic cough…in its second secondary offering in the last few months, Xoma netted $54M to pay for development of Phase III gevokizumab for non-infectious uveitis and its preclinical XMet program of insulin activators and sensitizers…days before announcing its acquisitions of CNS spec pharma NuPathe, Endo raised $700M in a 5.75% convertible notes sale…and Versant Ventures pledged investments in Canadian life sciences start-ups. – Amanda Micklus

2013 Financing of the Year Nominee: Editas

It's time for the IN VIVO Blog's Sixth Annual Deal of the Year! competition. This year we're once again presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A of the Year, Alliance of the Year, and Financing of the Year. We'll supply the nominations (about a half dozen in each category throughout over the next week or so) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

One of the financings of the year, in our humble opinion, comes from three venture firms you should all know well: Polaris Venture Partners, Third Rock Ventures and Flagship Ventures. The trio "locked arms," in the words of Polaris principal Kevin Bitterman, to commit $43 million to Editas Medicine. We've nominated this deal for two reasons.

First, Editas -- of which Bitterman is serving as interim president -- is the first startup to declare its intent to turn one of the hottest research tools around into a new wave of therapeutics. One might call it gene therapy, version 2.0: the technology known as CRISPR/Cas9 allows researchers working with cells or model organisms to delete genes or replace them with new ones, but in ways considered more precise than other gene-editing systems currently in use.

Got genes?

The answer to whether the CRISPR/Cas9 modification system can become a basis for pharmaceutical products is years away. It is, relative to most venture-funded efforts, a brand-new field. Most of the critical developments have been described in academic papers only in the last twelve months, and many more will undoubtedly come in the next twelve.

The second reason we've spotlighted this deal is the syndicate. The VC trio involved more often than not will work in stealth on new potential breakthrough technologies on their own, as our START-UP colleagues detailed earlier this year here and here. In the past year, for example, Flagship has done solo work in launching a microbiome company (Seres Health), an epigenetics company (Syros Pharmaceuticals), a patient-as-protein-factory firm (Moderna Therapeutics, also to be nominated in this year's contest), and a nutritional supplement and drug maker (Pronutria).

With advances in CRISPR technology coming quickly from several academic sources, however, the VCs felt it was better to join forces. “Once a decade, it makes more sense to pool the expertise and resources of investors and the technology and expertise of the academic founders instead of creating three, four, or five different companies positioned against each other,” Bitterman told our Pink Sheet Daily colleagues when the company launched. (Also joining the syndicate is the Partners Innovation Fund, the venture arm of Boston-based Partners Healthcare.)

How far have they gotten in front of the competition? Check back around this time next year. Other CRISPR/Cas9 start-ups should soon emerge, and a CRISPR tools company in Berkeley, Calif. hopes to land a Series A round early next year to help it move into therapeutics as well as industrial and agricultural applications. The Berkeley company, Caribou Biosciences, lays claim to all the IP from the lab of University of California professor Jennifer Doudna, according to Caribou CEO Rachel Haurwitz. (This, despite Doudna being one of Editas' scientific co-founders.) As we said, the IP race is afoot.

CRISPR stands for “clustered, regularly interspaced short palindromic repeats.” It describes a nucleic acid system, first discovered in bacteria by Japanese researchers 25 years ago, that banks bits of foreign viral DNA to serve as an immune-system reminder when the pathogen invades again. Re-infection triggers production of RNA associated with the foreign DNA, which seeks out a match. The RNA doesn’t destroy the invading DNA on its own; the CRISPR RNA (crRNA) brings along an enzyme to make a double-stranded break. Scientists have zeroed in on the nuclease Cas9, or “CRISPR-associated protein 9."

Come to think of it, there's a third reason to nominate Editas. If it succeeds, it will have to improve upon two different strands of biotechnology that have proved extremely frustrating the past decade: gene therapy and RNA-mediated drugs. Therapies based on CRISPR/Cas9 will also be RNA-mediated, which has implications both pro and con. One benefit is that, theoretically, there is less engineering required as a company targets more than one disease. That’s because the “scissors” of Cas9 can cut DNA at any juncture; only the RNA guides need to be changed, a simpler engineering problem.  But the molecules are tough to deliver. Companies have struggled to formulate agents that don’t break down in systemic applications. Bitterman said one of Editas’ “core competencies” will be delivery: “We’ve spent a lot of time thinking about it, and we don’t need to reinvent the wheel.”

In addition to Doudna, Editas’ scientific co-founders are Feng Zhang of the Broad Institute and three Harvard researchers, including George Church; Keith Joung, also of Massachusetts General Hospital; and David Liu, also of the Howard Hughes Medical Institute.

Single, Early-Stage Financings of the Fortnight Seeks Attractive Exit Correlation

One month ago, as the government shut itself partially down, this column wondered if the IPO window might undergo a similar fate.

Since then, the same number of biopharmas has gone public (one) as has withdrawn their registration. The former is Aerie Pharmaceutical, and the latter is GlobeImmune, which said in its SEC filing, “The terms currently obtainable in the public marketplace are not sufficiently attractive.”

A second life sciences company actually went public, the cancer diagnostic firm Veracyte (see description in the roundup below). And several more companies filed their S-1s in October. And yes, the shutdown's been shut down and we're temporary passed the budget impasse. Six weeks ago, we would have taken GlobeImmune's lawyerese excuse as a fantastic joke -- C'mon, counsel, stop it! You're killing us! -- but as we wait for the likes of Relypsa, Karyopharm and GlycoMimetics to take the plunge, well, let's just say we're still waiting to exhale.

To distract ourselves for a moment, we'd like to draw your attention to an interesting back-and-forth that occurred recently on the high-tech VC side. Well-known investor Fred Wilson blogged in September that the more cash a startup raises in seed and Series A rounds, the less successful it will likely be. Data house CB Insights decided to fact-check Wilson, and it pronounced him wrong: there is no correlation.

This was all about high-tech, though, so START-UP decided to run the numbers for biopharma, where the investment dynamics are worlds apart from high-tech strategies. The article won’t be out for another week or two, but we’ll give you the high level answer: There's no correlation in biotech, either. (See above. R² = 0.0261, in case you're wondering.)

We found other interesting data around that answer, too. For example, of the 307 Series A rounds we found between 2002 and 2007 with disclosed value, 57, or 18.5%, of those companies went out of business. Those that exited via IPO (9%) and acquisition (31%) combined nearly equal those that remain private and independent (41%). Or sliced another way, of the 5-year cohort of companies we looked at, exactly half are still around, either public or private. (We'll save the rest for the Start-Up article, co-authored by Amanda Micklus.)

Since there's no correlation between size of exit (or, in the case of public companies, current market cap) and their Series A commitment, how much cash should an investor group front a new company? That question is driving much of the exploration of new biotech funding models that we're seeing from groups like Atlas Venture, Index Ventures, and Versant Ventures – whose new fundraising efforts we note in our roundup below. (And too late for inclusion here, but, ahem, speaking of fundraising efforts... our Pink Sheet colleagues will have all the details on the OrbiMed news later today.)

Even though venture returns across various timelines showed some improvement halfway through 2013, according to the NVCA, biotech VCs are still under tremendous pressure to shorten their investment timelines and take less risky bets. Tranching rounds, of course, is de rigueur, and sometimes those big Series A numbers announced with great fanfare never fully materialize. That could be a good thing: when Shire bought Lotus Tissue Repair early this year, its sole backer Third Rock Ventures had only funneled a sliver of its $26 million Series A commitment into the company.

Or, the company’s original plan could fizzle, as we note in this week’s note about Calithera in the roundup below.

Of course, how much VCs put into a company, and in what configuration, is driven by how much they’re getting out at the other end. The IPO bounty of recent months has LPs impatient for returns, and VCs need to “put some points on the board,” as Atlas Venture partner and bloguero Bruce Booth puts it in his latest Forbes column. How they manage those post-IPO exits when trading volume is limited, however, is a delicate complicated dance, which Booth explains in detail. (Whether to distribute cash or stock to LPs is just one of many considerations.)

With so many biotech exits these days coming via IPO -- have you noticed the dearth of private companies? So have our blogmates at Deals of the Week -- it makes us curious to see if the correlation between Series A size and exit success will shift in a few years, when we use a different cohort of companies that weren't forced to brave the Great Recession. We certainly acknowledge that the times we live in, and the data we collect, could be of our moment. Or, there could be a shift in correlation with more acquisition-heavy exit data if the IPO wave recedes -- perhaps we should say “when,” since all waves must eventually recede from the shore. We’re keeping an eye on the surf line, because, as anyone who grew up along the Pacific Coast knows, the worst time to gather shells is when the water suddenly disappears.

Where else can you get your safety tips and Zen koans all at once? Sit down, grasshopper, and open your mind to…

Veracyte: The diagnostics firm launched an initial public offering of its stock October 30 and raised $65 million by selling 5 million shares at $13 each. It’s one of the few diagnostics companies to tap the public markets this year, as most of the life-science activity has benefited the biopharmaceutical sector. (Foundation Medicine is another exception.) As we described in detail in February’s IN VIVO, Veracyte of South San Francisco, Calif., was founded to help resolve the ambiguity that often comes from a cytology sample of thyroid nodules that are possibly malignant. When looking at the cells isn’t enough to determine course of action – about 25% of the time -- Veracyte’s test is meant to guide an endocrinologist in the decision for or against surgery, which otherwise is recommended for cancerous, suspicious, or even indeterminate modules. Its test, Afirma, uses 167 biomarkers, and has also begun to identify rare types of thyroid cancer that aren’t evident under the microscope but reveal themselves in genomic analysis. Veracyte launched Afirma in 2011, and in the twelve months leading to June 30, 2013, the company tallied revenues of $17 million but with a net loss of $23 million. Its main shareholders before the offering were Kleiner Perkins Caufield & Byers (22%), TPG (22%), Versant Ventures (23%), and Domain Associates (19%). Just before the IPO, on October 9, Veracyte enacted a 4-to-1 reverse split of its common stock. Underwriters were led by Morgan Stanley and have the option to buy up to 750,000 more shares in the 30 days after the IPO date. It closed on its first day of trading up 2% to $13.25 a share. – Alex Lash and Mark Ratner

Calithera Biosciences: Calithera is hardly the same company that announced a $40 million Series A round of funding in 2010. The high-flying start-up, which made our A-List that year, is now heading in a different direction. As announced October 29, the company is shifting focus with $35 million in fresh cash in a Series D round that includes some, but not all, of its original investors. Moreover, the company never raised the full $40 million initial round, designed to arrive in tranches. Founded by University of California, San Francisco professor Jim Wells to commercialize research on the role of caspases in inducing apoptosis of cancer cells, Calithera is now turning to an oncology program centering on glutamine metabolism that CEO Susan Molineaux tells FOTF was internally developed. Meanwhile, scientific co-founder Wells has left Calithera’s board of directors, as has U.S. Venture Partners’ Larry Lasky, an early investor. Another Series A backer, Mission Bay Capital, also did not participate in the new round; USVP and Mission Bay area still shareholders, however. In addition, Molineaux described the interim Series B and C rounds in an email as “tranches of the original $40 million Series A financing in June 2010,” and added that the total amount Calithera raised in all three rounds amounted to just $30 million. Two first-time investors, hedge fund operator Adage Capital Partners and VC firm Longwood Fund, joined existing backers Morgenthaler Ventures, Advanced Technology Ventures and Delphi Ventures in the Series D funding. Since backing Calithera initially, Morgenthaler and ATV’s life sciences teams have created Lightstone Ventures; Morgenthaler and ATV have ceased making new life sciences investments. – Paul Bonanos

Spark Therapeutics: For the first time, the non-profit Children's Hospital of Philadelphia has spun out a privately held, for-profit company. As our colleagues at "The Pink Sheet" described, the hospital has budgeted $50 million to support the launch of Spark Therapeutics, created to house a pair of gene therapy programs that the hospital’s Center for Cellular and Molecular Therapeutics has been working on for several years. CHOP chief executive Steve Altschuler said the hospital will supply Spark with cash when needed, and only when Spark executives can justify expenditures. Spark has a Phase III program for a type of inherited blindness attributable to a malfunctioning RPE65 gene, and a Phase I/II program for hemophilia B. Spark CEO Jeffrey Marrazzo said it also holds rights to other preclinical programs, including at least one in-licensed from another source. The cash commitment is designed to fund the opthalmological program all the way to the market, Marrazzo said. While considerable uncertainty remains in the gene therapy field, barriers have begun to fall, leading to more fundings recently. Paris-based GenSight Biologics, another ophthalmological gene therapy developer, received one of 2013’s largest Series A rounds to date, a €32 million ($41.4 million) commitment in April. – P.B.

Versant Ventures: The life science firm headquartered in Silicon Valley slipped toward the bottom of this year’s annual VC “gas tank” chart in Start-Up, not having raised a fund since 2008.

That’s apparently about to change. According to a regulatory filing, the firm is aiming for a fifth fund of at least $250 million, which would be half the amount of its 2008 vintage fund. If successful – the October 18 filing says none of the offering has been sold -- the new fund would come after a couple years of big changes at the firm. In late 2011 Start-Up reported the firm would head into fundraising mode without four veteran partners, two each from the biopharma and device sides of the firm. In the interim, its biopharma team began a shift toward smaller scale investments by building an unusual investment-R&D hybrid called Inception Biosciences. Inception is run by a drug discovery team that scouts for early-stage programs and works them into assets that could move forward in spun-out entities, some with pharma partners holding acquisition rights, some with more traditional backing. With the pharma team building Inception in San Diego and expanding it to Vancouver, the device team got START-UP’s attention with an industry-high quartet of Series A investments in 2012. Assuming Versant’s new $250 million target is a ceiling, not a floor, it stands to reason the biopharma side will continue to explore cost-sharing (and -saving) models like Inception. (Managing director Brad Bolzon declined to comment on the document or the new fund.) The SEC document, which you can view here, has other interesting tidbits. The firm is using three names: Versant Venture Capital V, Versant Affiliates Fund V, and Versant Ophthalmic Affiliates I. Our colleagues reported this spring that the first spin-off from the Vancouver team was in the works, so perhaps that last name holds a clue to what Versant’s Canadian team has been eyeballing. – A.L.

Best of the Rest (Highlights of Other Financing Activity This Fortnight): Immune Design headed up the late-stage venture financing category with its $49mm Series C round led by the Column Group and Topspin Partners (and five additional backers, including Sanofi-Genzyme BioVentures, also participated); the funds will progress proof-of-concept studies for its lead solid-tumor candidates IDLV305 and IDG305…with a $31mm private placement including a debt conversion and a 1-for-8 reverse stock split, another oncology drug developer, Arno Therapeutics, hopes to advance its breast and prostate cancer compound onapristone into the clinic…Dynavax Technologies raised funds to support Phase III development of its Heplisav hepatitis B vaccine, netting a total of $125mm through concurrent offerings: in a FOPO it sold 79.6mm shares at $1.075 (for $81mm) and brought in another $44mm through the sale of 43k shares of Series B convertible preferred stock at $1,075…Aerie Pharmaceuticals (ophthalmology therapeutics) netted $71.8mm in its IPO, selling 6.72mm shares at $10, below its anticipated $12-14 range. – Maureen Riordan

Financings of the Fortnight Is Putin' Rusnano In The Spotlight

Rarely has a sovereign fund been as high-profile in the life sciences as Rusnano, which is investing $10 billion of Russian government money in companies from a variety of industries, including life sciences/biomedicine.

In a country that’s had a painful relationship with capitalism since the Soviet state collapsed, it’s no surprise the idea of a giant state-backed fund making bets on private companies has drawn skepticism – including from then-Russian president Medvedev four years ago.

Now, six years after Russia's Vladimir Putin authorized the group, it’s undergoing a shakeup and a corruption audit, apparently with Putin’s blessing. (A related project, Skolkovo – an attempt to build a Silicon-Valley-like cluster near Moscow – has also been dogged by similar investigations, allegations of corruption, and political pressure.)

Seeing how about 20% of Rusnano’s investments have landed in the life sciences so far, what happens next should be of keen interest to many in our corner of the world. That’s why we’re pointing out our colleague Stacy Lawrence’s one-on-one interview with Rusnano chairman Anatoly Chubais in the current issue of “The Pink Sheet.”

Chubais was a key figure in the post-Soviet privatizations that concentrated wealth in the hands of so-called oligarchs, and he has run Rusnano since 2008. He survived the recent shakeup, during which several directors left the fund.

Despite the turmoil, Chubais says he’s pressing ahead with more privatization plans, transforming Rusnano from a vast sovereign fund to a private management firm that runs several funds. Here’s how he described it in “The Pink Sheet”: 

“We decided to transform Rusnano into a private equity fund, which means that we will be a separate management company from Rusnano and we will transform it into a GP, which will attract investors and create a family of private equity and venture funds. And the GP itself will be privatized stage by stage… it should start next year and maybe finish between 2016 and 2017.”

Anatoly Chubais (right) is listening. (Courtesy Michael Popov.)

That's still rather murky, so we won't be surprised if plans shift in the next couple years according to the political winds within Russia. Rusnano has set off alarms – at least within certain factions of the Russian government – by posting much larger than expected losses within its portfolio. It’s unclear how much of them are associated with its life science deals, which have included big names in the US. Among its direct investments are BIND Therapeutics and Selecta Therapeutics, both built around technology from the lab of Bob Langer, a Massachusetts Institute of Technology professor and the ne plus ultra of the American ideal that combines academic and capitalist freedom. It doesn’t get more apple pie, biotechnologically speaking, than a Langer spin-out.

Going into BIND’s initial public offering in September, Rusnano owned 11.5% of the company and according to documents bought more than 200,000 shares at the IPO price, leaving it with a 9.3% stake in the company currently worth $22.3 million.

Through subsidiary RMI Investments, Rusnano also has moved heavily into Regado Biosciences, first by leading its Series E round in late 2012, then buying more shares at IPO, which took place only because Regado accepted a drastic haircut. At the end of August, RMI owned nearly 26% of Regado. The cardiovascular treatment developer debuted in late August at $4 a share and closed October 16 at $5.71.

On top of its direct investments, Rusnano has committed $200 million to Burrill & Co.’s fourth general venture fund, which began investing in late 2011. Topping that, it has earmarked $330 million to invest side by side with Domain Associates, the US venture fund, in a deal that also aims to build Russian manufacturing capacity for the products that emerged from the firms’ jointly-funded portfolio companies.

It’s a significant source of capital for hungry biotechs, but there are strings attached. Non-Russian firms that take Rusnano money must establish a footprint in Russia, part of the firm’s remit to build a domestic pharmaceutical industry through the Pharma 2020 initiative, which, as our IN VIVO colleagues explain here, is as much a proclamation as it is a specific roadmap.

Here’s how Chubais describes the tightened scrutiny of his operation: 

“We had a very, very deep check from the special state auditors and there was not a single corruption allegation, which is positive. We have about 100 portfolio companies and for some of them, they have some grounds for further investigation for their efficiency of using money from Rusnano. That’s an investigation which is going on now and we don’t know if it’s a ‘yes’ or ‘no.’”

You can scrutinize the entire Chubais interview and pelmeni more stories about the nascent Russian biomedical initiatives in our sister publications. Or, if you just want to keep it on the blog, that's your pirogitive, go ahead and stuff yourself full of…

SAGE Therapeutics: The Cambridge, Mass. CNS startup has raised a $20 million Series B, with ARCH Venture Partners, joining original backer Third Rock Ventures to help move into the clinic the first compound of what the company hopes will be an epilepsy franchise. The new money and the clinical transition comes in the first few months of the tenure of new CEO Jeff Jonas, who previously ran Shire’s regenerative medicine group. SAGE’s platform is dubbed PANAM, for “positive and negative allosteric modulation.” Its compounds are designed to dial up or dial down activity around receptors such as gamma-aminobutyric acid, or GABA, and N-methyl-D-aspartate, or NDMA, without acting directly upon the ligand binding sites of the receptors themselves. The Series B round is nearly half the amount SAGE raised in its $38 million Series A, which was disclosed two years ago and came mainly from Third Rock. (ARCH, it turns out, also topped off the Series A last month with nearly $3 million, but Jonas declined to say why ARCH’s cash was allocated in that fashion.) ARCH Managing Director Robert Nelsen joined SAGE’s board. Jonas said the company will soon file an IND for SGE-547 to treat status epilepticus, a type of seizure that lasts several minutes and can be life-threatening. With an eye toward building a franchise, SAGE will investigate the role of GABA in other epilepsies, and could add indications to ‘547 or develop other seizure drugs that act around the receptor. ARCH and Third Rock know each well. The syndicate partners previously co-invested in a pair of this year’s high-profile IPO companies: cancer metabolism company Agios Pharmaceuticals Inc. and gene therapy developer bluebird bio Inc. With its new fund, SAGE is “comfortable well into next year,” Jonas told “The Pink Sheet” DAILY, and more private funding might not be necessary. – Paul Bonanos

Macrogenics: The antibody developer raised $92 million by selling 5.75 million shares at $16 each in its October 9 IPO. In baseball terms, it hit the triple crown despite a choppy broader market. It upsized its deal; priced at the top of its range; and traded up 56% in the first day. MacroGenics has two candidates in the clinic, with another two expected to advance into clinical testing in 2014. The most advanced is margetuximab, a monoclonal antibody that targets HER2-expressing tumors, which is in Phase IIa testing. It’s intended to be a bio-better of Herceptin (trastuzumab) that not only will be more effective killing tumor cells expressing a lower level of HER2, but also enhance the immune system’s ability to kill cancer cells. Prior to the IPO, Macrogenics raised an astonishing $547 million, including $342 million from partners Gilead Sciences, Pfizer, and Boehringer Ingelheim, among others; $151 million in equity; and $54 million in government grants and contracts. These deals could keep it from leaning too heavily on shareholders; it stands to receive more than $100 million in milestone and other partnership payments by the end of 2015. Venture investors include TPG (11.6% pre-IPO stake), Alta Partners (10.5%), InterWest Partners (10%) and MPM Capital (9.4%). This is MPM’s fifth biotech IPO this year, placing it among the most active in 2013. Only ARCH Ventures, Flagship Ventures and crossover investor Fidelity have been behind as many biotech IPOs this year. – Stacy Lawrence

G1 Therapeutics: North Carolina biotech veteran Christy Shaffer, who left Inspire Pharmaceuticals shortly before Merck purchased it in 2011, has returned with the start-up G1 Therapeutics. The Chapel Hill-based company on October 16 announced a $12.5 million Series A financing that will enable it to bring its lead chemo-protectant candidate into Phase I in 2014. G1’s technology focuses on inhibition of cyclin-dependent kinase (CDK) 4 and 6 to shield cancer patients’ bone marrow from the myelosuppressive effects of chemotherapy. Early on, G1 is planning two development courses for its lead candidate: as an intravenous infusion in small cell lung cancer patients, and as an oral version to protect against radiological-induced myelosuppression, a condition that could result from a nuclear weapon strike. Shaffer joined North Carolina-based Hatteras Venture Partners in 2011 to head up its Hatteras Discovery initiative focused on incubating start-ups derived from academic research. Hatteras Discovery seeded G1 with $600,000 in 2012 and now has invested in the A round, led by MedImmune Ventures, with participation from Mountain Group Capital. With the seed funding and NIH grants, G1 selected a lead candidate, and it hopes to file the IND by summer 2014 and begin Phase I by the end of the year, Shaffer said. With potential to protect all four lineages of blood cells, G1 hopes the candidate will earn first-in-class status. – Joseph Haas

TD1 Innovations: The Juvenile Diabetes Research Foundation said October 15 it has pledged to put up to $5 million into a new company, TD1 Innovations, which will scout new pharmaceutical, device and diagnostic technologies related to type-1 diabetes, the autoimmune version of the disease. If JDRF and its partner in the effort, PureTech Ventures, find compelling technologies, they’ll spin them out into new companies and provide seed funding, with hopes of advancing them far enough to find outside investors or industry partners on the other side of the so-called valley of death. It’s the first project under PureTech’s “Valley of Life” initiative, which aims to give nonprofits a legal structure to make philanthropic investments in for-profit companies without violating the tax code. With venture capitalists and pharma companies reticent to fund early stage biomedical innovation, disease foundations, patient advocacies and other nonprofits have looked to push treatments into clinical trials. To trigger JDRF’s full $5 million investment in TD1 Innovations, PureTech must raise matching funds, but the partners hope the fundraising goes well beyond that, up to $30 million, which they estimate would allow them to spin out roughly 10 new companies. Others have tried so-called “venture philanthropy” – including the Bill and Melinda Gates Foundation) – but this appears to be the first time a nonprofit will have a hand, and a financial stake, in building new companies from scratch. -- Alex Lash


All the Rest: Astellas not only contributed to Mitokyne’s Series A, which brought in $45mm, but also signed a concurrent drug discovery alliance and has an option to acquire the company...a $46mm Series D by immatics biotechnologies GmbH will fund Phase III of IMA901 for renal cancer…Seragon Pharmaceuticals revealed that the value of its Series A, which closed in August, was $30mm..genome and exome sequencing company Personalis completed a $22mm Series B…Aslan Pharma’s $22mm Series B will support Phase IIb trials for gastric cancer candidate ASLAN001…Versartis’ $20mm Series D round will go towards Phase III of VRS317 for pediatric growth hormone deficiency…French vaccines developer Theravectys raised $20mm...Curemark (enzyme replacement candidate for autism) brought in $18.5mm in what looks to be its Series C round…PharmaLink raised $15mm in a Series C round…a Series A round by PharmAkea Therapeutics brought in $10mm concurrent with an alliance with Celgene, which took a stake and has an option to acquire the start-up…Molecular Templates (antibody-drug conjugates for cancer) completed an $8.5mm Series C…AxioMx fetched $2mm in a Series B round…Mid Atlantic Bio Angels invested $400k in Immunomic Therapeutics...Arrowhead Research netted $60mm through the private sale of common and preferred shares…Cytos Biotech hopes to raise CHF17.6mm ($19.5mm) in a rights offering of up to 6.3mm shares...in a private placement to institutional investors, Pharming brought in $16.3mm…Rexahn raised $5.3mm in a registered direct offering…VG Life Sciences concluded a $2.2mm private placement...multiple players completed follow-on public offerings: Portola Pharmaceuticals (hematological and inflammatory disorders) $151mm...$113mm for dermatology-focused Kythera; generic drug maker Lannett netted $71.9mm; Prothena (antibody therapeutics) $71.6mm; Dyax (phage display technology) $56.4mm; cell therapy developer NeoStem $33mm; CytRx (cancer therapeutics) $24.3mm; Cel-Sci (immunotherapeutics)  $16.4mm; Tekmira (RNAi therapeutics) $30mm; and Advaxis (cancer and infectious immunotherapies) $23mm...Aerie Pharmaceuticals set terms for its initial public offering hoping to sell 5.25mm shares between $12-14…Ruthigen set IPO terms too: 1.5mm shares at $12-14...several other biotechs filed for IPOs: GlycoMimetics (lead compound for sickle cell disease); Karyopharm (cancer and inflammation); Trevena (GPCR compounds); Xencor (MAbs);  Celladon (calcium dysregulation); Vital Therapies (liver disease); and Egalet (abuse-deterring pain drugs)…BioMarin priced five-year 0.75% senior subordinated convertible notes ($340mm) and 1.50% seven-year 1.50% senior subordinated convertible notes ($340mm)…European Investment Bank provided Norgine with an $81.2mm loan to help with product acquisitions. -- Maureen Riordan

Putin art photo courtesy of flickr member volna80.

Financings of the Fortnight Worries About The Window

"It was wide open a minute ago."

Who’s lining up next? It’s become quite the parlor game, now that the biotech IPO window has been wide open for months. But all the fun might be on hold as Washington works to sort itself out (or get further entangled) and Wall Street starts to worry over the potential economic instability. What if the days of the shutdown turn into weeks? What once seemed laughable has already come to pass, as the Ted Cruz Republicans are proving their disdain for Obamacare with ever uglier self-inflicted wounds. Hey, don’t take our word for it. Ask Grover.

Already we’re seeing a small but ominous sign: There are no IPOs on the list of current road shows, despite the queue of those – including MacroGenics and Relypsa – that are on file. Perhaps the seven biotech IPOs in the last two weeks -- Acceleron, Five Prime Therapeutics, BIND Therapeutics, Foundation Medicine (see description in our roundup below), Ophthotech, Evoke Pharma, and Fate Therapeutics -- were the SEC equivalent of a rush job to avoid the potential politically-induced volatility.

Once biotech IPOs started to show signs of life last fall and then took off this spring, everyone has wondered what would burst biotech’s bubble. Most assumed it would be bankers pushing out too much crappy paper, but perhaps it will be the idiocy in Washington, particularly if it extends past the debt default deadline of Oct. 17. If Wall Street starts steep selling and recessionary fears turn into reality, biotech IPOs will be a swift casualty of the broader market.

For a few more days, at least, the IPO machinery will grind away. The SEC has enough cash under the mattress to keep the lights on for a few weeks, unlike so many other government agencies. But it will clang to a halt if the shutdown drags on; the folks who deal with registrations and whatnot are not deemed essential staff.

Seems all the headlines (and tweets) are focused on the effect on Twitter’s pending IPO, but arguably no sector has benefited more than health care from the IPO changes this year, as all manner of companies at various stages of development have become public. IPO data house Renaissance Capital says health care companies have launched 42 IPOs and raised $7.6 billion this year, the most of any sector. They’ve also scored the highest aggregate returns year-to-date, 64%. (By comparison, our technology compatriots in their hoodies have had 30 IPOs, raising $3.3 billion and gained 44% on average.)

It’s only fair to mention that the health-care numbers include the likes of giant CRO Quintiles Transnational ($947 million raised) and Pfizer’s animal health group Zoetis ($2.2 billion raised), but the argument still holds: A prolonged and wholly unnecessary drought would hurt biotech disproportionately. It’s like the party you’ve been planning with your neighbors has finally started swinging, but the creepy guy with the fake tan across the street who smokes too much calls the cops. Not because the party was too loud, but because he thinks your house’s architecture is ugly. Ruining his property values, or something.

Let’s ignore for a moment the bucket of cold tea, er, water tossed in biotech’s direction, and get on with our parlor game, made all the more intriguing by the JOBS Act rules that allow companies to file in stealth and remain so for weeks on end.

We already mentioned MacroGenics and Relypsa, which filed publicly this week to raise up to $126.5 million. Among companies that haven’t declared – at least publicly -- Moderna Therapeutics would make a fine candidate, says our friend Luke Timmerman of Xconomy. (Moderna CEO Stephane Bancel wouldn’t take the bait and said he prefers to proceed with caution. For more on Moderna’s new Department of Defense grant, see our roundup below.)

OK, who else? Our colleagues at START-UP wrote this summer about Forma Therapeutics’ decision to re-structure itself to make spinouts of single assets easier; CEO Steve Tregay was quick to say that, if need be, the company could convert back to a more traditional corporation and go the IPO route.

“At the time in 2009 when we started talking about [becoming a holding company], it wasn’t obvious you’d see a robust IPO market,” said Tregay. “We knew we wanted to provide liquidity to our shareholders, and we wanted to commoditize assets. Can we convince Wall Street to believe in sustainable R&D companies? We think so. But our first objective was and is to create a sustainable research engine, and to do that we needed to do things differently than the old ‘R-then-D’ model.”

You can’t talk about IPOs without mentioning Third Rock Ventures, which has pushed three portfolio companies public this year. Might we see more before the New Year? If FOTF had to bet (all proceeds going to charity, of course), we’d put a few chits down on Blueprint Medicines, Constellation Pharmaceuticals, and Sage Therapeutics, which just saw interim CEO and Third Rock partner Kevin Starr hand the reins to the former head of Shire’s regenerative medicine group, Jeff Jonas.

We could also take a closer look at biotechs that have raised a few rounds, are deep into the clinic, and whose investor roster includes crossover firms or VCs at the end of their fund cycle. Or firms whose executives have notable track records. (The upcoming START-UP takes a look at one such company, Kolltan Pharmaceuticals, whose cofounder Yossi Schlessinger had a hand in kinase inhibitor developers Sugen and Plexxikon, each of which exited quite handsomely.)

The answer to whether these guesses are correct could already be lying on someone’s desk deep in the bowels of the SEC in a pile of confidential filings, just waiting for the POTUS and both houses of Congress to come together, join hands, and realize that it’s a small world after all. Which is just about as likely as the next Pulitzer Prize being awarded to this edition of…

Foundation Medicine: It isn’t quite four years old, but the cancer diagnostics specialist is already public, and in a big way, its share price nearly doubling the first day it traded and holding those gains for a week. The Cambridge, Mass. company priced its offering Sept. 25 above expectations at $18 per share, ultimately grossing $121.9 million. Foundation sold nearly 6.8 million shares, including a greenshoe option for underwriters, raising substantially more than the five million it planned to sell for $14 to $16 apiece. The young company last year began selling its first product, a diagnostics platform that matches individual cancer genomes with a broad database of genomic alterations in order to optimize care. Stakeholders receiving liquidity via the offering included venture firms Third Rock Ventures, Kleiner Perkins Caufield & Byers, and Google Ventures; crossover investors Deerfield Partners, Casdin Capital and Redmile Group; and individuals including Microsoft founder Bill Gates, Russian billionaire Yuri Milner, and Digene CEO Evan Jones. The IPO is the third this year for Third Rock, which is on quite a roll. It’s also a notable exit for Google Ventures, which quietly has built a small but influential health care portfolio, led by partner Krishna Yeshwant (and profiled here). With the company’s market capitalization hovering around $1 billion, the investors who pumped in $89 million in two rounds of funding have earned a hefty return. It’s yet another sign that the public markets are welcoming for life sciences companies with a strong story to tell – even young ones. – Paul Bonanos

Arvinas: Many drugs work by blocking or inhibiting proteins and the reactions they cause in the human body, but only about 25% of the roughly 20,000 proteins in the body can be inhibited with molecular therapy. New company Arvinas is pursuing the opportunities presented by a different approach to disease-causing proteins – degradation – and will get its work underway with a $15 million Series A announced Sept. 26. Canaan Partners and 5AM Ventures led the A round, with participation from Elm Street Ventures and Connecticut Innovations, a state-funded venture firm with a goal to keep innovation by Connecticut researchers within the state. Along with the Connecticut Department of Community and Economic Development, Connecticut Innovations is supplying to the New Haven biotech  an additional $3.5 million in non-equity funding, some of which is tied to hiring milestones. The state also took a $1 million equity stake in Arvinas through Connecticut Innovations’ investment in the A round. The company’s work stems from research at Yale University by Craig Crews, a professor of chemistry and pharmacology, focused on inducing a cell’s own protein-degradation capability to bind to specific protein and mark it for degradation, which would remove it from the system entirely. He previously founded the biotech Proteolix, which also focused on protein degradation and was bought out in 2009 by Onyx Pharmaceuticals, bringing that company the multiple myeloma candidate Kyprolis (carfilzomib). – Joseph Haas

Moderna Therapeutics: The Flagship Ventures company said October 2 it had received a grant worth up to $25 million from the US government’s legendary Defense Advanced Research Projects Agency (or DARPA) – birthplace of the Internet -- to develop treatments for infectious disease and bioengineered attacks. The Cambridge, Mass. biotech is working on a new drug modality, in which modified messenger RNA (mRNA) are injected into a patient to spur endogenous production of therapeutic proteins. Shortly after emerging from stealth, Moderna’s platform received validation – and a boatload of cash – from AstraZeneca. But the firm has yet to prove in clinic that its mRNA analogs can evade the immune system, which is primed to recognize RNA as a viral invader, and trigger a patient’s ability to make proteins in the right quantities to fight pathogens. Moderna has raised $40 million from its Series A from Flagship Ventures and individuals, including its own CEO Stephane Bancel, after a long evolution from a Harvard University researcher’s idea to more efficiently create induced pluripotent stem cells. The AZ deal brought $240 million in upfront fees, plus potential milestones and royalties, for the rights to as many as 40 compounds across several therapeutic areas. The DARPA grant runs for five years and focuses on the production of therapeutic antibodies. Moderna’s appeal to public health officials in a pandemic or emergency situation is to simplify the distribution of treatments. Its mRNA-based injectable agent would need to be produced, shipped and stored, but potentially with less complication and cost of other types of stockpiled or rapid-response agents. – Alex Lash

Frazier Healthcare: The veteran venture firm said September 30 it has closed its seventh fund with $377 million committed, topping its $300 million target. Its previous fund was a $600 million vehicle that closed in 2007, and in the intervening years the firm has indicated it will shift some focus toward growth stage companies, although the area is not new to Frazier. There are currently nine companies in its growth portfolio, ranging from makers of health care product packaging and orthotics to dialysis services to outpatient facilities for bariatric surgery patients. To that end, for FH VII it has promoted two members who have worked on the firm’s growth buyout investments. Brian Morfitt is now a general partner, and Ben Magnano is now a partner. That said, Frazier continues to make early stage bets, too. It most recently co-led a $16 million Series A financing for Atterocor, which is developing a small molecule treatment for the adrenal cancer adrenocortical carcinoma and expects to enter the clinic this year. (Look for more on Atterocor in the upcoming issue of START-UP.) Frazier recently participated in the IPOs for Portola Pharmaceuticals, in which it had a 5.6% pre-IPO stake, and Chimerix, with a stake under 5%. It also saw acquisitions for its portfolio companies Trident Health and Incline Therapeutics. -- A.L.

All The Rest: JJDC joined as a new investor in a €31M Series B extension for Merus...Array BioPharma partner Loxo Oncology snagged a $33M Series A...To advance trabodenoson through Phase II for glaucoma, Inotek Pharmaceuticals raised $21M in equity and $7M in debt…Protagonist Therapeutics added $4M onto the $14M in Series B funds grossed this past June…NovaDigm completed a $14M Series B round to support its Phase II vaccine for chronic yeast infections...Lilly Asia Ventures provided a $10M Series C to Tianjin CanSino Biotech…Zindol raised $10M to advance its CINV candidate…Relmada Therapeutics closed on an oversubscribed $8M Series A round that began in July 2012…Opsona Therapeutics added €3M from Omnes Capital onto its €33M Series C announced in April 2013…InterWest Partners led a $1.5M seed investment in Integrated Molecular….Aequus Pharmaceuticals completed a $Cdn1.2M Series A to support work on a transdermal reformulation of the anti-psychotic aripiprazole…advancing research on PDE4 inhibitors for neurological diseases, Tetra Discovery Partners closed on a $1M seed round…BVM Capital seeded K94 Discoveries with $300k…ImmunAid is in the process of raising a Series B financing…the following biotechs completed FOPOs: Synageva BioPharma (rare diseases) $155.7M…Novavax (vaccines and vaccine adjuvants for infectious diseases) $100M…Fibrocell (autologous cell therapy) $45.1M…TherapeuticsMD (generic and OTC women's health products) $33M… KaloBios (antibodies) $30M…Idera Pharmaceuticals (TLR antagonists in autoimmune and inflammatory diseases) $27.7M…StemCells (cell-based therapeutics and tools) $16.2M…and Kythera is proposing an $85M secondary offering…the following completed PIPEs: MorphoSys (antibody libraries) $84.4M…Navidea Biopharmaceuticals (Crede CG III invested) $30M…Ampio Pharmaceuticals (inflammation) $25.3M…Celsus Therapeutics (multi-functional anti-inflammatory candidates) $12.5M…and La Jolla Pharmaceutical (to achieve development milestones for GCS100 and LJPC-501) $10M…Ophthotech, Bind Therapeutics, Evoke Pharma, Enzymotec, and Fate Therapeutics each priced their IPOs…MacroGenics set IPO terms…Relypsa filed to go public…Cleveland BioLabs received a $10M senior secured term loan from Hercules Technology Growth Capital…Pivotal Therapeutics raised $Cdn7M in a combination equity/debt financing…Business Development Bank of Canada's BDC Venture Capital arm raised a $135M fund for health care investments…Gates Foundation and JPMorgan Chase teamed up for a new fund to finance late-stage health technologies…and orphan drug accelerator Cydan added $10M to the $16M raised in April 2013. -- Amanda Micklus