An­oth­er mega-start­up: Chi­na in­vestors back TCR2's $125M cash round to fu­el a pre­clin­i­cal as­sault on sol­id tu­mors

Gar­ry Men­zel

In yet an­oth­er dis­play of biotech’s bold fundrais­ing en­vi­ron­ment right now, a Cam­bridge, MA-based start­up with a hand­ful of pre­clin­i­cal can­cer drugs in its pipeline has scored a $125 mil­lion mega-round — with all of the cash in the bank.

TCR2 Ther­a­peu­tics tells me they want­ed flex­i­bil­i­ty to pur­sue “mul­ti­ple pro­grams in mul­ti­ple for­mats,” which re­quires a sig­nif­i­cant amount of cash on hand. When peo­ple get hyped about mega-rounds, sober­ing re­al­ists will al­ways point out how mega-rounds are usu­al­ly tranched. That means the cash is gat­ed, and ac­cess to that cash is de­pen­dent on the start­up meet­ing cer­tain mile­stones.

This arrange­ment pro­vides some pro­tec­tion for cau­tious in­vestors, and is com­mon­place con­sid­er­ing this in­dus­try’s fail­ure rate. In­vestors in this case, how­ev­er, ap­pear to have thrown that cau­tion to the wind, bank­ing on TCR2’s abil­i­ty to pro­vide a re­turn one way or an­oth­er.

“All the mon­ey ar­rives in the bank on day one,” said Gar­ry Men­zel, CEO at TCR2.

How did the com­pa­ny get so much cash to play with? In part, they tapped flush in­vestor groups in Chi­na, one com­po­nent of a an in­creas­ing­ly pop­u­lar strate­gic move to fo­cus heav­i­ly in that mar­ket.

“There’s so much ac­tiv­i­ty in Chi­na right now,” Men­zel said. “There’s a tremen­dous amount of clin­i­cal ex­pe­ri­ence, good man­u­fac­tur­ing ca­pa­bil­i­ties, and it’s a big mar­ket.”

The mega-round was co-led by Shang­hai-based 6 Di­men­sions Cap­i­tal and Dal­las-based Cu­ra­tive Ven­tures. A long (long) list of new in­vestors and ex­ist­ing in­vestors joined in, in­clud­ing MPM Cap­i­tal (a ma­jor in­vestor in the on­col­o­gy space). Check out the com­pa­ny’s press re­lease for the full run­down.

Patrick Baeuer­le

What has these in­vestors so jazzed? TCR2 thinks it can lever­age the com­pa­ny’s un­der­stand­ing of the T cell re­cep­tor struc­ture to im­prove on how the body’s can­cer-fight­ing cells re­spond to dis­ease. The hope is to break down bar­ri­ers that have lim­it­ed ef­fi­ca­cy, ex­tend­ing im­muno-on­col­o­gy’s range in­to sol­id tu­mors.

The com­pa­ny was found­ed in 2015 by can­cer im­mu­nol­o­gist Patrick Baeuer­le, man­ag­ing di­rec­tor of MPM Cap­i­tal. You might rec­og­nize Baeuer­le as the for­mer CSO of Mi­cromet, which used an an­ti­body to redi­rect killer T cells to de­stroy tu­mor cells. Am­gen went on to ac­quire Mi­cromet in 2012 in a deal val­ued at $1 bil­lion-plus, bring­ing Baeuer­le on board to Am­gen to con­tin­ue work­ing on Blin­cy­to, an an­ti­body-based leukemia drug.

Now Baeuer­le sits on the board of TCR2, a com­pa­ny that wants to take im­muno-on­col­o­gy far past where CAR-Ts can go.

“There’s a lot of ex­cite­ment around CAR-T, and a lot of com­pa­nies in that space,” Men­zel said. “But CAR-T ran in­to a brick wall with sol­id tu­mors. There’s just been no ac­tiv­i­ty there.”

TCR² takes its name from T cell re­cep­tors (TCR), mol­e­cules on the sur­faces of im­mune cells that rec­og­nize a spe­cif­ic mol­e­c­u­lar tar­get, or anti­gen, and fo­cus an im­mune at­tack on cells with that tar­get. But CAR-T on­ly taps a part of a TCR’s full struc­ture.

“You can think of CAR-T as a piece of the TCR,” Men­zel said. “TCR has six sub­units, and CAR-T is one.”

Al­fon­so Quin­tás Car­dama

TCR² hopes to find a way to em­ploy the full TCR — a goal that com­pa­nies like blue­bird bio, Kite (Gilead), and GSK all have their eye on.  But TCR²’s CMO Al­fon­so Quin­tás Car­dama says the start­up has a game-chang­ing dif­fer­en­tia­tor. “We are ag­nos­tic to HLA. That’s the ad­van­tage of our plat­form over any oth­er TCR plat­form that re­quires spe­cif­ic HLA geno­typ­ing.”

TCR² has four pro­grams in the pipeline, all of which are tar­get­ing can­cers. Its lead in­ves­ti­ga­tion­al drug is called TC-210, a pre­clin­i­cal sol­id tu­mor ther­a­py that tar­gets mesothe­lin, an anti­gen present in sev­er­al types of can­cer. The com­pa­ny is hop­ing that drug can be used against ovar­i­an can­cer, mesothe­lioma, cholan­gio­car­ci­no­ma, and non-small cell lung can­cer (NSCLC).

Its sec­ond pro­gram is ba­si­cal­ly TC-210 with a PD1 switch at­tached, which the com­pa­ny hopes will make the ther­a­py more ef­fec­tive in lung can­cer pa­tients.

Its re­main­ing two pro­grams are still very ear­ly in their de­vel­op­ment, in ei­ther lead op­ti­miza­tion or dis­cov­ery stage. And TCR² isn’t say­ing much about ei­ther pro­gram, ex­cept that one is called Pro­gram X and the oth­er will take on blood can­cers.

Men­zel said the mas­sive Se­ries B round will like­ly take two pro­grams to proof-of-con­cept by 2021 and fi­nance an ex­pan­sion of the plat­form. TCR² plans to dou­ble its staff over the next year — from 30 to rough­ly 60 em­ploy­ees — all of whom will be work­ing out of a brand new fa­cil­i­ty in the heart of Kendall Square.

“You’ll see us grow­ing quite rapid­ly over the next year,” Men­zel says.

With $125 mil­lion in the bank, we wouldn’t ex­pect any less.

Part club, part guide, part land­lord: Arie Bellde­grun is blue­print­ing a string of be­spoke biotech com­plex­es in glob­al boom­towns — start­ing with Boston

The biotech industry is getting a landlord, unlike anything it’s ever known before.

Inspired by his recent experiences scrounging for space in Boston and the Bay Area, master biotech builder, investor, and global dealmaker Arie Belldegrun has organized a new venture to build a new, 250,000 square foot biopharma building in Boston’s Seaport district — home to Vertex and a number of up-and-coming biotech players.

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Novotech CRO Ex­pands Chi­na Team as Biotech De­mand for Clin­i­cal Tri­als In­creas­es up to 79%

An increase in demand of up to 79% for clinical trials in China has prompted Novotech the Asia-Pacific CRO to rapidly expand the China team, appointing expert local clinical executives to their Shanghai and Hong Kong offices. The company is planning to expand their team by 30% over the next quarter.

Novotech China has seen considerable demand recently which is borne out by research from GlobalData:
A global migration of clinical research is occurring from high-income countries to low and middle-income countries with emerging economies. Over the period 2017 to 2018, for example, the number of clinical trial sites opened by biotech companies in Asia-Pacific increased by 35% compared to 8% in the rest of the world, with growth as high as 79% in China.
Novotech CEO Dr John Moller said China offers the largest population in the world, rapid economic growth, and an increasing willingness by government to invest in research and development.
Novotech’s 23 years of experience working in the region means we are the ideal CRO partner for USA biotechs wanting to tap the research expertise and opportunities that China offers.
There are over 22,000 active investigators in Greater China, with about 5,000 investigators with experience on at least 3 studies (source GlobalData).

UP­DAT­ED: With loom­ing ‘apoc­a­lypse of drug re­sis­tance,’ Mer­ck’s com­bi­na­tion an­tibi­ot­ic scores FDA ap­proval on two fronts

Merck — one of the last large biopharmaceuticals companies in the beleaguered field of antibiotic drug development — on Wednesday said the FDA had sanctioned the approval of its combination antibacterial for the treatment of complicated urinary tract and intra-abdominal infections.

To curb the rise of drug-resistant bacteria and maintain the efficacy of the therapy, Recarbrio (and other antibacterials) — the drug must be used to treat or prevent infections that are proven or strongly suspected to be caused by susceptible gram-negative bacteria, Merck $MRK said.

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John McHutchison in 2012. Getty Images

The $1.1M good­bye: Gilead CSO John McHutchi­son is out as Daniel O’Day shakes up the se­nior team

Just a little more than a year after John McHutchison grabbed a promotion to become CSO at Gilead in the wake of Norbert Bischofberger’s exit, he’s out amid a shakeup of the senior team that is also triggering the departure of two other top execs.

Gilead stated that McHutchison “has decided to step down” from the job as of August 2nd. And their SEC filing notes that he’ll be getting a $1.1 million check to settle up on his contract.

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Thomas Gajewski, David Steinberg. (CRI, Pyxis)

Bay­er, Long­wood back star re­searcher's deep dive in­to the tu­mor mi­croen­vi­ron­ment for new I/O tar­gets

From PD-1 targeting to the RAS pathway to the STING complex, Thomas Gajewski has spent the past two decades of his career decoding the various ways the immune system can be unleashed to defend against cancer. So when the University of Chicago professor comes around to putting all his findings into a new platform for finding new targets, VCs and pharma groups alike pay attention.

“He’s been studying T cells for 20 years, plus he’s one of the world’s leaders if not the world leader in the space,” David Steinberg, partner at Longwood Fund, said. “Furthermore, let me add he did a lot of the foundational research and also some of the seminal clinical trials in the existing set of I/O agents. He understands the space really well, he understands the current strengths, and I think he understood really well what was missing, so he knew where to look.”

Kamala Harris speaking yesterday at the Des Moines Register Iowa Presidential Candidate Forum [via Getty]

Who’s the tough­est on drug prices? A game of po­lit­i­cal one-up­man­ship is dri­ving the pol­i­cy de­bate in Wash­ing­ton

Earlier this week we got a look at Senator Kamala Harris’ position on drug prices. She’s proposing that HHS take an average price from single-payer systems like the UK, Germany and Canada — which leverage market access for lower prices — and use that to set the US price. Anything drug companies collect above that would be taxed at a rate of 100%.

And the rhetoric is scathing:
While families struggle to make it to the end of the month, pharmaceutical companies are turning record profits. They’re spending nearly as much on advertising as R&D. They’re manipulating their market power to hike prices on lifesaving generic drugs. They’re making twice the profit of the average industry in America and still increased drug prices by 10.5% over the past six months alone. Meanwhile, they are charging dramatically higher prices to American consumers.
That’s an escalation on Joe Biden’s plan, which includes drug importation from those cheaper markets as well as allowing Medicare to negotiate prices — something that virtually all Dems agree on now.

SJ Lee [File photo]

Go­ing in­side cells, Sung Joo Lee has sketched some big goals for his small — but glob­al — team of drug hunters

For a small biotech based in South Korea with a research arm in Cambridge, MA, Orum Therapeutics has sketched out some big goals aimed at developing antibodies for intracellular targets. And now they have a new $30 million round to push the work forward, aiming at a slate of currently undruggable quests.

Orum has been working on a platform tech out of Ajou University that relies on endocytosis to smuggle antibodies and their cargo inside a cell. They’ve published work in Nature that illustrates its preclinical potential in RAS mutations, and KRAS is on their list of targets. 

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Astel­las buys in­to Fre­quen­cy's re­gen­er­a­tive med strat­e­gy with a $625M al­liance on hear­ing loss

The executive team at Frequency Therapeutics never oversold the results of their maiden Phase I/II study for a new drug to rectify hearing loss. It was, they said back in April, primarily about safety and tolerability, where their drug FX-322 performed as they had hoped. 

That early glimpse of efficacy everyone searches for in their first try on humans? 

(I)mprovements in hearing function, including audiometry and word scores, were observed in multiple FX-322 treated patients.

We don’t know exactly what that means. But whatever the details, Astellas found enough in the data to jump in with a sizable collaboration deal.

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H1 analy­sis: The high-stakes ta­ble in the biotech deals casi­no is pay­ing out some record-set­ting win­nings

For years the big trend among dealmakers at the major players has been centered on ratcheting down upfront payments in favor of bigger milestones. Better known as biobucks for some. But with the top 15 companies competing for the kind of “transformative” pacts that can whip up some excitement on Wall Street, with some big biotechs like Regeneron now weighing in as well, cash is king at the high stakes table.

We asked Chris Dokomajilar, the head of DealForma, to crunch the numbers for us, looking over the top 20 deals for the past decade and breaking it all down into the top alliances already created in 2019. Gilead has clearly tipped the scales in terms of the coin of the bio-realm, with its record-setting $5 billion upfront to tie up to Galapagos’ entire pipeline.

Dokomajilar notes:

We’re going to need a ‘three comma club’ for the deals with over $1 billion in total upfront cash and equity. The $100 million-plus club is getting crowded at 164 deals in the last decade with new deals being added towards the top of the chart. 2019 already has 14 deals with at least $100 million in upfront cash and equity for a total year-to-date of over $9 billion. That beats last year’s $8 billion and sets a record.

Add upfronts and equity payments and you get $11.5 billion for the year, just shy of last year’s record-setting $11.8 billion.

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