Canaan reels in a jum­bo $800M fund with a big fo­cus on a new wave of biotech star­tups

In the lat­est sign of the leviathan ap­petite ven­ture in­vestors have for new tech­nol­o­gy, Canaan Part­ners — one of the busiest play­ers in biotech — has raised a firm-record $800 mil­lion fund to dri­ve a new wave of bets in the biz.

The Sil­i­con Val­ley-based Canaan has many in­ter­ests — fin­tech, mar­ket­places, en­ter­prise — with a spe­cial place in the port­fo­lio for a big chunk of bio­phar­ma. Known as a reg­u­lar in seed fi­nanc­ings and Se­ries A rounds, Canaan likes to get in ear­ly.

Canaan al­so likes to make mon­ey, which has been helped with 30 ex­its over the past 3 years. Nine of those were from the biotech port­fo­lio. The lim­it­ed part­ners have been good in re­turn; the last fund Canaan raised rang in at $675 mil­lion.

Tim Shan­non

Tim Shan­non, the East Coast gen­er­al part­ner and an ex­pe­ri­enced biotech vet who’s cur­rent­ly work­ing with a slate of com­pa­nies that in­cludes Arv­inas and IDEAYA, is ready to roll.

There are a num­ber of ear­ly-stage in­vestors that Canaan likes to work with, he says. Once their com­pa­nies hit Phase I, says Shan­non, they pre­fer to in­vest in ar­eas where they know they have a good chance of suc­cess. So ge­net­ic val­i­da­tion is im­por­tant for de-risk­ing their work. An­ti-in­fec­tives have been a hall­mark of their work.

But aside from the big­ger num­bers in Fund XI, adds Shan­non, not much changes.

“I think we’ll keep our same phi­los­o­phy in terms of the kinds of in­vest­ments we’re tar­get­ing,” he says. Then he ticks them off: “Ear­ly-stage, trans­for­ma­tive, high own­er­ship, high re­turns.”

You can fig­ure about 40% of the fund will go to health­care, rough­ly $360 mil­lion. Of that, look for about 75% to go in­to bio­phar­ma af­ter “di­al­ing up a notch” in the in­dus­try. That will trans­late in­to about 15 new com­pa­nies — plat­forms are a key — with about $15 mil­lion or so for each. A good rule of thumb is that 60% will be­come suc­cess­ful ex­its. Break it down fur­ther, he says, and 20% will be fund mak­ers, 20% will con­tribute, 20% will get by.

What’s not on Canaan’s plate? Com­mon dis­eases are tough to crack, says Shan­non. Di­a­betes and car­dio are two prime ex­am­ples, where ge­net­ic val­i­da­tion is of­ten lack­ing. PC­SK9 could have been a break­through, he notes, but it hasn’t fired up yet.

That ba­sic phi­los­o­phy, trans­lat­ed by a small team of pro­fes­sion­als, has paid off con­sis­tent­ly for the past 10 years.

In a blog post out to­day, the VC un­der­scored the val­ue of di­ver­si­ty and col­lab­o­ra­tion:

It may sound trite, but hav­ing a “no ass­holes pol­i­cy” works. Ours is a team-ori­ent­ed, trans­par­ent and col­lab­o­ra­tive cul­ture, with a com­pen­sa­tion struc­ture that re­wards per­for­mance — re­gard­less of a team mem­ber’s tenure. Sil­i­con Val­ley, in par­tic­u­lar, has seen the im­pact of un­der­rep­re­sen­ta­tion in gut-wrench­ing ways over the past few weeks. We know that hav­ing more points of view at the ta­ble makes a dif­fer­ence and we lead by ex­am­ple, with an in­vest­ment team that is 40% women — in­clud­ing at the Gen­er­al Part­ner lev­el — and 47% im­mi­grant or first-gen­er­a­tion.

Biotech Half­time Re­port: Af­ter a bumpy year, is biotech ready to re­bound?

The biotech sector has come down firmly from the highs of February as negative sentiment takes hold. The sector had a major boost of optimism from the success of the COVID-19 vaccines, making investors keenly aware of the potential of biopharma R&D engines. But from early this year, clinical trial, regulatory and access setbacks have reminded investors of the sector’s inherent risks.

RBC Capital Markets recently surveyed investors to take the temperature of the market, a mix of specialists/generalists and long-only/ long-short investment strategies. Heading into the second half of the year, investors mostly see the sector as undervalued (49%), a large change from the first half of the year when only 20% rated it as undervalued. Around 41% of investors now believe that biotech will underperform the S&P500 in the second half of 2021. Despite that view, 54% plan to maintain their position in the market and 41% still plan to increase their holdings.

How to col­lect and sub­mit RWD to win ap­proval for a new drug in­di­ca­tion: FDA spells it out in a long-await­ed guid­ance

Real-world data is messy. There can be differences in the standards used to collect different types of data, differences in terminologies and curation strategies, and even in the way data is exchanged.

While acknowledging this somewhat controlled chaos, the FDA is now explaining how biopharma companies can submit study data derived from real-world data (RWD) sources in applicable regulatory submissions, including new drug indications.

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David Lockhart, ReCode Therapeutics CEO

Pfiz­er throws its weight be­hind LNP play­er eye­ing mR­NA treat­ments for CF, PCD

David Lockhart did not see the meteoric rise of messenger RNA and lipid nanoparticles coming.

Thanks to the worldwide fight against Covid-19, mRNA — the genetic code that can be engineered to turn the body into a mini protein factory — and LNPs, those tiny bubbles of fat carrying those instructions, have found their way into hundreds of millions of people. Within the biotech world, pioneers like Alnylam and Intellia have demonstrated just how versatile LNPs can be as a delivery vehicle for anything from siRNA to CRISPR/Cas9.

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David Livingston (Credit: Michael Sazel for CeMM)

Renowned Dana-Far­ber sci­en­tist, men­tor and bio­phar­ma ad­vi­sor David Liv­ingston has died

David Livingston, the Dana-Farber/Harvard Med scientist who helped shine a light on some of the key molecular drivers of breast and ovarian cancer, died unexpectedly last Sunday.

One of the senior leaders at Dana-Farber during his nearly half century of work there, Livingston was credited with shedding light on the genes that regulate cell growth, with insights into inherited BRCA1 and BRCA2 mutations that helped lay the scientific foundation for targeted therapies and earlier detection that have transformed the field.

Leen Kawas (L) has resigned as CEO of Athira and will be replaced by COO Mark Litton

Ex­clu­sive: Athi­ra CEO Leen Kawas re­signs af­ter in­ves­ti­ga­tion finds she ma­nip­u­lat­ed da­ta

Leen Kawas, CEO and founder of the Alzheimer’s upstart Athira Pharma, has resigned after an internal investigation found she altered images in her doctoral thesis and four other papers that were foundational to establishing the company.

Mark Litton, the company’s COO since June 2019 and a longtime biotech executive, has been named full-time CEO. Kawas, meanwhile, will no longer have ties to the company except for owning a few hundred thousand shares.

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Sen. Richard Durbin (D-IL, foreground) and Sen. Richard Blumenthal (D-CT) (Patrick Semansky/AP Images)

Sen­a­tors back FDA's plan to re­quire manda­to­ry pre­scriber ed­u­ca­tion for opi­oids

Three Senate Democrats are backing an FDA plan to require mandatory prescriber education for opioids as overdose deaths have risen sharply over the past decade, with almost 97,000 American opioid-related overdose deaths in the past year alone.

While acknowledging a decline in overall opioid analgesic dispensing in recent years, the FDA said it’s reconsidering the need for mandatory prescriber training through a REMS given the current situation with overdoses, and is seeking input on the aspects of the opioid crisis that mandatory training could potentially mitigate.

Suresh Katta, Saama CEO (via YouTube)

As AI con­tin­ues to en­tice Big Phar­ma, a Car­lyle-led drug­mak­er syn­di­cate shells out $430M for cloud com­put­ing play­er

The AI revolution permeating Big Pharma took a big financial step forward Wednesday, with VCs and major drugmakers coming together to acquire a cloud-focused company.

Led by the Carlyle Group, the investors will put up $430 million for a majority stake in Saama, a company that collects patient data to help speed along the drug development process. The investment arms of Pfizer, Merck, Amgen and McKesson all participated in the financing, in addition to other prominent life sciences VCs like Northpond.

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Raju Mohan, Ventyx Biosciences CEO

Ven­tyx sprints to Wall Street less than a year af­ter emerg­ing from stealth

Editor’s note: Interested in following biopharma’s fast-paced IPO market? You can bookmark our IPO Tracker here.

It took seven months from exiting “quiet mode” for Ventyx Biosciences to land its very own stock ticker, raising $165 million in venture funds along the way.

Now, after pricing a massive $151.5 million IPO, the Encinitas, CA-based biotech is gunning for Phase II.

Ventyx priced close to 9.5 million shares at $16 apiece on Wednesday, the midpoint of its $15 to $17 range. CEO Raju Mohan filed the S-1 papers at the end of September, just over a week after unveiling a $114 million Series B round. He penciled in the standard figure of $100 million at first, likely knowing that in the last year, it’s been common for biotechs to raise much more than those initial estimates.

Bris­tol My­ers pledges to sell its Ac­celeron shares as ac­tivist in­vestors cir­cle Mer­ck­'s $11.5B buy­out — re­port

Just as Avoro Capital’s campaign to derail Merck’s proposed $11.5 billion buyout of Acceleron gains steam, Bristol Myers Squibb is leaning in with some hefty counterweight.

The pharma giant is planning to tender its Acceleron shares, Bloomberg reported, which add up to a sizable 11.5% stake. Based on the offer price, the sale would net Bristol Myers around $1.3 billion.

To complete its deal, Merck needs a majority of shareholders to agree to sell their shares.