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.

A New Fron­tier: The In­ner Ear

What happens when a successful biotech venture capitalist is unexpectedly diagnosed with a chronic, life-disrupting vertigo disorder? Innovation in neurotology.

That venture capitalist was Jay Lichter, Ph.D., and after learning there was no FDA-approved drug treatment for his condition, Ménière’s disease, he decided to create a company to bring drug development to neurotology. Otonomy was founded in 2008 and is dedicated to finding new drug treatments for the hugely underserved community living with balance and hearing disorders. Helping patients like Jay has been the driving force behind Otonomy, a company heading into a transformative 2020 with three clinical trial readouts: Phase 3 in Ménière’s disease, Phase 2 in tinnitus, and Phase 1/2 in hearing loss. These catalysts, together with others in the field, highlight the emerging opportunity in neurotology.
Otonomy is leading the way in neurotology
Neurotology, or the treatment of inner ear neurological disorders, is a large and untapped market for drug developers: one in eight individuals in the U.S. have moderate-to-severe hearing loss, tinnitus or vertigo disorders such as Ménière’s disease.1 With no FDA-approved drug treatments available for these conditions, the burden on patients—including social anxiety, lower quality of life, reduced work productivity, and higher rates of depression—can be significant.2, 3, 4

Joe Jimenez, Getty

Ex-No­var­tis CEO Joe Jimenez is tak­ing an­oth­er crack at open­ing a new chap­ter in his ca­reer — and that in­cludes a new board seat and a $250M start­up

Joe Jimenez is back.

The ex-CEO of Novartis has taken a board seat on Century Therapeutics, the Versant and Bayer-backed startup focused on coming up with a brand new twist on cell therapies for cancer — a field where Jimenez made his mark backing the first personalized CAR-T approved for use.

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Top Har­vard chemist caught up in FBI’s 'T­hou­sand Tal­ents' drag­net, ac­cused of ly­ing about Chi­nese con­nec­tions, pay

The FBI’s probe into the alleged theft of R&D secrets by Chinese authorities has drawn Harvard’s top chemist into its net.

The agency accused Charles M. Lieber, who chairs the university’s chemistry and chemical biology department, with lying about his involvement in China’s Thousand Talents campaign, which was established as a way of drawing in innovators from around the world. And the scientist, 60, was charged with making false statements about his ties to China.

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Can we make the an­tibi­ot­ic mar­ket great again?

The standard for-profit model in drug development is straightforward. Spend millions, even billions, to develop a medicine from scratch. The return on investment (and ideally a tidy profit) comes via volume and/or price, depending on the disease. But the string of big pharma exits and slew of biotech bankruptcies indicate that the model is sorely flawed when it comes to antibiotics.

The industry players contributing to the arsenal of antimicrobials are fast dwindling, and the pipeline for new antibiotics is embarrassingly sparse, the WHO has warned. Drugmakers are enticed by greener pastures, compared to the long, arduous and expensive path to antibiotic approval that offers little financial gain as treatments are typically priced cheaply, and often lose potency over time as microbes grow resistant to them.

Eye­ing a trio of tri­al ini­ti­a­tions, Jim Wilson's gene ther­a­py start­up woos Bruce Gold­smith from Deer­field as CEO

Passage Bio — Jim Wilson’s self-described “legacy company” — has wooed a seasoned biotech executive to steer the clinical entry of its first three gene therapy programs.

Bruce Goldsmith jumps to the helm of Passage after a brief CEO stint at Civetta, a cancer-focused startup he helped launch while a venture partner at Deerfield. He takes over from OrbiMed partner and interim chief Stephen Squinto, who will now lead the R&D team.

Amber Saltzman (Ohana)

Flag­ship's first ven­ture of 2020 is out, and it's all about sperm

A couple years ago, Amber Salzman got a call as she was returning East full-time after a two-year stint running a gene therapy company in California.

It was from someone at Flagship Pioneering, the deep-pocketed biotech venture firm. They had a new company with a new way of thinking about sperm. It had been incubating for over a year, and now they wanted her to run it.

“It exactly fit,” Salzman told Endpoints News. “I just thought I had to do something.”

Pfiz­er ax­es 6 ear­ly to late-stage can­cer stud­ies from the pipeline — with one oth­er cut for sick­le cell dis­ease

Pfizer trimmed a group of 3 R&D programs using their PD-L1 Bavencio — partnered with Merck KGaA — in their latest pipeline cull.

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UP­DAT­ED: In­cyte scores much need­ed PhI­II suc­cess — and of course it’s de­liv­ered by rux­oli­tinib

Incyte’s efforts to breathe a second life into ruxolitinib — its JAK inhibitor sold in pill form as Jakafi — has been greeted with clear, if preliminary and unsurprising, Phase III success.

Topline data from the TRuE-AD2 cements ruxolitinib’s foundational importance for Incyte, and gives analysts hope that there might yet be room for growth in a pipeline that’s suffered multiple R&D setbacks.

Stephen Hahn, AP

The FDA un­veils a new reg­u­la­to­ry frame­work to speed along gene ther­a­pies, re­ward­ing the lead­ing play­ers

Bioregnum Opinion Column by John Carroll

The emphasis at the FDA over the past 5 years or so has been on assisting drug developers as much as they can to speed up regulatory reviews and push more drugs into the market. And they are now crafting a final set of regulations aimed at flagging through a whole new generation of gene therapies in clinical testing at a rapid clip.

In a set of 6 prospective guidances posted on the FDA web site Tuesday morning, FDA commissioner Stephen Hahn committed the agency to staying flexible in handing out designations that are critical to gaining early approvals for drugs that claim to be once-and-done but don’t have anything close to the data needed to prove it.

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