Flow of US biotech VC dol­lars on track to match record 2018 lev­els — Chi­na? Not so much

With the third quar­ter of the year be­hind us, the US pri­vate biotech ecosys­tem has some sol­id num­bers to cel­e­brate — and some fog to clear out as it looks out the glob­al win­dow.

Kather­ine An­der­sen

While the over­all vol­ume of deals and their sizes may not sur­pass red hot 2018 lev­els, Pitch­Book an­a­lysts see the deal count on pace to match the record, eas­i­ly tow­er­ing over the nine years pri­or. An ef­fer­ves­cent IPO mar­ket and sev­er­al high pro­file ac­qui­si­tions helped keep en­thu­si­asm high; in fact, this has been the most lu­cra­tive year for over­all VC ex­its in a decade, the da­ta com­pa­ny and the Na­tion­al Ven­ture Cap­i­tal As­so­ci­a­tion not­ed in their quar­ter­ly Ven­ture Mon­i­tor re­port pub­lished Tues­day.

Is bio­phar­ma in a bub­ble? No, ac­cord­ing to Kather­ine An­der­sen, SVB’s head of life sci­ences and health­care re­la­tion­ship bank­ing. But brace for an off-cy­cle as slow­ing economies and con­tin­ued geopo­lit­i­cal noise cast their shad­ows.

So far, with 609 VC deals on the books, bio­phar­ma has col­lec­tive­ly raised $115 bil­lion in 2019. And ear­ly-stage fi­nanc­ing, gen­er­al­ly clas­si­fied as Se­ries A or B, con­tin­ues to take up a slight ma­jor­i­ty of that since over­tak­ing late-stage VC deals in 2017.

Deal sizes, though, have resided some­what from last year’s peak.

On the oth­er hand, we’ve seen a good run in biotech IPOs and buy­outs — some­thing that Pitch­Book didn’t quan­ti­fy ex­cept for point­ing out that VC ex­it for all-fe­male found­ed com­pa­nies has reached a decade high of $2.4 bil­lion in val­ue (among 28 deals).

Pitch­Book’s analy­sis, of course, on­ly in­volves US VC firms. But the Chi­na ques­tion is clear­ly loom­ing over every­one’s head, and An­der­sen de­vot­ed much of her com­men­tary in the re­port to the top­ic. As Amer­i­can reg­u­la­tors turn up their scruti­ny on for­eign (but es­pe­cial­ly Chi­nese) mon­ey, she ex­pects to see small­er in­vest­ments from Chi­na mark­ing a sharp drop from a re­cent surge.

On an an­nu­al­ized ba­sis, we’re pre­dict­ing about a 35% de­cline from 2018 to 2019 in Asia’s to­tal syn­di­cat­ed in­vest­ment in­to the US and Eu­rope across all health­care sub­sec­tors. That is part­ly due to more strin­gent CFIUS scruti­ny and a slow­down in the Chi­nese econ­o­my. Look­ing ahead, the fu­ture im­pact of CFIUS de­pends on who is viewed as a na­tion­al se­cu­ri­ty threat.

As far as US play­ers go, An­der­sen ob­served that the heavy­weights are play­ing a larg­er role in shap­ing the in­dus­try, with the top 15 crossovers back­ing 41% of all US bio­phar­ma deals in the first half of 2019.

“We al­so no­ticed an emerg­ing trend in which many large, cor­po­rate-on­ly eq­ui­ty rounds ex­ist­ed as part of col­lab­o­ra­tions or with op­tions to buy,” she said.

Charts: Pitch­Book-NVCA Ven­ture Mon­i­tor

UP­DAT­ED: In a stun­ning turn­around, Bio­gen says that ad­u­canum­ab does work for Alzheimer's — but da­ta min­ing in­cites con­tro­ver­sy and ques­tions

Biogen has confounded the biotech world one more time.

In a stunning about-face, the company and its partners at Eisai say that a new analysis of a larger dataset on aducanumab has restored its faith in the drug as a game-changer for Alzheimer’s and, after talking it over with the FDA, they’ll now be filing for an approval of a drug that had been given up for dead.

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Vas Narasimhan. Getty Images

UP­DAT­ED: Failed PhI­II fe­vip­iprant tri­als pour more cold wa­ter on No­var­tis' block­buster R&D en­gine — and briefly spread the chill to a high-pro­file biotech

Back in July, during an investor call where Novartis execs ran through an upbeat assessment of their Q2 performance, CEO Vas Narasimhan and development chief John Tsai were pressed to predict which of the two looming Phase III readouts — involving cardio drug Entresto and asthma therapy fevipiprant, respectively — had a higher likelihood of success. Tsai gave the PARAGON-HF study with Entresto minimally better odds, but Narasimhan emphasized that their strategy of giving fevipiprant to more severe patients gave them confidence.

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UP­DAT­ED: The FDA sets a reg­u­la­to­ry speed record, pro­vid­ing a snap OK for Ver­tex's break­through triplet for cys­tic fi­bro­sis

The FDA has approved Vertex’s new triplet for cystic fibrosis at a record-setting speed.

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IM­brave150: Roche’s reg­u­la­to­ry crew plans a glob­al roll­out of Tecen­triq com­bo for liv­er can­cer as PhI­II scores a hit

Just weeks after Bristol-Myers Squibb defended its failed pivotal study pitting Opdivo against Nexavar in liver cancer, Roche says it’s beat the frontline challenge with a combination of their PD-L1 Tecentriq with Avastin. And now they’re rolling their regulatory teams in the US, Europe and China in search of a new approval — badly needed to boost a trailing franchise effort.
Given their breakthrough and Big Pharma status as well as the use of two approved drugs, FDA approval may well prove to be something of a formality. And the Chinese have been clear that they want new drugs for liver cancer, where lethal disease rates are particularly high.
Researchers at their big biotech sub, Genentech, say that the combo beat Bayer’s Nexavar on both progression-free survival as well as overall survival — the first advance in this field in more than a decade. We won’t get the breakdown in months of life gained, but it’s a big win for Roche, which has lagged far, far behind Keytruda and Opdivo, the dominant PD-1s that have captured the bulk of the checkpoint market so far.
Researchers recruited hepatocellular carcinoma — the most common form of liver cancer — patients for the IMbrave150 study who weren’t eligible for surgery ahead of any systemic treatment of the disease.
Roche has a fairly low bar to beat, with modest survival benefit for Nexavar, approved for this indication 12 years ago. But they also plan to offer a combo therapy that could have significantly less toxicity, offering patients a much easier treatment regimen.
Cowen’s Steven Scala recently sized up the importance of IMbrave150, noting:

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UP­DAT­ED: Clay Sie­gall’s $614M wa­ger on tu­ca­tinib pays off with solid­ly pos­i­tive piv­otal da­ta and a date with the FDA

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And if all the cards keep falling in its favor, they’ll move from 1 drug on the market to 3 in 2020, which is shaping up as a landmark year as Seattle Genetics prepares for its 23rd anniversary on July 15.

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David Liu, Liu Group

David Liu un­veils newest ad­vance­ment in CRISPR tech: Prime edit­ing

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David Liu, base editing pioneer and founder of Beam Therapeutics, published the findings in Nature alongside Andrew Anzalone. They estimated that the breakthrough “in principle” puts 89% of human diseases in purview — although experts cautioned that human therapies were a long way off.

Bhaskar Chaudhuri. Frazier Healthcare Partners

Fra­zier Health­care Part­ner­s' der­ma­tol­ogy up­start at­tracts a mar­quee syn­di­cate, $94M+ for 'in-be­tween' top­i­cal drug

For the past three years Frazier Healthcare Partners’ Bhaskar Chaudhuri has been carefully and quietly grooming Arcutis Therapeutics, a new dermatology play he co-founded to deliver topical formulations of well-known drugs. Now that the biotech is poised to enter Phase III, he’s being joined by a marquee syndicate for its $94.5 million Series C.

HBM Healthcare Investments, Vivo Capital, BlackRock, Omega Funds, Pivotal BioVentures, and Goldman Sachs jumped on board, joining Bain Capital Life Sciences, OrbiMed and RA Capital Management in backing Arcutis’ lead topical cream for plaque psoriasis.

A new com­pa­ny en­ters the Tec­fidera fight, of­fer­ing to kill two birds

The remedy for the most common side effect for one of the most common multiple sclerosis drugs is simple: aspirin.

Taking aspirin with Biogen’s Tecfidera will reduce the flush, a sometimes painful form of red skin irritation, many patients experiences. The problem is that the aspirin has to be taken at least 30 minutes before Tecfidera, turning a simple twice-a-day, one-dose oral drug into a staggered two-drug regimen.

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Despite a head start, when Bristol-Myers Squibb and its pioneering checkpoint inhibitor Opdivo suffered a key lung cancer setback in 2016, they found themselves relegated to the backseat as Merck’s Keytruda seized the wheel on the road to immunotherapy stardom. Bristol-Myers has since suffered blow after blow in its quest to take a big slice of the lucrative market, peppered with some small successes. On Tuesday, the New Jersey drugmaker touted positive data from a Phase III open-label study in a bid to carve itself a piece of the frontline lung cancer market.