Health­care ven­ture cap­i­tal has al­ready blown away 2020 records, but does it have the juice to keep grow­ing?

With the wind of the pan­dem­ic at its back, the bio­phar­ma in­dus­try saw a surg­ing tide of fundrais­ing in 2020 that has on­ly ex­po­nen­tial­ly grown this year. But with VC dol­lars flow­ing like nev­er be­fore, are there some cracks show­ing in bio­phar­ma’s gold-tint­ed façade?

In the first half of 2021, to­tal health­care ven­ture spend­ing in the US has al­ready out­stripped 2020’s record-break­ing to­tals across biotech, healthtech and be­yond, putting the in­dus­try on a fund­ing pace that could be hard to match in com­ing years, ac­cord­ing to a new re­port from Sil­i­con Val­ley Bank re­leased Wednes­day.

For the US health­care in­dus­try writ large — which in­cludes biotech, healthtech, di­ag­nos­tics and de­vices — ven­ture cap­i­tal was re­spon­si­ble for $21.9 bil­lion in fundrais­ing in the first half, well past the in­dus­try’s to­tal of $16.8 bil­lion in 2020.

The sto­ry is much the same when con­sid­er­ing the num­ber of deals and VC fundrais­ing in both the US and Eu­rope, where the health­care sec­tor in the first half near­ly sur­passed 2020 to­tals with $47.2 bil­lion raised com­pared with $50 bil­lion, re­spec­tive­ly. Mean­while, the to­tal num­ber of VC fundrais­ing deals al­ready reached 1,286 in H1 com­pared with 1,611 in all of 2020.

The in­dus­try’s Q2, rid­ing tail­winds from the pan­dem­ic year, was a par­tic­u­lar­ly strong pe­ri­od with 669 VC deals in the US and Eu­rope, just nar­row­ly beat­ing out Q1’s 619 to­tal deals. Q3 2020 pre­vi­ous­ly held the record on that count with 465 deals.

Un­der­scor­ing that tor­rent of fi­nanc­ing was the VC in­dus­try’s turn to­ward Se­ries A founds for biotech­nol­o­gy, which proved to be a par­tic­u­lar­ly fruit­ful mar­ket as com­pe­ti­tion among crossover in­vestors dri­ves their in­ter­ests ear­li­er in­to the drug de­vel­op­ment process. Se­ries A in­vest­ments to­taled $3.94 bil­lion in the first half com­pared with $3.95 bil­lion in all of 2020.

Se­ries A in­vest­ments in what SVB de­fined as “plat­forms” to­taled 35 deals in H1, well on the way to over­tak­ing 2020’s to­tal of 45. But the val­u­a­tions on those rais­es were far high­er, with $2.2 bil­lion raised in the first half com­pared with just $1.4 bil­lion for 2020. Many of those in­vest­ments have al­so moved away from sin­gle-in­di­ca­tion biotechs with mol­e­cules in the clin­ic — a pop­u­lar bet as re­cent­ly as 2019 — to mul­ti-tar­get com­pa­nies with their can­di­dates in the pre­clin­i­cal stage or still in stealth.

Mean­while, on­col­o­gy — the big win­ner in terms of VC fundrais­ing — saw 34 Se­ries As in the first half of 2021 com­pared with 44 in 2020. In terms of dol­lar fig­ures, those deals came out to $1.1 bil­lion and $1.3 bil­lion, re­spec­tive­ly. For both plat­form and on­col­o­gy plays, all fundrais­ing round to­tals are on pace to pass last year’s to­tal.

That growth in ear­ly fundrais­ing has been led by a slate of new crossover in­vestors jump­ing in­to the fold. Alexan­dria Ven­tures, for in­stance, dropped 12 Se­ries A in­vest­ments over the course of 2020 and H1 de­spite be­ing a new en­trant. Cas­din Cap­i­tal, Or­biMed and RA Cap­i­tal fol­lowed the leader with 10, 10 and nine such deals, re­spec­tive­ly.

SVB al­so high­light­ed what End­points News read­ers know well: The biotech IPO mar­ket has been red hot in terms of to­tal of­fer­ings while a promis­ing 2020 for M&A has slammed on the brakes. In H1 so far, there have been just sev­en M&A deals for pri­vate biotechs com­pared with 19 in 2020.

De­spite the small­er deals, up­front cash in those sev­en pacts has ac­tu­al­ly been high­er than last year at a me­di­an val­ue of $370 mil­lion com­pared with $300 mil­lion in 2020. The ma­jor­i­ty of this year’s deals has al­so been for pre­clin­i­cal as­sets, his­tor­i­cal­ly a mi­nor­i­ty of pri­vate M&A deals signed.

The rea­son for bio­phar­ma’s move away from M&A are mul­ti­fold, with a sud­den­ly com­bat­ive FTC and an in­dus­try look­ing to steer clear of sky-high val­u­a­tions and high pre­mi­ums on deals. As­traZeneca and Alex­ion’s $39 bil­lion merg­er with rare dis­ease drug­mak­er Alex­ion, which re­cent­ly cleared its fi­nal hur­dle for ap­proval, could soon prove to be a di­nosaur of a deal as reg­u­la­to­ry hur­dles ac­cu­mu­late.

Mean­while, SVB tracked 50 IPOs so far on the year, well on pace to sur­pass 2020’s to­tal of 84. But while pub­lic of­fer­ings have been up, pre-mon­ey val­u­a­tions and pro­ceeds have been down, ac­cord­ing to SVB. The stan­dard “pop” for post-IPO biotechs post­ed a mea­ger 7% av­er­age jump — per­haps un­der­scor­ing some wan­ing in­ter­est as the pan­dem­ic winds down among gen­er­al­ist in­vestors.

“It is pos­si­ble that bio­phar­ma spe­cial­ist pub­lic in­vestors can­not keep up with the IPO pace, and gen­er­al­ists that helped keep IPOs frothy have di­ver­si­fied as the econ­o­my re-opened in 2021, lead­ing to less at­ten­tion and less of the post IPO pop we saw in re­cent years,” the firm said.

Adap­tive De­sign Meth­ods Of­fer Rapid, Seam­less Tran­si­tion Be­tween Study Phas­es in Rare Can­cer Tri­als

Rare cancers account for 22 percent of cancer diagnoses worldwide, yet there is no universally accepted definition for a “rare” cancer. Moreover, with the evolution of genomics and associated changes in categorizing tumors, some common cancers are now characterized into groups of rare cancers, each with a unique implication for patient management and therapy.

Adaptive designs, which allow for prospectively planned modifications to study design based on accumulating data from subjects in the trial, can be used to optimize rare oncology trials (see Figure 1). Adaptive design studies may include multiple cohorts and multiple tumor types. In addition, numerous adaptation methods may be used in a single trial and may facilitate a more rapid, seamless transition between study phases.

Matt Gline (L) and Pete Salzmann

UP­DAT­ED: Roivant bumps stake in Im­muno­vant with a $200M deal. But with M&A off the ta­ble, shares crater

Roivant has worked out a deal to pick up a chunk of stock in its majority-owned sub Immunovant $IMVT, but the stock buy falls far short of its much-discussed thoughts about buying out all of the 43% of shares it doesn’t already own.

Roivant, which recently inked a SPAC move to the market at a $7 billion-plus valuation, has forged a deal to boost its ownership in Immunovant by 6.3 points, ending with 63.8% of the biotech’s stock following a $200 million injection. That cash will bolster Immunovant’s cash reserves, giving it a $600 million war chest to fund a slate of late-stage studies for its big drug: the anti-FcRn antibody IMVT-1401.

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Sanofi preps a multi­bil­lion-dol­lar buy­out of an mR­NA pi­o­neer af­ter falling be­hind in the race for a Covid-19 jab — re­port

It looks like Sanofi CEO Paul Hudson is dead serious about his intention to vault directly into contention for the future of mRNA vaccines.

A year after paying Translate Bio a whopping $425 million in an upfront and equity payment to help guide the pharma giant to the promised land of mRNA vaccines for Covid-19, Sanofi is reportedly ready to close the deal with a buyout.

Translate’s stock $TBIO soared 78% after the market closed Monday. A spokesperson for Sanofi declined to comment on the report, telling Endpoints News that the company doesn’t comment on market rumors.

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Anthony Sun, Zentalis and Zentera CEO (Zentalis)

With clin­i­cal tri­als lined up for Zen­tal­is drugs, Chi­na's Zen­tera sets its sights on more deal­mak­ing and an IPO

As Zentalis geared up for an AACR presentation of early data on its WEE1 inhibitor earlier this year, its Chinese joint venture Zentera wasn’t idle, either.

Zentera, which has headquarters in Shanghai, had already nabbed clearance to start clinical trials in China for three of the parent company’s drugs. In May — just a month after Zentalis touted three “exceptional responses” out of 55 patients for their shared lead drug, ZN-c3 — it got a fourth CTA approval.

Thomas Soloway, T-knife CEO

What hap­pens when you give a mouse a hu­man self-anti­gen? In­vestors bet $110M to find out

T-knife Therapeutics launched last August on a mission to isolate T cell receptors not from human donors, but from mice. Now, with a new CEO and a candidate bound for the clinic, the Versant-backed company is reloading with a fresh $110 million.

“What we are trying to do for the field of TCR therapy and solid tumor therapy is very analogous to what the murine platforms have done in antibody development,” CEO Thomas Soloway told Endpoints News. 

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UP­DAT­ED: Watch out Glax­o­SmithK­line: As­traZeneca's once-failed lu­pus drug is now ap­proved

Capping a roller coaster journey, AstraZeneca has steered its lupus drug anifrolumab across the finish line.

Saphnelo, as the antibody will be marketed, is the only treatment that’s been approved for systemic lupus erythematosus since GlaxoSmithKline’s Benlysta clinched an OK in 2011. The British drugmaker notes it’s also the first to target the type I interferon receptor.

Mirroring the population that the drug was tested on in late-stage trials, regulators sanctioned it for patients with moderate to severe cases who are already receiving standard therapy — setting up a launch planned for the end of August, according to Ruud Dobber, who’s in charge of AstraZeneca’s biopharmaceuticals business unit.

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Not all mR­NA vac­cines are cre­at­ed equal. Does it mat­ter?; Neu­ro is back; Pri­vate M&A af­fair; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

As part of our broader and deeper drive, Endpoints has been pairing webinars with our special reports to cover more angles on a given topic. In conjunction with Max Gelman’s neuroscience feature, Kyle Blankenship moderated an insightful panel to discuss where the field is headed. You can register to watch it on demand here.

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Bris­tol My­ers pulls lym­phoma in­di­ca­tion for Is­to­dax af­ter con­fir­ma­to­ry tri­al falls flat

Amid an industrywide review of cancer drugs with accelerated approval, Bristol Myers Squibb had to make the tough call last month to yank an approval for leading I/O drug Opdivo after flopping a confirmatory study. Now, a second Bristol Myers drug is on the chopping block.

Bristol Myers has pulled aging HDAC inhibitor Istodax’s indication in peripheral T cell lymphoma after a Phase III confirmatory study for the drug flopped on its progression-free survival endpoint, the drugmaker said Monday.

Rick Pazdur (via AACR)

FDA's on­col­o­gy head Rick Paz­dur de­fends the ac­cel­er­at­ed ap­proval path­way, claim­ing it is 'un­der at­tack'

The FDA is sounding the alarm over its accelerated approval pathway as backlash continues over the recent nod in favor of Biogen’s Alzheimer’s drug Aduhelm, and an ODAC meeting on six such approvals that could potentially be pulled from the market — two of which already have.

“Do you think accelerated approval is under attack? I do,” Rick Pazdur, head of FDA’s Oncology Center of Excellence, said at a Friends of Cancer Research webinar on Thursday.

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