Justin Klein and Kirk Nielsen. (Credit: Jeffrey Graetsch)

Co-found­ed by Ver­sant, NEA in­vestors, new medtech VC firm kicks off in­au­gur­al fund with $225M boun­ty

In an era where medtech doesn’t get the same love that biotech does from the av­er­age in­vestor, two medtech-fo­cused in­vestors from a pair of key­stone ven­ture cap­i­tal firms — Ver­sant Ven­tures and New En­ter­prise As­so­ci­ates (NEA) — are com­ing to­geth­er to bridge the gap in pri­vate mar­ket cap­i­tal for the un­der­served sec­tor.

Launched this year, the VC in­vest­ment firm — called Ven­sana Cap­i­tal — closed its in­au­gur­al fund, Ven­sana Cap­i­tal I, with $225 mil­lion in com­mit­ted cap­i­tal from a cadre of in­sti­tu­tion­al in­vestors, in­clud­ing pub­lic pen­sions, uni­ver­si­ty en­dow­ments, foun­da­tions, lead­ing aca­d­e­m­ic health sys­tems, fam­i­ly of­fices, and fund-of-funds, it said on Wednes­day.

Co-found­ed by Ver­sant’s Kirk Nielsen and NEA’s Justin Klein, Ven­sana’s fo­cus will be on the kalei­do­scope of sub­cat­e­gories that con­sti­tute medtech: med­ical de­vices, di­ag­nos­tics and da­ta sci­ence, drug de­liv­ery, dig­i­tal health, and tech-en­abled ser­vices.

“I think one over­ar­ch­ing theme for many prod­ucts we in­vest in is try­ing to move them from the more ex­pen­sive side of care, to the less ex­pen­sive,” Nielsen not­ed in an in­ter­view with End­points News.

For ex­am­ple, de­vices that can com­mu­ni­cate with physi­cians or oth­er providers to iden­ti­fy pa­tients that are at risk for be­ing ad­mit­ted with heart fail­ure, or COPD. An­oth­er op­por­tu­ni­ty is about ad­dress­ing chron­ic dis­eases, where pa­tients aren’t nec­es­sar­i­ly com­pli­ant or ther­a­pies have side ef­fects that pre­vent adop­tion.

“We like the idea of iden­ti­fy­ing sur­gi­cal strate­gies, neur­al mod­u­la­tion based strate­gies or oth­er medtech-based in­ter­ven­tions that can ef­fec­tive­ly treat the un­der­ly­ing con­di­tion,” he said.

Al­though Ven­sana is an in­de­pen­dent firm, Ver­sant will pro­vide sup­port. Shar­ing deal flow can ex­tend the op­por­tu­ni­ties that emerge at the in­ter­sec­tion of the two strate­gies — such as drug de­liv­ery or di­ag­nos­tics, Nielsen added.

Nielsen, who was once a pro­fes­sion­al hock­ey play­er and has pre­vi­ous­ly worked with Medtron­ic, has been with Ver­sant for over a decade and was in charge of the firm’s medtech prac­tice.

In biotech — where Ver­sant op­er­ates — in­vest­ment is large­ly fo­cused on ear­ly-stage com­pa­ny cre­ation. In medtech, the op­por­tu­ni­ty lies in mid-to-late stage op­por­tu­ni­ties, he said.

“Most medtech com­pa­nies are best po­si­tioned to go pub­lic or be ac­quired in a com­pet­i­tive process for the time when they’ve re­al­ly demon­strat­ed the adop­tion of their prod­ucts by clin­i­cians, sur­geons and hos­pi­tals,” Ven­sana’s oth­er founder, Klein, em­pha­sized. Klein served as a part­ner at NEA for more than 12 years.

“Be­cause of the time­lines, cap­i­tal re­quire­ments as­so­ci­at­ed with nav­i­gat­ing the ear­ly-stage con­cept all the way through to a scal­ing US rev­enue stage busi­ness, it’s of­ten been the case that (…) some of the most com­pelling in­vest­ment rounds of fi­nanc­ing from medtech com­pa­nies have come kind of more mid­stream in that process.”

Ven­sana wants to cap­i­tal­ize on a rel­a­tive­ly healthy macro en­vi­ron­ment for medtech.

“If you look at the ex­it mar­kets in medtech, they’ve been re­al­ly strong, and you’ve got M&A (…) that con­tin­ues to have kind of a sol­id, con­sis­tent pace, you’ve got IPO win­dows that are now open, and (…) mul­ti­ples that are all time highs,” Nielsen said.

Da­ta from Sil­i­con Val­ley Bank (SVB) sug­gest strong per­for­mance of de­vice IPOs should spur con­tin­ued lat­er-stage ven­ture in­vest­ment. Mean­while, in­vest­ments in the first half of 2019 in dig­i­tal health have al­ready eclipsed full-year 2017 in­vest­ments and are on track to hit $10 bil­lion in 2019, the re­port said.

Deals for di­ag­nos­tics and med­ical tools are al­so ex­pect­ed to climb in the sec­ond half of 2019, and R&D tool in­vest­ment is set to surge fol­low­ing the suc­cess­ful IPOs of Adap­tive Biotech­nolo­gies and Per­son­alis, SVB an­a­lysts es­ti­mat­ed.

In the last year, the pub­lic mar­ket has been a suc­cess­ful way for Dx/Tools com­pa­nies to cap­ture val­ue. Ac­cord­ing­ly, we an­tic­i­pate more $B+ IPOs than pri­vate M&A for 2H 2019. We al­so be­lieve tech com­pa­nies will start to ac­quire Dx/Tools com­pa­nies in the AI/ML big da­ta space.

Com­pa­nies in the medtech sec­tor — akin to their coun­ter­parts in phar­ma — need to build out their pipelines. “Yet, there are very few… well cap­i­tal­ized, so­phis­ti­cat­ed medtech in­vestors that are avail­able to sup­port these com­pa­nies. And so we’re try­ing to kind of bridge that gap,” he added.

In the ex­it en­vi­ron­ment, there is a tremen­dous need for new tech­nolo­gies and start­up com­pa­nies. Whether that’s build­ing new prod­uct mar­kets in chron­ic dis­ease, or prod­ucts that are re­al­ly com­pli­men­ta­ry to block­buster fran­chis­es such as those in or­tho­pe­dics, re­con­struc­tive de­vices, or in­ter­ven­tion­al car­di­ol­o­gy.

“These (prod­ucts) can pro­vide val­ue growth dri­vers for some of the large ac­quir­ers in our space,” Klein said. “The ex­it mar­kets to­day have been great, but there’s a rel­a­tive dearth of com­pa­nies and in­no­v­a­tive prod­ucts that have made it to that phase.”

With the $225 mil­lion in their cof­fers, Ven­sana hopes to in­vest in a dozen com­pa­nies, in­ject­ing be­tween $10 to $30 mil­lion in each com­pa­ny, Klein not­ed.

Biotech and Big Phar­ma: A blue­print for a suc­cess­ful part­ner­ship

Strategic partnerships have long been an important contributor to how drugs are discovered and developed. For decades, big pharma companies have been forming alliances with biotech innovators to increase R&D productivity, expand geographical reach and better manage late-stage commercialization costs.

Noël Brown, Managing Director and Head of Biotechnology Investment Banking, and Greg Wiederrecht, Ph.D., Managing Director in the Global Healthcare Investment Banking Group at RBC Capital Markets, are no strangers to the importance of these tie-ups. Noël has over 20 years of investment banking experience in the industry. Before moving to the banking world in 2015, Greg was the Vice President and Head of External Scientific Affairs (ESA) at Merck, where he was responsible for the scientific assessment of strategic partnership opportunities worldwide.

No­var­tis' sec­ond at­tempt to repli­cate a stun­ning can­cer re­sult falls flat

Novartis’ hopes of turning one of the most surprising trial data points of the last decade into a lung cancer drug has taken another setback.

The Swiss pharma announced Monday that its IL-1 inhibitor canakinumab did not significantly extend the lives or slow the disease progression of patients with previously untreated locally advanced or metastatic non-small cell lung cancer when compared to standard of-care alone.

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Robert Califf (Pablo Martinez Monsivais, AP Images, File)

As buzz on Califf FDA nom heats up, in­dus­try and agency in­sid­ers of­fer a strong nod for the ‘per­fect’ choice

For once in this long, dramatic road to finding a new FDA commissioner, there’s been some continuity. Both CNN and Politico reported this weekend that Rob Califf met with President Biden to discuss the permanent commish role, following earlier news broken by the Washington Post that all signs point to Califf.

Although there may be a few Democrats who continue to grandstand about the dangers of COI (Califf has worked for Verily, sits on the board of Centessa Pharmaceuticals, and has other ties to industry research), with the pandemic ongoing and the need for some kind of continuity at FDA mounting, Califf is likely to meet the same fate as when he first won Senate confirmation in 2016, by a vote of 89-4 — Bernie Sanders and 6 others didn’t vote.

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AstraZeneca CEO Pascal Soriot (Raphael Lafargue/Abaca/Sipa USA)

A com­bo of As­traZeneca's Imfinzi and chemo wins where oth­ers have failed in piv­otal bil­iary tract test

Looking to run with the big dogs in the PD-(L)1 class, AstraZeneca’s Imfinzi has a tall hill to climb to compete in an increasingly bustling market. An aggressive combo strategy for the drug has paid off so far, and now AstraZeneca is adding another notch to its belt.

A combo of Imfinzi (durvalumab) and chemotherapy significantly extended the lives of first-line patients with advanced biliary tract cancer over chemo alone, according to topline results from the Phase III TOPAZ-1 study revealed Monday.

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Sean Ianchulev, Eyenovia CEO and CMO

Re­cent court de­ci­sion push­es FDA to re­ject and re­clas­si­fy drug-de­vice com­bo, crush­ing shares

Back in April, the FDA lost a crucial court case in which its broad discretion of regulating medical products that might satisfy the legal definitions of either “drug” and/or “medical device” was sharply curtailed.

In addition to the appeals court ruling that Genus Medical Technologies’ contrast agent barium sulfate (aka Vanilla SilQ) should not be considered a drug, as the FDA had initially ruled, but as a medical device, the agency also was forced to spell out which drugs would transition to devices as a result of the ruling.

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Peter Greenleaf, Aurinia CEO

Af­ter pass­ing on Ac­celeron, Bris­tol My­ers eyes bolt-on ac­qui­si­tion of au­toim­mune spe­cial­ist — re­port

Bristol Myers Squibb is looking to beef up its autoimmune portfolio by scooping up Aurinia Pharmaceuticals, Bloomberg reported.

The recent overtures to Aurinia, relayed by anonymous insiders, came just as Bristol Myers turned down buyout talks with partners at Acceleron — which Merck ultimately struck a deal to acquire for $11.5 billion. Bristol Myers has reportedly decided to cash out on its minority stake, likely bagging $1.3 billion in the process, while keeping the royalty deals on two of Acceleron’s blood disorder drugs.

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So — that pig-to-hu­man trans­plant; Po­ten­tial di­a­betes cure reach­es pa­tient; Ac­cused MIT sci­en­tist lash­es back; 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.

We’re incredibly excited to welcome Beth Bulik, seasoned pharma marketing reporter, to the team. You can find much of her work in our new Marketing channel — and in her weekly newsletter, Endpoints PharmaRx, which will launch in early November. Add it to your subscriptions here.

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NYU surgeon transplants an engineered pig kidney into the outside of a brain-dead patient (Joe Carrotta/NYU Langone Health)

No, sci­en­tists are not any clos­er to pig-to-hu­man trans­plants than they were last week

Steve Holtzman was awoken by a 1 a.m. call from a doctor at Duke University asking if he could put some pigs on a plane and fly them from Ohio to North Carolina that day. A motorcyclist had gotten into a horrific crash, the doctor explained. He believed the pigs’ livers, sutured onto the patient’s skin like an external filter, might be able to tide the young man over until a donor liver became available.

UP­DAT­ED: Agenus calls out FDA for play­ing fa­vorites with Mer­ck, pulls cer­vi­cal can­cer BLA at agen­cy's re­quest

While criticizing the FDA for what may be some favoritism towards Merck, Agenus on Friday officially pulled its accelerated BLA for its anti-PD-1 inhibitor balstilimab as a potential second-line treatment for cervical cancer because of the recent full approval for Merck’s Keytruda in the same indication.

The company said the BLA, which was due for an FDA decision by Dec. 16, was withdrawn “when the window for accelerated approval of balstilimab closed,” thanks to the conversion of Keytruda’s accelerated approval to a full approval four months prior to its PDUFA date.

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