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.

2019 Trin­i­ty Drug In­dex Eval­u­ates Ac­tu­al Com­mer­cial Per­for­mance of Nov­el Drugs Ap­proved in 2016

Fewer Approvals, but Neurology Rivals Oncology and Sees Major Innovations

This report, the fourth in our Trinity Drug Index series, outlines key themes and emerging trends in the industry as we progress towards a new world of targeted and innovative products. It provides a comprehensive evaluation of the performance of novel drugs approved by the FDA in 2016, scoring each on its commercial performance, therapeutic value, and R&D investment (Table 1: Drug ranking – Ratings on a 1-5 scale).

How to cap­i­talise on a lean launch

For start-up biotechnology companies and resource stretched pharmaceutical organisations, launching a novel product can be challenging. Lean teams can make setting a launch strategy and achieving your commercial goals seem like a colossal undertaking, but can these barriers be transformed into opportunities that work to your brand’s advantage?
We spoke to Managing Consultant Frances Hendry to find out how Blue Latitude Health partnered with a fledgling subsidiary of a pharmaceutical organisation to launch an innovative product in a
complex market.
What does the launch environment look like for this product?
FH: We started working on the product at Phase II and now we’re going into Phase III trials. There is a significant unmet need in this disease area, and everyone is excited about the launch. However, the organisation is still evolving and the team is quite small – naturally this causes a little turbulence.

Aymeric Le Chatelier, Ipsen

A $1B-plus drug stum­bles in­to an­oth­er big PhI­II set­back -- this time flunk­ing fu­til­i­ty test -- as FDA hold re­mains in ef­fect for Ipsen

David Meek

At the time Ipsen stepped up last year with more than a billion dollars in cash to buy Clementia and a late-stage program for a rare bone disease that afflicts children, then CEO David Meek was confident that he had put the French biotech on a short path to a mid-2020 launch.

Instead of prepping a launch, though, the company was hit with a hold on the FDA’s concerns that a therapy designed to prevent overgrowth of bone for cases of fibrodysplasia ossificans progressiva might actually stunt children’s growth. So they ordered a halt to any treatments for kids 14 and under. Meek left soon after to run a startup in Boston. And today the Paris-based biotech is grappling with the independent monitoring committee’s decision that their Phase III had failed a futility test.

Endpoints News

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Roche's check­point play­er Tecen­triq flops in an­oth­er blad­der can­cer sub­set

Just weeks after Merck’s star checkpoint inhibitor Keytruda secured FDA approval for a subset of bladder cancer patients, Swiss competitor Roche’s Tecentriq has failed in a pivotal bladder cancer study.

The 809-patient trial — IMvigor010 — tested the PD-L1 drug in patients with muscle-invasive urothelial cancer (MIUC) who had undergone surgery, and were at high risk for recurrence.

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UP­DAT­ED: Eli Lil­ly’s $1.6B can­cer drug failed to spark even the slight­est pos­i­tive gain for pa­tients in its 1st PhI­II

Eli Lilly had high hopes for its pegylated IL-10 drug pegilodecakin when it bought Armo last year for $1.6 billion in cash. But after reporting a few months ago that it had failed a Phase III in pancreatic cancer, without the data, its likely value has plunged. And now we’re getting some exact data that underscore just how little positive effect it had.

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UP­DAT­ED: FDA’s golodirsen CRL: Sarep­ta’s Duchenne drugs are dan­ger­ous to pa­tients, of­fer­ing on­ly a small ben­e­fit. And where's that con­fir­ma­to­ry tri­al?

Back last summer, Sarepta CEO Doug Ingram told Duchenne MD families and investors that the FDA’s shock rejection of their second Duchenne MD drug golodirsen was due to some concerns regulators raised about the risk of infection and the possibility of kidney toxicity. But when pressed to release the letter for all to see, he declined, according to a report from BioPharmaDive, saying that kind of move “might not look like we’re being as respectful as we’d like to be.”

He went on to assure everyone that he hadn’t misrepresented the CRL.

But Ingram’s public remarks didn’t include everything in the letter, which — following the FDA’s surprise about-face and unexplained approval — has now been posted on the FDA’s website and broadly circulated on Twitter early Wednesday.

The CRL raises plenty of fresh questions about why the FDA abruptly decided to reverse itself and hand out an OK for a drug a senior regulator at the FDA believed — 5 months ago, when he wrote the letter — is dangerous to patients. It also puts the spotlight back on Sarepta $SRPT, which failed to launch a confirmatory study of eteplirsen, which was only approved after a heated internal controversy at the FDA. Ellis Unger, director of CDER’s Office of Drug Evaluation I, notes that study could have clarified quite a lot about the benefit and risks associated with their drugs — which can cost as much as a million dollars per patient per year, depending on weight.

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Gilead dusts off a failed Ebo­la drug as coro­n­avirus spreads; Ex­elix­is boasts pos­i­tive Ph I/II da­ta

→ Less than a year ago Gilead’s antiviral remdesivir failed to make the cut as investigators considered a raft of potential drugs that could be used against an Ebola outbreak. But it may gain a new mission with the outbreak of the coronavirus in China, which is popping up now around the world.

Gilead put out a statement saying that they’re now in discussions with health officials in the US and China about testing their NUC against the virus. It’s the latest in a growing lineup of biopharma companies that are marshaling R&D forces to see if they can come up with a vaccine or therapy to blunt the spread of the virus, which has now sickened hundreds, killed at least 17 people and led the Chinese government to start quarantining cities.

Alex Karnal (Deerfield)

Deer­field vaults to the top of cell and gene ther­a­py CD­MO game with $1.1B fa­cil­i­ty at Philadel­phi­a's newest bio­phar­ma hub

Back at the beginning of 2015, Deerfield Management co-led a $10 million Series C for a private gene therapy startup, reshaping the company and bringing in new leaders to pave way for an IPO just a year later.

Fast forward four more years and the startup, AveXis, is now a subsidiary of Novartis marketing the second-ever gene therapy to be approved in the US.

For its part, Deerfield has also grown more comfortable and ambitious about the nascent field. And the investment firm is now putting down its biggest bet yet: a $1.1 billion contract development and manufacturing facility to produce everything one needs for cell and gene therapy — faster and better than how it’s currently done.

Tri­fec­ta of sick­le cell dis­ease ther­a­pies ex­tend life ex­pectan­cy, but are not cost-ef­fec­tive — ICER

Different therapeutic traits brandished by the three approved therapies for sickle cell disease all extend life expectancy, but their impact on quality of life is uncertain and their long-term cost-effectiveness is not up to scratch according to the thresholds considered reasonable by ICER, the non-profit concluded in a draft guidance report on Thursday.

Sickle cell disease (SCD), which encompasses a group of inherited red blood cell disorders that typically afflict those of African ancestry, impacts hemoglobin — and is characterized by episodes of searing pain as well as organ damage.