Six top biotech VCs take a look at the lat­est trends, and of­fer their thoughts on 2018

This year has been a rel­a­tive gush­er of VC dol­lars flow­ing in­to biotech com­pa­nies, with gi­ant “mega-deals” pro­pelling the in­dus­try’s record-set­ting year. Top VCs in the field say they’re cau­tious­ly op­ti­mistic that the trend will con­tin­ue next year.

The in­dus­try has cruised past its pre­vi­ous VC fund­ing record of $7.3 bil­lion, which was set back in 2015. This year saw biotechs raise $9.3 bil­lion in 471 deals, ac­cord­ing to Pitch­Book, mak­ing it the best year out of the last sev­en when it comes to vol­ume.

Deal count is run­ning a bit low­er than 2016 and 2015, which saw clos­er to 500 deals. But 2017 was a year of mega-deals, with the third quar­ter alone bring­ing in sev­er­al $100 mil­lion+ rounds. Most re­cent­ly there was ADC Ther­a­peu­tics’ $200 mil­lion round backed by As­traZeneca to push for­ward its next-gen an­ti­body-drug con­ju­gate. And ear­li­er in the quar­ter, Jeff Be­zos, Arch and oth­er in­vestors sunk $151 mil­lion in­to Uni­ty Biotech­nol­o­gy, which is look­ing to make new drugs that can se­lec­tive­ly sweep away senes­cent cells that clut­ter our bod­ies as we age.

All this ac­tiv­i­ty comes short­ly af­ter a some­what tur­bu­lent 2016 — a year when po­lit­i­cal and so­cial rhetoric and in­dus­try un­cer­tain­ty weighed on the sec­tor; when drug ap­provals fell sharply; and when biotech com­pa­nies faced a dwin­dling sup­ply of pub­lic mar­ket cap­i­tal to fund R&D.

Con­sid­er­ing the pip­ing hot IPO mar­ket so far this year and the record-set­ting VC fig­ures, it’s fair to say the in­dus­try took the un­cer­tain­ty rather well.

We asked 6 top ven­ture cap­i­tal­ists in biotech what they thought might hap­pen in 2018. Will ven­ture dol­lars go up, down, or stay flat next year? Why? Read their pre­dic­tions be­low:

Pre­dic­tions

Jer­el Davis

Jer­el Davis, man­ag­ing di­rec­tor at Ver­sant Ven­tures:

We ex­pect that 2018 will con­tin­ue to be a very strong ven­ture fund­ing en­vi­ron­ment with a con­tin­u­a­tion of fund­ing across stages, with large rounds, and in­creased com­mit­ments from new funds and cap­i­tal sources that are not the usu­al biotech sus­pects. This like­ly means ven­ture dol­lars will trend up­wards. Watch­ing pub­lic mar­ket ver­sus pri­vate val­u­a­tions through­out the year will be es­pe­cial­ly im­por­tant to en­sure the pri­vate space does not get ahead of it­self.

Wende Hut­ton

Wende Hut­ton, gen­er­al part­ner at Canaan Part­ners:

Ven­ture-backed fund­ing for bio­phar­ma deals in 2018 will be vig­or­ous and like­ly up from the high lev­els in 2017. An ir­re­sistible sup­ply of top-tier sci­ence and re­peat man­age­ment teams are bub­bling up every­where in the start­up ecosys­tem, which cre­ate at­trac­tive new op­por­tu­ni­ties for in­vest­ment. Ad­di­tion­al­ly, an un­par­al­leled lev­el of re­cent­ly-raised bio­phar­ma-fo­cused funds will need to be de­ployed in a ro­bust fash­ion dur­ing the next year. Canaan looks out and sees a great fund­ing en­vi­ron­ment for 2018.

Jay Lichter

Jay Lichter, man­ag­ing di­rec­tor at Aval­on Ven­tures:

I think that in­vest­ing will re­main ro­bust. There is a lot of cap­i­tal in the sys­tem with some big wins/ac­qui­si­tions and sev­er­al IPOs that pro­vid­ed liq­uid­i­ty for VCs and their in­vestors. I ex­pect the mar­kets to re­main “open” and hot while at times chop­py.

Ab­bie Cel­niker

Ab­bie Cel­niker, part­ner at Third Rock Ven­tures:

At Third Rock, we see the trend of healthy in­vest­ing con­tin­u­ing in 2018.  Con­di­tions in the macro en­vi­ron­ment place biotech in a strong po­si­tion for con­tin­ued val­ue cre­ation. In ad­di­tion, we see a tremen­dous amount of nov­el and ex­cit­ing sci­ence dri­ving both com­pa­ny cre­ation and the ad­vance­ment of new ther­a­pies mov­ing to­ward the clin­ic. Phar­ma and large biotech con­tin­ue to turn to small­er biotechs to en­hance their pipelines, and this sup­ports a very healthy ecosys­tem.

Bruce Booth

Bruce Booth, part­ner at At­las Ven­tures:

Bio­phar­ma ven­ture fund­ing in 2018 will like­ly mod­er­ate from the record-set­ting pace of 2017, but be in the ro­bust range of the last few years; in short, ac­cess to cap­i­tal won’t like­ly be a con­straint. Plen­ty of ven­ture and crossover firms have re­loaded with fresh funds, and large un­con­ven­tion­al gen­er­al­ist as­set man­agers re­main keen on in­vest­ing more in­to the promise of biotech, both pri­vate and pub­lic.

Noubar Afeyan

Noubar Afeyan, founder and CEO of Flag­ship Pi­o­neer­ing:

I ex­pect in­vest­ments in­to pri­vate biotech com­pa­nies to in­crease sig­nif­i­cant­ly year over year due to the strong pipeline of prod­uct-plat­form com­pa­nies emerg­ing from in­no­va­tion ef­forts in acad­e­mia, ven­ture firms and oth­er sources. Al­so ex­pect phar­ma de­pen­dence on ex­ter­nal in­no­va­tion as a source of their prod­uct sup­ply to con­tin­ue in­creas­ing as they find new ways of part­ner­ing with firms like Flag­ship to cre­ate long-term sup­ply agree­ments for break­through prod­ucts. Sources of cap­i­tal fo­cus­ing on life sci­ence in­vest­ing are al­so in­creas­ing con­sid­er­ably for late stage and pub­lic in­vest­ment.

 

Ryan Watts, Denali CEO

Bio­gen hands De­nali $1B-plus in cash, $1B-plus in mile­stones to part­ner on late-stage Parkin­son’s drug

Biogen is handing over more than a billion dollars cash to partner with the up-and-coming neurosciences crew at Denali on a new therapy for Parkinson’s. And the big biotech is ready to pile on more than a billion dollars more in milestones — if the alliance is a success.

For Biogen $BIIB, the move on Denali’s small molecule inhibitors of LRRK2 puts them in line to collaborate on a late-stage program for DNL151, which is scheduled to start next year.

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Michel Vounatsos, Biogen CEO (via YouTube)

UP­DAT­ED: Bio­gen scores a pri­or­i­ty re­view for its Alzheimer's drug ad­u­canum­ab, mov­ing one gi­ant leap for­ward in its con­tro­ver­sial quest

Biogen scored a big win at the FDA today as regulators accepted their application for the controversial Alzheimer’s drug aducanumab and gave it a priority review.

The PDUFA date is March 7, 2021.

Significantly, Biogen says it did not use its priority review voucher to win special treatment at the FDA. The agency handed that out gratis.

That’s the ideal scenario Biogen was looking for as disappointed analysts wondered aloud about the delayed application earlier in the year.

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Levi Garraway, Roche CMO (Source: Genentech)

UP­DAT­ED: FDA hands out a quick OK for po­ten­tial SMA block­buster ris­diplam, giv­ing Genen­tech and Roche a chance to chal­lenge ri­vals on the price

US regulators handed Roche and Genentech a big win Friday afternoon, one that has market-shaping potential for its high-priced rivals from Novartis and Biogen.

The FDA has green-lit the companies’ spinal muscular atrophy drug risdiplam, which will be marketed as Evrysdi in the US, for use in patients two months and older. It’s the first SMA drug that can be taken orally, as Biogen’s Spinraza is injected into the spine while Novartis’ Zolgensma is a gene therapy.

Moncef Slaoui, Getty Images

When will it end? Big Phar­ma's top vac­cine ex­pert at OWS of­fers a speedy time­line for a Covid-19 vac­cine — ei­ther be­fore or right af­ter the elec­tion

Moncef Slaoui hasn’t started making plans for his summer vacation next year. But he offers high odds that all Americans will be able to do that in the not too distant future.

In an interview with a pair of sympathetic podcasters at the conservative American Enterprise Institute, Slaoui provides an education to listeners on how any drug or vaccine can be sped through trials. And he leaves the door wide open to the notion that the leading vaccine developers can demonstrate efficacy and safety in a compelling fashion as early as October — or as late as the end of this year.

Yvonne Greenstreet, incoming Alnylam president (Alnylam)

Al­ny­lam pres­i­dent Bar­ry Greene leaves af­ter 17 years, hand­ing po­si­tion over to Yvonne Green­street as biotech looks to­ward prof­itabil­i­ty

After 17 years helping Alnylam steer control of buzzy but unproven science they promised could change medicine, president Barry Greene is leaving the RNAi biotech just as that technology is beginning to hit prime time.

Leaving to “pursue outside interests in the biopharmaceutical industry,” the longtime executive will hand over the reins on October 1 to current COO Yvonne Greenstreet. Greenstreet, a former Pfizer and GlaxoSmithKline executive, inherits the high-profile spot at a company that’s proven its tech can work in rare diseases but now faces the daunting task of turning a couple successes and a new mountain of cash into drugs that are broadly applicable and, crucially, profitable.

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Covid-19 roundup: Gates Foun­da­tion pours $150M in­to In­dia’s Serum In­sti­tute; Pfiz­er teams with Gilead on remde­sivir

By CEO and scion Adar Poonawalla’s estimation, the Serum Institute in India has already poured hundreds of millions of dollars into scaling up the unproven Covid-19 vaccine being developed by AstraZeneca and Oxford for use in low and middle income countries. It’s meant taking on a risk that other companies, including AstraZeneca, have mitigated with huge amounts of government funding.

Now, for the first time, Poonawalla is getting some outside help. The Gates Foundation has agreed to pay the institute $150 million to supply 100 million vaccines to India and other emerging economies next year, Reuters reported. That includes both the vaccine being developed by AstraZeneca and the one being developed by Novavax. Those vaccines will be available in 92 countries and be priced at $3 per dose.

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UP­DAT­ED: No­vavax her­alds the lat­est pos­i­tive snap­shot of ear­ly-stage Covid-19 vac­cine — so why did its stock briefly crater?

High-flying Novavax $NVAX became the latest of the Covid-19 vaccine players to stake out a positive set of biomarker data from its early-stage look at its vaccine in humans.

Their adjuvanted Covid-19 vaccine was “well-tolerated and elicited robust antibody responses numerically superior to that seen in human convalescent sera,” the company noted. According to the biotech:

All subjects developed anti-spike IgG antibodies after a single dose of vaccine, many of them also developing wild-type virus neutralizing antibody responses, and after Dose 2, 100% of participants developed wild-type virus neutralizing antibody responses. Both anti-spike IgG and viral neutralization responses compared favorably to responses from patients with clinically significant COVID‑19 disease. Importantly, the IgG antibody response was highly correlated with neutralization titers, demonstrating that a significant proportion of antibodies were functional.

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Bio­haven adds near­ly $1B in Nurtec deals with Roy­al­ty Phar­ma, Sixth Street

Biohaven just added nearly $1 billion to their balance sheet.

On Friday morning, the neuroscience biotech announced a pair of creative agreements with Royalty Pharma and the investment firm Sixth Street to bolster the commercial launch of their new migraine drug, Nurtec. Biohaven will sell a sliver of its royalties on Nurtec and 3% of the royalties on their experimental migraine drug zavegepant to Royalty Pharma as part of a larger agreeement that will pay $450 million. At the same time, the company announced they took out a $500 million loan from Sixth Street.

Ab­b­Vie set­tles in­sur­ance fraud suit, agrees to tweak nurse am­bas­sador pro­gram; CStone aims for NSCLC OK with pos­i­tive PhI­II da­ta

AbbVie has resolved a California lawsuit alleging insurance fraud in the promotion of its cash cow Humira, paying $24 million to settle things with the state’s insurance regulator.

The settlement comes almost four years after a whistleblower first reported AbbVie’s practice of deploying registered nurses to visit patients at home or call them by phone to ensure that Humira prescriptions are filled. AbbVie was also charged with providing illegal kickbacks to doctors in an attempt to encourage them to prescribe Humira for a range of anti-inflammatory diseases.