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.

 

Martin Shkreli [via Getty]

Pris­on­er #87850-053 does not get to add drug de­vel­op­er to his list of cred­its

Just days after Retrophin shed its last ties to founder Martin Shkreli, the biotech is reporting that the lead drug he co-invented flopped in a pivotal trial. Fosmetpantotenate flunked both the primary and key secondary endpoints in a placebo-controlled trial for a rare disease called pantothenate kinase-associated neurodegeneration, or PKAN.

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We­bi­nar: Re­al World End­points — the brave new world com­ing in build­ing fran­chise ther­a­pies

Several biopharma companies have been working on expanding drug labels through the use of real world endpoints, combing through the data to find evidence of a drug’s efficacy for particular indications. But we’ve just begun. Real World Evidence is becoming an important part of every clinical development plan, in the soup-through-nuts approach used in building franchises.

I’ve recruited a panel of 3 top experts in the field — the first in a series of premium webinars — to look at the practical realities governing what can be done today, and where this is headed over the next few years, at the prodding of the FDA.

ZHEN SU — Merck Serono’s Senior Vice President and Global Head of Oncology
ELLIOTT LEVY — Amgen’s Senior Vice President of Global Development
CHRIS BOSHOFF — Pfizer Oncology’s Chief Development Officer

A premium subscription to Endpoints News is required to attend this webinar. Please upgrade to either an Insider or Enterprise plan for access. Already have Endpoints Premium? Please sign-in below. You can contact our Subscriptions team at help@endpointsnews.com with any issues.

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Brian Kaspar. AveXis via Twitter

AveX­is sci­en­tif­ic founder fires back at No­var­tis CEO Vas Narasimhan, 'cat­e­gor­i­cal­ly de­nies any wrong­do­ing'

Brian Kaspar’s head was among the first to roll at Novartis after company execs became aware of the fact that manipulated data had been included in its application for Zolgensma, now the world’s most expensive therapy.

But in his first public response, the scientific founder at AveXis — acquired by Novartis for $8.7 billion — is firing back. And he says that not only was he not involved in any wrongdoing, he’s ready to defend his name as needed.

I reached out to Brian Kaspar after Novartis put out word that he and his brother Allen had been axed in mid-May, two months after the company became aware of the allegations related to manipulated data. His response came back through his attorneys.

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Hal Barron. GSK

GSK's Hal Bar­ron her­alds their sec­ond pos­i­tive piv­otal for cru­cial an­ti-BC­MA ther­a­py, point­ing to a push for quick OKs in a crowd­ed field

Hal Barron has his second positive round of Phase III data in hand for his anti-BCMA antibody drug conjugate belantamab mafodotin (GSK2857916). And GSK’s research chief says the data paves the way for their drive in search of an FDA approval for treating multiple myeloma.

It’s hard to overestimate the importance of this drug for GSK, a cornerstone of Barron’s campaign to make a dramatic impact on the oncology market and provide some long-lost excitement for the pharma giant’s pipeline. They’re putting this BCMA program at the front of that charge — looking to lead a host of rivals all aimed at the same target.

We don’t know what the data are yet, but DREAMM-2 falls on the heels of a promising set of data delivered 5 months ago for DREAMM-1. There investigators noted that complete responses among treatment-resistant patients rose to 15% in the extra year’s worth of data to look over, with a median progression-free survival rate of 12 months, up from 7.9 months reported earlier. The median duration of response was 14.3 months.

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UP­DAT­ED: An em­bold­ened As­traZeneca splurges $95M on a pri­or­i­ty re­view vouch­er. Where do they need the FDA to hus­tle up?

AstraZeneca is in a hurry.

We learned this morning that the pharma giant — not known as a big spender, until recently — forked over $95 million to get its hands on a priority review voucher from Sobi, otherwise known as Swedish Orphan Biovitrum.

That marks another step down on price for a PRV, which allows the holder to slash 4 months off of any FDA review time.

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Bob Smith, Pfizer

Pfiz­er is mak­ing a $500M state­ment to­day: Here’s how you be­come a lead play­er in the boom­ing gene ther­a­py sec­tor

Three years ago, Pfizer anted up $150 million in cash to buy Bamboo Therapeutics in Chapel Hill, NC as it cautiously stuck a toe in the small gene therapy pool of research and development.

Company execs followed up a year later with a $100 million expansion of the manufacturing operations they picked up in that deal for the UNC spinout, which came with $495 million in milestones.

And now they’re really going for it.

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Video: Putting the AI in R&D — with Badhri Srini­vasan, Tony Wood, Rosana Kapeller, Hugo Ceule­mans, Saurabh Sa­ha and Shoibal Dat­ta

During BIO this year, I had a chance to moderate a panel among some of the top tech experts in biopharma on their real-world use of artificial intelligence in R&D. There’s been a lot said about the potential of AI, but I wanted to explore more about what some of the larger players are actually doing with this technology today, and how they see it advancing in the future. It was a fascinating exchange, which you can see here. The transcript has been edited for brevity and clarity. — John Carroll

As­traZeneca’s Imfinzi/treme com­bo strikes out — again — in lung can­cer. Is it time for last rites?

AstraZeneca bet big on the future of their PD-L1 Imfinzi combined with the experimental CTLA-4 drug tremelimumab. But once again it’s gone down to defeat in a major Phase III study — while adding damage to the theory involving targeting cancer with a high tumor mutational burden.

Early Wednesday the pharma giant announced that their NEPTUNE study had failed, with the combination unable to beat standard chemo at overall survival in high TMB cases of advanced non-small cell lung cancer. We won’t get hard data until later in the year, but the drumbeat of failures will call into question what — if any — future this combination can have left.

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Why would Am­gen want to buy Alex­ion? An­a­lysts call hot­ly ru­mored takeover un­like­ly, but seize the mo­ment

A rumor that Amgen is closing in on buyout deal for Alexion has sparked a guessing game on just what kind of M&A strategy Amgen is pursuing and how much Alexion is worth.

Mizuho analyst Salim Syed first lent credence to the report out of the Spanish news outlet Intereconomía, which said Amgen is bidding as much as $200 per share. While the source may be questionable, “the concept of this happening doesn’t sound too crazy to me,” he wrote.