‘There was a growing weariness’: Rushing against a pandemic clock, Aspen Neuroscience secures $70M Series A
Just before Christmastime, Howard Federoff got a tip from Washington: There was a new virus in China. And this one could be bad.
News report of the virus had not yet appeared. Federoff, a neuroscientist, was briefed because years before, he was vetted as part of a group — he didn’t give a name for the group — to consult for the US government on emerging scientific issues. His day job, though, was CEO of Aspen Neuroscience, a Parkinson’s cell therapy startup that days before had come out of stealth mode and gave word to investors they were hoping to raise $70 million. That, Federoff realized, would be difficult if a pandemic shut down the global economy.
“I started thinking rather early on…There might be something on the horizon that we don’t fully understand,” Federoff told Endpoints News. “We knew that if something did change, it could change rather quickly.”
Operating with insight and knowledge other biotechs lacked access to, Federoff went into overdrive trying to close before Covid-19 hit the US, and he emerged today with $70 million in Series A funding led by OrbiMed. The other investors included Frazier Health Partners, Sam Altman and ARCH Venture Partners, the VC whose leader Robert Nelsen became one of the earliest and most prominent voices calling for change.
”We’ve had long conversations,” Federoff said of him and Nelsen.
With the Series A, Federoff has convinced A-list investors to back one version of a long-sought solution to Parkinson’s. Aspen will use stem cells grown from Parkinson’s patients’ own skin tissue to grow dopamine neurons that can be implanted into the brain and hopefully replace the degenerating neurons. The idea has been around for decades, with the first transplant occurring in the 80s, but it was never scaleable. The technology to produce stem cells on demand didn’t exist.
The company has a rival in BlueRock, which uses donor stem cells and which Bayer acquired in August at a valuation of $1 billion.
Over the winter, though, the investor hunt became less about pitching the science — which Federoff says everyone agreed was promising — than about beating the clock and investors’ rising worries about the economy. He prepared to work fast, turning an early meeting with Frazier at the JP Morgan Healthcare Conference into a pivotal one. As the months passed, he phoned investors multiple times a day to keep funding on track.
“They were already in from the standpoint of the science,” Federoff said. “I could tell that there was a growing weariness about whether all that they had previously considered as part of their own respective portfolios outside of Aspen would all be possible.”
The money he secured will help fund their Phase I trial on Parkinson’s and a second program that uses a form of gene therapy to implant stem cells that have a genetic marker for Parkinson’s edited out. The plan had been to start a trial in 2021, but Federoff knows there are no more guarantees.
“At this time it’s not clear what Covid-19 will do to projections,” he said.