Investor Article

Drug & Device Development Funding Flows

As we head toward June and toward the mid-point of 2019, TrialSite News was requested by a few readers for a monthly investor (VC, PEG, Institutional) roundup in and around clinical research.  We provide just a sample of many financial transactions that have occurred over the past couple months.  What follows are just a sampling of recent transactions.

Bumper Day for British Biotech Investments & Start-Ups Get Cash Haul

The UK medical science tech investment sizzles as LifeArc cashes in on investments taking home about $1.3 billion for its Keytruda (Merck) royalty interest. Some of this billion will be allocated to early-stage life science ventures in the UK.  LifeArc also had royalty rights to other drugs it helped develop including Biogen’s Tysabri (multiple sclerosis), Roche’s Acterms (RA) and Takeda’s Entyvio (GI therapy).

Two UK start-ups secured funding, including Quell Therapeutics, a new cell therapy venture that raised £35 million, and Storm Therapeutics, focusing on modulating RNA modifying enzymes, raised an additional £14 million, raising its total to £30 million. May 20, 2019

Lipe & Dalton Buy More Bristol Myers-Squibb Shares

Lipe & Dalton increased its BMS stock equity position by 11.35% based on its latest Q4 regulatory filing with the SEC. They bought 7,551 shares as the company’s stock rose 2.02% with the market. An institutional investor, they held 74,078 shares of the global pharma at the end of the Calendar year—valued at $3.85 million.  They are bullish on the $76.63 billion market cap company reports CryptocoinsTribune. BMS has declined 19.24% since May 19, 2018 and is down trending. It has underperformed the S&P500. May 19, 2019

Global CRO Syneos Health Receives Interest from Investors

Swiss Zurcher Kantonalbank Zurich Cantonalbank lowered its position in shares of global CRO Syneos Health Inc (NASDAQ: SYNH) by 9.4% during the 1st quarter. It sold 373 shares. Its holdings of Syneos Health equals worth of $187,000. Other Syneos activity reported by the Mayfield Recorder:

  • Enlightenment Research LLC acquired $51,000 worth of new stakes in Syneos during Q4
  • NumerixS investment Technologies Inc. acquired $57,000 worth of new stock
  • Bessemer Group Inc. acquired $59,000 worth of new stock
  • Oppenheimer Asset Management Inc. acquired $66,000 worth of new stock
  • Private Capital Group LLC grew its position in Syneos by 79.7% during Q4.

The CRO market has consolidated and Syneos Health is the third largest by revenue. Much clinical operational work is outsourced by biopharma in this era, hence the CRO growth. They face considerable growth challenges and ultimately represent services companies. They must diversify into technology (which they are); information access (e.g. Quintiles and IMS merger now equals IQVIA) and even value-added areas including participating in IP development.

Syneos currently commands a market valuation of $4.3 billion with a share price of $41.43  (52 week high/low $56.34 to $36.26), its revenues total $4.45 billion and net income a minuscule $18.83 million. With about $107 million cash it commands considerable business and backlog.  It is the result of a merger between two leading mid-market CROs of InVentiv Health and Inc. Research.  How it really competing against IQVIA? PAREXEL? Lab Corp of America? May 19, 2019

Texas-Based Actuate Therapeutics Inc. Receives $21.7 Million Series B from Kairos Ventures

Fort Worth, Texas-based Actuate Therapeutics, Inc., https://actuatetherapeutics.com/ a clinical stage biopharma has raised $21.7 million in Series B funding from Kairos Ventures (lead) with subordinated positions from DEFTA Partners, Tech Coast Angels and Bios Partners. They will use the proceeds to fund Phase I/2 clinical trial and fund development programs. They are advancing their 1801 clinical trial of 9-ING-41 in adult cancer patients in the US. With the funds they can expand their 1801 to leading investigator sites including:

  • Brown University,  Rhode Island Hospital Providence RI
  • UCSF Helen Diller Family Comprehensive Cancer Center, SF, CA
  • Miami Cancer Institute, Miami, FL
  • Mayo Clinic, Rochester, MN
  • Sanford Research, Sioux Falls, SD

May 16, 2019

Lincoln Park Capital Fund Invests in Trovagene Supporting Extension of Cancer Clinical Trials

Chicago-based Lincoln Park Capital Fund, LLC (Lincoln Park), an existing institutional investor in Trovagene, Inc. (Nasdaq: TROV) has agreed to purchase in a registered direct offering 196,104 shares of common stock for $3.275 per share and pre-funded warrants at a purchase price of $3.275 per pre-funded warrant, representing a premium to the closing sale price on May 10, 2019 on the NASDAQ Capital Market.  In a concurrent private placement, Lincoln Park agreed to purchase warrants of 458,015 shares of common stock.   The warrants sold in the concurrent private placement will be available six months following the date of issuance and expire on the 5.5 year anniversary of the initial exercise date and have an exercise price of $3.15 per share.

Founded in 1999, Trovagene is a clinical-stage oncology therapeutics company focusing on precision cancer medicine approaches to develop drugs that target cell division (mitosis) for the treatment of leukemia, lymphomas and solid tumor cancers. May 13, 2019

Avantor Plans a $3 Billion U.S. IPO

Seeking Alpha reports that Avantor has filed proposed terms for a $3 billion IP and $500 million concurrent private placement.  They develop a wide array of biomedical research products and services worldwide.   Although they have a large footprint via M&A, they are loaded with debt load post-IPO. Private equity firm New Mountain Capital is a major shareholder in the company and manages over $20 billion in assets. May 10, 2019

Stealth Private Equity Invests in Regenerative Medicine-Focused Venture

A Texas private equity firm announced the acquisition of Phoenix based Axoloit Biologix, a biotechnology company focusing on regenerative medicine.  The terms were not disclosed nor was the investor. Axoloti board member Gary Lauterbach accepted the role of interim CEO while Phil Larson existed. The company expects to initiate FDA clinical trials now that it will receive an infusion of capital.  May 8, 2019

Molecular Diagnostic & Tech Venture GenDx Receives Minority Growth Infusion from Ampersand Capital Partners

Founded in 2005 in the Netherlands, GenDx develops and markets a comprehensive line of In Vitro Diagnostic (IVD) tests and services, analysis software and education. A pioneer in the area of Sequencing-Based Typing (SBT) for transplantation offering high resolution HLA typing methods for Sanger and NGS techniques. Ampersand has invested, according to GM David Parker, give their deep experience in transplantation and NGS markets and their “differentiated product and service offering.” May 8, 2019

Alphabet (Google) Invests in Gene Editing Venture Verve Therapeutics

GV, Alphabet Inc.’s venture capital arm, led a $58.5 million investment to launch Verve Therapeutics, a new biotech focused on developing therapies that edit the human genome to treat heart diseases.  With the development of CRISPR gene editing therapies are considered big in potential—they are seen in as a potential disrupter in biotech.  Gene editing clinical trials have started off slow in the U.S. with concerns about safety, and the permanent harmful effects the editing could have on humans persist.  Verve is years away from any commercialization. The Series A round from Google will support pre-clinical animal testing. To date its position is that it will focus on treatments that involve editing adult cells, so the effects of genetic manipulation cannot be passed on to future generations. They seek to target adults at risk of coronary artery disease, the leading cause of death worldwide. May 7, 2019

Dance Biopharm Holdings Receives $20.5M in Private Placement from PEG Syndicate

Dance Biopharm Holdings, Inc., a privately-held clinical state biopharma focused on the development of novel soft mist inhalable formulations of biologics for people living with chronic diseases, announced that they completed a private equity financing round securing approximately $20.5 million in gross proceeds.  At an inflexion point, the cash infusion will help them embark on the pivotal clinical trial path for their flagship soft mist inhaled insulin product as well as advance their pipeline assets toward clinical trials. Investors included a syndicate of institutional and individual accredited investors as well as Koch Industries subsidiary Molex Ventures, LLC. Use of funds include A) fund manufacturing of the insulin and devices for Phase III registration studies B) IND-enabling studies for their Dance 601 asset C) GLP-1 analog D) organizational preparation for the execution of upcoming studies and E) general corporate purposes.

Dance 501, their most advanced candidate, includes a novel, preservative-free formulation of inhaled recombinant insulin delivered via proprietary, smart, handheld soft mist device. SternAegis Ventures via Aegis Capital Corp. acted as the exclusive agent for the offering.  Dance Biopharm began operations in 2010 and founded by John Patton, PhD (founder of Nektar Therapeutics).

April 23, 2019

German ATAI Life Sciences Closes $43 Million

300 million people worldwide suffer from depression, and ATAI Life Sciences AG seeks to do something about it. Founded in 2018 by Christian Angermayer, founder of Alnlylam and partners,  ATAI takes a decentralized and big data platform approach to drug development—leveraging expertise, access to talent, financial resources and technology with the goal to accelerate drug development with a focus on central nervous system related indications (e.g. mental health disorders). The new funds will be used to further expand in the ATAI platform technology, advance pipeline and acquire additional compounds.

The investment round was led by Michael Auerbach’s Subversive Capital. New and existing investors included Apeiron Investment Group, Bail Capital and Efrem Kamen, founder of Pura Vida Investments.

They acquired Perception Neuroscience and is now developing an arketamine therapy for neuropsychiatric diseases. Actually the largest investor in COMPASS Pathways, which is developing psilocybin (magic mushrooms) therapy for treatment-resistant depression, and has received Breakthrough Therapy designation from the FDA. ATAI also develops Innoplexus, which delivers big data and AI solutions to big pharma and biotech companies—they plan on utilizing for their internal drug development. March 27, 2019

New Heritage Capital Invests in Brain Activity Data Venture Rhythmlink

Boston-based New Heritage Capital made an investment in Rhythmlink International, LLC in March 2019.  By collecting neurological data from patients, they measure their brain activity through disposable electrode pads.  New Heritage’s Melissa Barry reports “We are seeing a dramatic increase in brain health monitoring. Valuable clinical insights will be faster and easier to obtain.”

Founded in 2002, Rhythmlink designs, manufactures and distributes medical devices and provides custom packaging, private labeling, custom products and contract manufacturing to its customers. Rhythmlink is recognized as a leader within its field at providing the important physical connection between patients and the diagnostic equipment to record or elicit neurophysiologic biopotentials. March 4, 2019

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