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Collaborations Thrive in Sizzling Biotechnology Sector
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By Brian Gormley, WSJ Pro
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Good day. The coronavirus wasn't the only thing complicating acquisitions of drug and medical-device companies in 2020. Soaring valuations did as well.
An Ernst & Young analysis of biotechnology and medical-technology acquisitions in 2020—which includes private and publicly traded companies—found that deal value fell to $159 billion last year from $306 billion in 2019.
The pandemic slowed acquisitions as companies adjusted to virtual deal-making. Skyrocketing investor interest in health care, partly fueled by the pandemic, also pushed valuations higher and deterred buyers, according to EY. (An analysis of acquisitions of private, venture-backed biotechs by Silicon Valley Bank, described below, found that the number of deals increased in 2020 from the year before.)
Corporations are engaging acquisition targets through partnerships, which enable them to hedge their bets when seeking access to technologies and products. That is especially true in the sizzling biotech market. Through Nov. 30, acquirers signed 261 biotech partnership deals, worth nearly $140 billion in upfront and success-based payments, EY said this week.
While a partnership helps an acquirer build a relationship with a buyout target, it doesn't guarantee that it will later win an acquisition deal. But considering the competition in biotech these days, buyers will seek any advantage they can get.
And now on to the news...
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Bayer announced its deal to buy gene-therapy startup Asklepios BioPharmaceutical in October, one of 19 acquisitions of biotech startups by drug manufacturers last year, according to Silicon Valley Bank.
PHOTO: WOLFGANG RATTAY/REUTERS
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Biotech acquisitions. Acquisitions of biotechnology startups jumped in 2020, as buyers moved upstream to grab promising drugmakers while they were still private and relatively cheap.
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Drug manufacturers bought 19 biotech startups last year, up from 15 in 2019, according to Silicon Valley Bank. Last year’s total was the highest since the 20 buyouts recorded in 2016. The median upfront sum paid in 2020 was $300 million, compared with $250 million the year before.
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Buyers are competing with an exploding initial public offerings market. Eighty-four biotechs went public in 2020, topping the previous peak of 66 in 2014, according to SVB.
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Median biotech IPO pre-money valuations, the value before a company goes public, reached a record, $500 million in 2020. Some acquirers aim to buy biotechs before they become more highly valued, publicly traded companies, SVB Managing Director Jonathan Norris said.
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$300 Million
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The median upfront sum paid for acquisitions of venture-backed biotechnology companies in 2020, according to Silicon Valley Bank
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Define Ventures Collects $200 Million for Digital-Health Deals
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Define Ventures has raised $200 million for its second digital-health fund, more than double the size of its first pool as venture investment in the sector soars. San Francisco-based Define set out around the second quarter of 2020 to raise $150 million for Define Ventures Fund II LP, and has closed the fund above that goal. Define, formed in 2018 by former Kleiner Perkins health-care investor Lynne Chou O’Keefe, closed its debut fund at $87 million in late 2019.
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FTC Reaches Settlement With Flo Health Over Fertility-Tracking App
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The Federal Trade Commission reached a settlement with Flo Health Inc., the developer of a widely used period and fertility-tracking app, over allegations that it improperly shared personal data with Facebook and others, including whether users were ovulating, WSJ reports.
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The data shared by Flo Health often allowed online ads to be targeted to those users, despite Flo Health’s promises that the information would be kept private, The Wall Street Journal found in a 2019 article.
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In a statement, a Flo spokesperson said the company cooperated with the FTC, adding, “We are committed to ensuring that the privacy of our users’ personal health data is absolutely paramount.” The company emphasized that it didn’t share users’ names, addresses or birthdays, and that its agreement with the FTC wasn’t an admission of wrongdoing but allowed it to “avoid the time and expense of litigation and...decisively put this matter behind us.”
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Funds
Enterprise software investor March Capital closed its March Capital Fund III LP at $450 million. Last year, the Santa Monica, Calif.-based firm participated in funding rounds for online fraud detection-software developer Forter Ltd., account takeover prevention technology provider SpyCloud Inc. and workflow automation startup ASAPP Inc.
Canada and U.S. firm Raiven Capital held the initial $25 million close of a $100 million targeted fund to make Series A investments in sectors including cybersecurity, finance, energy, environment, health, medical devices and food.
People
Health-care investor Vivo Capital appointed Hongbo Lu, Jack Bech Nielsen and Michael Chang as managing partners. Ms. Lu was previously managing partner at Lilly Asia Ventures. Before joining Vivo, Mr. Nielsen was a senior partner within the Novo A/S organization, while Mr. Chang was at Johnson & Johnson.
Digital clinical trial platform Medable Inc. named Andrea Valente as chief operating officer. She most recently led the development and launch of Oracle’s public health platform. In November, Palo Alto, Calif.-based Medable secured a $91 million Series C round from Sapphire Ventures, GSR Ventures, PPD Inc. and Streamlined Ventures.
TMRW Life Sciences Inc., a robotic process automation platform for in vitro fertilization, hired Todd Ballard as chief marketing officer. He previously held the same position at GoPro. To date, New York-based TMRW has raised $50 million from investors including 5AM Ventures.
Moon Surgical appointed Jeffery Alvarez as chief operating officer and David Noonan as chief technology officer. Mr. Alvarez and Mr. Noonan previously worked at Auris Health. Formerly known as MastOR, Moon Surgical is backed by Sofinnova Partners and has offices in Paris and San Carlos, Calif.
Precision medicine startup Deepcell Inc. said Marc Montserrat joined the company as chief business officer. He was previously vice president of commercial development at Omniome. Last month, Mountain View, Calif.-based closed a $20 million Series A round from Bow Capital, Andreessen Horowitz, Fifty Years and DCVC.
Exits
Sanofi agreed to acquire antibody therapeutics developer Kymab for an upfront payment of approximately $1.1 billion and up to $350 million upon achievement of certain milestones. U.K.-based Kymab is backed by investors including ORI Healthcare Fund.
AbSci LLC, which provides a protein expression platform for biopharmaceutical discovery and manufacturing, acquired artificial intelligence deep learning company Denovium Inc. for an undisclosed sum. In October, Vancouver, Wash.-based AbSci raised a $65 million Series E round from Casdin Capital, Redmile Group, ArrowMark Partners and Phoenix Venture Partners.
IPO Tracking
Sana Biotechnology Inc., which creates and delivers engineered cells as medicines, filed with the U.S. Securities and Exchange Commission for a proposed initial public offering, according to Dow Jones Newswires. Sana, which last year raised more than $700 million in its initial financing, said it has applied to list its shares on the Nasdaq Global Select Market under the symbol SANA. The Seattle-based company is backed by ARCH Venture Partners, Flagship Pioneering, F-Prime Capital, Bezos Expeditions, GV, Omega Funds and Altitude Life Science Ventures.
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IO Biotech ApS, a Copenhagen-based maker of anti-cancer therapies based on its proprietary T-win technology, scored €127 million ($154 million) in Series B funding led by HBM Healthcare Investments. Additional new investors Vivo Capital, Kurma Partners, Avoro Capital, RA Capital Management, Samsara Biocapital, Idinvest Partners, PFM Health Sciences, Soleus Capital, Eir Ventures and Serrado Capital joined in the round, along with existing backers Novo Seeds, Lundbeckfonden Emerge and Sunstone Life Science Ventures. Priyanka Belawat of HBM Partners, Jack B. Nielsen of Vivo Capital and Vanessa Malier of Kurma Partners will join the
company’s board.
Impulse Dynamics, a Marlton, N.J.-based developer of a heart failure treatment device, closed $60 million in Series D financing from investors including CR-CCT Industry Pilot Fund, Redmile Group and Perceptive Advisors.
Earli, a South San Francisco, Calif.-based startup whose platform technology allows clinicians to locate early cancers, secured $40 million in Series A financing. Khosla Ventures led the round, which included participation from Perceptive Advisors, Casdin Capital, Andreessen Horowitz, Sands Capital and others. Justin Kao, partner at Khosla Ventures, will join the board.
Bryte, a Los Altos, Calif.-based maker of an AI-connected and robotics-powered bed for a better night’s sleep, raised $24 million in Series A funding. ARCHina Capital led the round, with co-founder Amy Huang joining Bryte’s board.
NeuroFlow, a Philadelphia-based startup that measures and manages behavioral health, completed a $20 million Series B round. Magellan Health led the investment, with participation from undisclosed existing investors. NeuroFlow in December 2019 raised a Series A round from Builders VC, Dreamit Ventures, Spring Point Partners, Red & Blue Ventures and AWT Private Investments.
Qualitas Health, a Houston startup developing algae-based nutritional products, picked up a $10 million investment at a $73 million valuation. PeakBridge VC led the round.
Gainful, a San Francisco-based personalized sports nutrition brand, landed $7.5 million in Series A financing. BrandProject and Courtside Ventures co-led the round, which included contributions from AF Ventures, Round13 Capital and Barrel Ventures.
Cardea Bio Inc., a San Diego-based startup integrating molecular biology with semiconductors, added $6.5 million in Series A financing, bringing the round total to $20 million. 3E Bioventures Capital led the new tranche.
BioAesthetics Corp., a Research Triangle Park, N.C.-based developer of regenerative nipple graft technology for breast cancer survivors, closed a $5 million Series A round. FemHealth Ventures along with Sibling Capital Ventures’ Sandra Coufal co-led the investment, and were joined by Joyance Partners, Arizona Technology Investors and others. FemHealth Managing Partner Maneesha Ghiya will join the board.
Paubox, a San Francisco-based provider of email security and compliance for health-care providers, snagged $4 million in Series A financing. Arthur Ventures led the round, with Partner Patrick Meenan joining the company’s board.
Primmune Therapeutics, a San Diego-based startup developing treatments for acute viral diseases and cancer, added $4 million in Series A financing from Bioqube Ventures to close the round with $31.4 million. Debbie Dumont, managing partner at Bioqube, joined the board.
Alula, a New York-based digital platform for cancer patients and caregivers, was seeded with a $2.2 million investment. Andy Dunn led the round, and was joined by Metrodora Ventures, BBG Ventures, Thrive Capital, Village Global and Homebrew.
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Pfizer investment fund makes waves in VC. (Endpoints News)
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Hospitals' rocky rollout of Covid-19 vaccine. (Kaiser Health News)
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Evoq pens $240 million Amgen pact for autoimmune medications. (Fierce Biotech)
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Biden's Covid-19 team reconsiders pandemic plan. (STAT News)
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