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Life Sciences Investors Choose Quality Over Quantity
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By Brian Gormley, WSJ Pro
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Good day. Healthcare venture investment is down from its pandemic highs, but some signs point up—for the right companies.
U.S. and European healthcare companies nabbed $9.85 billion in the first quarter, putting this year on pace to come in well below the $65.73 billion startups raised in all of 2022, or the record $98.42 billion amassed in 2021, according to Silicon Valley Bank.
Investment is reverting closer to prepandemic levels, but not entirely. Investment in the last quarter was higher than in any quarter before 2020, said Kale Frank, managing director, life science and healthcare for SVB. In years leading up to 2020, quarterly totals typically hovered around $8 billion to $9 billion, he said.
While venture investors have been deploying less capital overall, startups viewed as having the right mix of science, management and market opportunity can still command giant rounds akin to those raised in 2021.
“This is going to be a year of separating the haves from the have-nots,” Frank said.
This week, RNA-focused biotech startup ReNAgade Therapeutics disclosed a $300 million Series A round and cell- and gene-therapy-technology company ElevateBio said it had closed a $401 million Series D financing.
ReNAgade says its technology for delivering RNA molecules around the body could extend the reach of RNA treatments beyond what has been possible before.
ElevateBio, meanwhile, collects revenue by helping drugmakers manufacture and develop cell- and gene therapies and stands to benefit as the industry expands.
“We’re in the earliest days of the cell- and gene-therapy revolution,” Chief Executive David Hallal said.
And now on to the news...
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The boom in venture healthcare investment began with the pandemic.
PHOTO: DIMAS ARDIAN/BLOOMBERG NEWS
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A healthy fundraising pace. Venture capitalists are raising piles of cash to invest in healthcare—even as less of that cash is actually being put to work at startups.
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U.S. healthcare venture investors are standing firm in the belief that innovation in the life sciences, coupled with falling valuations, will in time pay off.
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In the first quarter, these investors secured $6.8 billion, a pace that exceeds that of 2022, when $21.8 billion was raised for the entire year, according to Silicon Valley Bank.
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But even with cash sloshing around in health-focused venture funds, investment in startups is down. Some investors are holding out for bargains, especially in mid- to later-stage companies that previously raised capital at lofty valuations.
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High-Tech Farm Startups Are Laid Low by Financing Drought, Pests
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Startups that promised to make farming a high-tech business are withering, suffering from rising costs, tight financing, pests and other problems that have troubled traditional agriculture for centuries, The Wall Street Journal reports. Investors poured billions of dollars into companies such as AppHarvest and Local Bounti that grow lettuce, tomatoes and other crops in indoor farms that use advanced technology such as sensors and robots to offset weather-related risks, use less water and produce more consistent crops. Shares of the two companies are down more than 95% since they went public in 2021, and in recent months at least four companies in the sector have shut down
or filed for bankruptcy. Funding has all but dried up. The industry raised a record $895 million in last year’s first quarter. So far in the current quarter, the figure is about $10 million, according to data provider AgFunder.
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People
Akido, a healthtech company and medical network, said Judy Carpenter has joined its leadership team as the new head of medical network operations. Carpenter will oversee all operations for Akido’s clinical enterprise.
Sinaptica Therapeutics, a clinical-stage company developing personalized neuromodulation therapeutics to treat Alzheimer’s and neurodegenerative diseases, named Ken Mariash Jr. its chief executive. Mariash has prior experience with healthcare companies such as Boston Scientific, the company said.
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OnKure, a precision-oncology company, said it closed a $54 million Series C financing. The financing will be used to support the development of OnKure’s pipeline of precision medicines, including the advancement of its lead discovery program into clinical trials.
Quanta Therapeutics, a biopharmaceutical company developing targeted therapies to treat RAS-driven cancers, said it raised a $50.7 million Series D financing. The financing will be used to advance Quanta’s pipeline.
Larkspur Biosciences, a biotechnology company building precision immunotherapies, said it launched with $35.5 million in combined seed and Series A financing. Larkspur said its approach targets the unique ways that tumors hijack the immune system.
Artelon, a medical-device company, said it closed on about $20 million in Series B funding. The company said the financing will fund commercial growth, clinical research and expansion of its product line for surgical treatment of ankles and other joints.
Pluton Biosciences, a startup using microbes to create solutions that address sustainability challenges facing agriculture, said it closed a $16.5 million Series A round. The funding will accelerate the development of Pluton’s flagship product, the Microbial Cover Crop, through field trials and towards commercial partnerships, the company said.
PharmEnable, a drug-discovery company focused on chemical novelty, diversity and complexity, said it closed a pre-Series A investment of $7.5 million to develop small-molecule drugs against disease areas of high clinical need. It said the funds will be used to advance and expand PharmEnable’s portfolio of wholly owned and co-discovery projects across oncology and neurology targets, as well as supporting further platform research and development.
Leadoptik, a medical-imaging company, said it has raised $5 million in seed financing. The company said the capital will allow it to move to the next stage of product development, including Food and Drug Administration approval.
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The FTC also wants to find if coordination between companies affected sales more broadly, outside of the Women, Infants and Children formula-supply program.
PHOTO: JOSEPH PREZIOSO/AFP/GETTY IMAGES
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ChatGPT bot flunks gastroenterology exam (Medscape)
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Sought out by science, then forgotten (New York Times)
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Brain waves can tell how much pain someone is in (MIT Technology Review)
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New Alzheimer’s drugs offer subtle benefits—with real risks (Wired)
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