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Steps Aim to Revive Antibiotics Industry, Spur Venture Investment
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By Brian Gormley, WSJ Pro
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Good day. The Centers for Disease Control and Prevention recently detailed actions the federal government will take over the next five years to battle drug-resistant bacterial infections. The plan has its merits, but more comprehensive changes will be needed to revive the struggling antibiotics industry, says biotechnology venture capitalist Patrick Heron.
Antibiotic-resistant bacteria kill more than 35,000 American a year, according to the CDC, whose action plan lays out measures to prevent bacterial infections and encourage the development of new antibiotics. Venture capitalists and other investors have shunned antibiotics companies in recent years because these medicines are poorly reimbursed compared with many other drugs.
The CDC’s plan, for example, calls for agencies such as the Biomedical Advanced Research and Development Authority—which aims to protect the U.S. from infectious diseases and chemical, biological, radiological and nuclear threats—to acquire antibiotics to ensure national security and provide revenue to antibiotics companies.
More fundamental changes to how antibiotics are reimbursed will be needed to spur more venture investment in antibiotics, according to Mr. Heron, a managing partner with Frazier Healthcare Partners. Congress, for example, could take action on two bills, the Pasteur and Disarm Acts, designed to make antibiotics a more financially attractive market, he said.
And now on to the news...
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The Merck Global Health Innovation Fund has made seven new investments and seven follow-on deals this year. PHOTO: MEL EVANS/ASSOCIATED PRESS
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Merck’s digital-health venture investments. Merck & Co.’s digital-health venture-capital arm is picking up the pace of its investments and widening its scope even as pandemic restrictions have forced it to rethink its operations.
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Merck Global Health Innovation Fund has quietly emerged as a prominent digital-health investor over its 10-year history, backing more than 50 companies and exiting more than 20 through acquisitions or initial public offerings.
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The investment group says it has grown more efficient as video calls have replaced in-person meetings, which has helped process investment opportunities more quickly. The team, which mostly invests in growth-stage companies, has begun backing some earlier-stage companies with technologies that could disrupt the pharmaceutical industry.
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As venture capital floods into digital health this year, the team is seeing valuations rise quickly. That benefits its existing holdings but complicates decisions about new investments.
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Eli Lilly Signs Contract to Supply Potential Covid-19 Treatment
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Drugmaker Eli Lilly & Co. agreed to provide 300,000 doses of its experimental Covid-19 antibody drug to the federal government for $375 million, if the medicine is authorized for emergency use in the U.S., The Wall Street Journal reports. The U.S. Department of Health and Human Services said the federal government will allocate the doses to state and territorial health departments, which will, in turn, determine which hospitals and health facilities get the drug.
The deal is the latest by the federal government to lock up supplies of promising coronavirus vaccines and treatments. Earlier this year, Regeneron Pharmaceuticals Inc. said it received $450 million to manufacture and supply 300,000 doses of its experimental antibody-based drug for Covid-19.
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Brain Implants Hold Promise for Immobilized Patients
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Synchron co-founder and Chief Technical Officer Nicholas Opie with the company’s Stentrode brain-sensing device. PHOTO: SYNCHRON
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Companies and academic labs around the world are racing to build next-generation devices and artificial intelligence that can monitor and decode brain activity, Daniela Hernandez and Mike Cherney write in The Wall Street Journal. With as many as 500,000 people a year world-wide suffering spinal-cord injuries and strokes becoming more common among younger patients because of Covid-19, the need is huge, neuroscientists said.
Success in developing technology that allows immobilized people to handle daily tasks requiring movement hinges on better understanding normal brain function and being able to build durable, accurate and safe devices that work outside research settings. Companies including Silicon Valley startup Synchron Inc. are working on technology to access the brain while limiting the potential for damage.
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Funds
NaviMed Capital, a Washington, D.C.-based private-equity firm focused on health-care deals, has collected at least $165.8 million for NaviMed Partners II, L.P., according to a regulatory filing. Moelis & Co. is placing the fund, according to the filing. NaviMed typically makes equity investments of $5 million to $30 million in companies with $10 million to $100 million of revenue and up to $10 million of earnings before interest, tax, depreciation and amortization, according to the firm’s website.
Robust AI Inc., a startup developing an artificial intelligence system intended to allow robots to work autonomously in open-ended environments, raised $15 million in venture-capital funding, bringing its total raised to $22.5 million.
People
GentiBio Inc., a Boston-based biotherapeutics company developing engineered regulatory T cells programmed to treat autoimmune, alloimmune, autoinflammatory, and allergic diseases, named Catherine Thut as its chief business officer and Thomas Wickham as its chief scientific officer. Thut will lead the company's corporate development, strategy and financing, and Wickham will drive its research and development activities. GentiBio in August raised a $20 million seed round led by OrbiMed Advisors, Novartis Venture Fund and RA Capital Management.
Exits
The initial public offering of Root Inc., parent of Root Insurance Co., is a big win for its venture backers, especially Midwest-focused Drive Capital and fintech venture firm Ribbit Capital, WSJ Pro's Yuliya Chernova reports. Columbus, Ohio-based Root, which sells auto and renters insurance primarily through its mobile app, started in the offices of Drive Capital in 2015. On Wednesday, Root went public at an initial price of $27 a share and a market capitalization of $6.75 billion. The stock ended the day flat. Drive Capital, a Columbus-based venture firm founded in 2012 by former Sequoia Capital partners Mark Kvamme and Chris Olsen, held a 26.1% stake
in Root pre-IPO and had more than 54 million shares, according to Root’s regulatory filings. Based on Root’s IPO price, that stake is now worth $1.46 billion. Drive invested a total $67 million in the company.
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Highland Capital Management and Coatue Management led a $310 million growth investment in molecular research and drug development company Caris Life Sciences Inc., of Irving, Texas. Other investors included Sixth Street Partners, which also provided $75 million in fresh debt, building on an earlier $150 million in structured debt financing.
Insitro, a San Francisco-based machine-learning-driven drug discovery and development company, has entered into a five-year discovery collaboration with Bristol Myers Squibb focused on the discovery and development of novel therapies for the treatment of amyotrophic lateral sclerosis and frontotemporal dementia. Insitro is to receive $50 million in upfront cash with a total potential deal value of over $2.1 billion.
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Gilead Sciences said it expects lower product sales for the year, reflecting the progression of the pandemic. PHOTO: MIKE BLAKE/REUTERS
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