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Health-Care VCs Push Back on Trump Drug-Pricing Measure; Soaring Biotech Stocks; Teladoc Nabs Livongo
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By Brian Gormley, WSJ Pro
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Good day. Biomedical investor Longwood Fund will have extra firepower for launching startups with treatments for cystic fibrosis, thanks to a new collaboration with the Cystic Fibrosis Foundation.
Boston-based Longwood and the foundation have agreed to work together to evaluate science that could lead to new companies that can develop therapies for cystic fibrosis, a genetic disease that causes persistent lung infections and hinders breathing over time. The foundation, which is a limited partner in Longwood’s new, $170 million fund, has separately committed $20 million to the new incubator program focused on building new companies.
Longwood can tap into the foundation’s expertise when evaluating the potential of a technology to be applied to cystic fibrosis, said General Partner David Steinberg. For the foundation, the incubator adds to its existing efforts to provide funding to startups and scientists researching the disease, a spokeswoman said.
The fund investment and incubator collaboration grew out of a meeting of life sciences industry experts that Longwood convened in October, where he and William Skach, the foundation’s chief scientific officer, first discussed ideas for collaborating, Mr. Steinberg said. Now the goal is to start at least one company that wouldn’t have existed, or wouldn’t have focused on cystic fibrosis, if not for this collaboration, he said.
And now on to the news...
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The U.S. Department of Health and Human Services has estimated that spending for drugs under Medicare Part B is 1.8 times higher than prices paid for these medicines in other developed countries. PHOTO: CAROLINE BREHMAN/ZUMA PRESS
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Drug pricing battle. Some venture capitalists say a drug-pricing measure President Trump has ordered will thwart investment in biotechnology at a time when startups are pursuing innovative treatments for Covid-19 and other diseases, WSJ Pro’s Brian Gormley reports.
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President Trump on July 24 issued executive orders to lower prescription drug costs, including one that would peg prices for drugs under Medicare Part B, which covers medicines administered in doctor offices, to lower prices paid in other countries.
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Mr. Trump said the order would go into effect on Aug. 24 unless the administration can reach an agreement with pharmaceutical companies on lowering medication costs. Some venture capitalists say this measure would amount to price controls that could dampen investors’ incentive to bet on high-risk biotech startups.
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Biotech entrepreneurs say there are other ways besides lowering drug prices to control health-care spending, including increasing the focus on disease prevention and increasing efficiency in the medical system.
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$18.5 Billion
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The amount Teladoc Health Inc. has agreed to pay to buy digital-health company Livongo Health Inc.
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Livongo snapped up. Teladoc Health Inc. a provider of virtual-care services, has agreed to buy digital-health company Livongo Health Inc. in a deal worth an estimated $18.5 billion, The Wall Street Journal's Chris Wack reports.
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Livongo, which has developed technology to monitor and manage chronic conditions such as diabetes, went public in 2019 after raising venture capital from 7Wire Ventures and several other investors.
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The combined the business on a pro forma basis would have $1.3 billion in revenue and more than $120 million in adjusted earnings before interest, taxes and amortization for 2020, the companies said.
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Biotech stocks. Few stocks have captured investors’ affections lately like biotech companies chasing coronavirus advances, The Wall Street Journal's Gregory Zuckerman and Michael Wursthorn report. Stocks such as Moderna Inc. and Novavax Inc. have soared, but so too have tiny ones a long way from an approved U.S. vaccine or treatment, including CytoDyn Inc., Equillium Inc., all of which are up between 214% and 915% this year, thanks in large part to the fervor of individual investors. Their passion stems from the promise of medical advances that can send shares surging. Small biotechs constantly need financing, so executives tend to be
more comfortable promoting themselves, efforts that also can hook investors.
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“People tend to fall in love with biotech companies,” says health-care investor Brad Loncar at Loncar Investments. “There’s an emotional aspect given that it is medical-related and then, because the stocks are so volatile, like a casino, it adds fuel to the fire on both sides.”
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Royalty deal. Drug developer Athenex Inc. has inked a $50 million deal with a unit of asset-management firm Sagard Holdings to help commercialize an oral chemotherapy drug aimed at treating metastatic breast cancer, WSJ Pro’s Laura Kreutzer reports. The Buffalo, N.Y.-based pharmaceutical company said Toronto-based Sagard’s health-care royalty investment unit agreed to a revenue interest financing deal for its Oral Paclitaxel breast cancer drug that would temporarily give Sagard a share of royalties once the Food and Drug Administration approves the therapy for U.S. patients. The unit, Sagard Healthcare Royalty Partners, will provide the capital when the FDA approves Oral
Paclitaxel.
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Sagard Healthcare is financing the Athenex deal out of its debut drug royalty fund, which recently held a second closing that took it past the $560 million mark. The Athenex transaction is the second deal Sagard Healthcare has backed out of the fund.
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Funds
Blackbird Ventures raised 500 million Australian dollars ($359 million) for its fourth fund to invest in Australian and New Zealand startups. Local and international investors in the fund included Future Fund, Australian Super, Hesta, institutional clients of Cambridge Associates, First State Super, Telstra Super, Cendana Capital, Greenspring Associates and Pavilion Capital. Blackbird has offices in Sydney, Melbourne and Auckland. The firm secured 260 million Australian dollars for its third fund in 2018.
American Family Ventures raised a $212.8 million third fund, according to a regulatory filing. The firm earlier this year participated in funding rounds for smart home device maker Wyze Labs Inc. and car insurance startup Clearcover Inc. American Family Ventures has offices in Madison, Wis., Boston and New York.
People
Ribometrix, a Durham, N.C.-based startup developing small-molecule therapeutics that directly target RNA to treat human diseases, appointed Barclay “Buck” Phillips as chief operating officer and chief financial officer. He was most recently CFO and senior vice president of corporate development at G1 Therapeutics. In September 2019, Ribometrix raised a $7.8 million funding round from existing investors Dementia Discovery Fund and Illumina Ventures.
Exits
Indian digital-learning products maker BYJU’s acquired WhiteHat Jr., a coding platform for kids. BYJU’s is backed by investors including Owl Ventures, Prosus Ventures and Innoven Capital. WhiteHat also counts Owl Ventures among its backers, as well as Nexus Venture Partners.
Harness Inc., a San Francisco-based automated software delivery provider, acquired open-source project Drone.io for an undisclosed amount. In April 2019, Harness raised a $60 million Series B round from Institutional Venture Partners, GV, BIG Labs, Menlo Ventures and Unusual Ventures.
TouchBistro Inc., a Toronto-based developer of an iPad restaurant operating system, purchased TableUp, a provider of loyalty and marketing services for the restaurant industry. Terms weren’t disclosed. In September 2019, TouchBistro raised 158 Canadian dollars in Series E funding from Omers Growth Equity, Omers Ventures, RBC Ventures, BMO Capital Partners, Kensington Capital Partners and others. TableUp, of Boston, was backed by Allied Minds.
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ChargePoint Inc., a Campbell, Calif.-based provider of charging ports for electric vehicles, scored $127 million in new funding from previous investors including Chevron Technology Ventures, American Electric Power, Clearvision, Braemar Energy Ventures, Canada Pension Plan Investment Board, GIC, Linse Capital and Quantum Energy Partners.
Taysha Gene Therapies, a Dallas-based startup developing gene therapy programs, closed a $95 million Series B round of funding led by Fidelity Management & Research Co. New investors including GV, Franklin Templeton, Sands Capital, ArrowMark Partners and Venrock Healthcare Capital Partners also participated in the financing, and were joined by existing backers PBM Capital and Nolan Capital.
Kinnate Biopharma Inc., a San Diego-based precision oncology company focused on the discovery and development of novel kinase inhibitors, sold $88 million in equity, according to a regulatory filing. In December, the company raised a $74.5 million Series B round from OrbiMed, Nextech Invest, Vida Ventures, Foresite Capital and Eshelman Ventures.
Sight Diagnostics, a Tel Aviv-based blood testing startup, raised $71 million in Series D funding from investors including Koch Disruptive Technologies, Longliv Ventures and OurCrowd.
Ginger, a San Francisco-based on-demand behavioral health provider, raised a $50 million Series D round. Advance Venture Partners and Bessemer Venture Partners led the investment, which included participation from Cigna Ventures and Kaiser Permanente Ventures. Advance’s David ibnAle and Bessemer’s Steve Kraus joined the board.
CloudPay, a payroll services startup, fetched $35 million in growth capital. New investor Runway Growth Capital joined existing investors Rho Ventures and Pinnacle Investment Partners in the round.
Matterhorn Biosciences AG, a Swiss anti-tumor startup, launched with a $30 million investment from Versant Ventures.
PandaDoc Inc., a document automation software provider with offices in San Francisco, St. Petersburg, Fla. and Belarus, added $30 million in new funding. One Peak led the round, with support from M12, Savano Capital Partners, Rembrandt Venture Partners and EBRD Venture Capital Investment Programme. David Sipes, formerly chief operating officer at RingCentral, will join the board.
GentiBio Inc., a developer of engineered regulatory T cells to treat autoimmune, alloimmune, autoinflammatory and allergic diseases, secured $20 million in seed funding led by OrbiMed, Novartis Venture Fund and RA Capital Management. GentiBio also entered into exclusive licensing partnerships with Seattle Children's Research Institute, Benaroya Research Institute at Virginia Mason and MIGAL Galilee Research Institute to advance the company's immune tolerance platform.
Infermedica Inc., a Poland-based preliminary diagnosis and patient triage startup, collected $10.3 million in Series A financing. European Bank for Reconstruction and Development and Heal Capital led the round, which included contributions from Karma Ventures, Inovo Venture Partners and Dreamit Ventures.
ARC Therapeutics, a Research Triangle Park, N.C.-based startup developing small molecule inhibitors of cyclin-dependent kinases for the treatment of advanced and resistant cancers, launched with a $6 million round of funding led by Eshelman Ventures. With this financing, ARC has entered an exclusive license agreement with G1 Therapeutics for its preclinical CDK2 inhibitor program.
Gero, a Singapore-based developer of drugs for aging and other complicated disorders, landed $2.2 million in Series A funding. Bulba Ventures led the round, with co-founder Yury Melnichek joining Gero’s board.
Stix, a Philadelphia-based provider of pregnancy and ovulation tests, was seeded with a $1.3 million investment from inventors including BDMI, Rogue Women’s Fund, Vamos Ventures and Johnson & Johnson Innovation.
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Huntington Beach, Calif., on July 19. Getting California residents to comply with mask rules has been a challenge. PHOTO: APU GOMES/AGENCE FRANCE-PRESS/GETTY IMAGES
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California is trying to control its coronavirus outbreak without going into a second lockdown. It isn’t going smoothly. (WSJ)
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New details are emerging about how much drugmakers are charging for coronavirus vaccines, with prices spanning from several dollars a dose to more than $70 for a regimen. (WSJ)
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Novavax Inc. said Tuesday its experimental coronavirus vaccine induced promising immune responses and was generally well-tolerated in healthy adults in the first human study of the shot. (WSJ)
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Researchers and companies developing Covid-19 vaccines are taking new steps to tackle a longtime challenge: Those who need the vaccines most urgently, including Black and Latino people, are least likely to participate in clinical trials to determine whether they work safely. (WSJ)
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Pharmaceutical companies that are racing to develop vaccines for the coronavirus are already working behind the scenes to build the supply chains needed to deliver their drugs to billions of people as rapidly as possible. (WSJ)
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Is telemedicine here to stay? (New York Times)
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Goldman economist gives late-stage vaccines a good shot at targeting 'large shares' of U.S. by mid-2021. (Endpoints News)
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Fighting Covid-19 by luring the virus away from human cells with a decoy target. (Fierce Biotech)
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