Juno exploits immuno-oncology frenzy to raise huge series A
Cancer immunotherapies are scorchingly hot right now, as Roche’s deals with Inovio and Immatics and the rapturous investor response to ImmunoCellular’s phase I data show – and all that just in the past week.
In this context Juno Therapeutics’ highly successful series A round might be unsurprising – if it weren’t for the fact that, at $120m, it is the second-largest series A ever. The only company to beat Juno by this measure, Clovis Oncology, never completed another round, instead going public the next time it needed cash. Perhaps this provides a precedent for the new company. On the other hand, two of the top 10 series A rounds identified by EP Vantage have ended up with the companies involved going out of business (see table). In any case, Juno will be worth watching.
Juno is the result of a collaboration between the Fred Hutchinson Cancer Research Center, Memorial Sloan-Kettering Cancer Center and Seattle Children’s Research Institute. The company’s technology focuses on reprogramming a patient’s T-cells to recognise cancer cells, marking them for destruction.
Juno intends to use synthetic receptors or augmented natural antigen receptors to create a powerful anti-tumour immune response, thereby halting or reversing cancer progression while reducing the need for surgery, radiation and chemotherapy. This approach has already resulted in tumour regressions in phase I trials, the company says.
Such is the promise of cancer immunotherapy. Thanks to this and the strong management team that is a prerequisite for a successful financing of any kind, Juno has obviously stoked a huge amount of enthusiasm from venture firms including ARCH Venture Partners and the Alaska Permanent Fund, through a partnership managed by Crestline Investors.
Certainly biotech venture financing rounds have been getting bigger in recent years. VCs are seeking to form syndicates able to fund a company long enough for it to provide sufficient clinical proof of its products to attract the attention of a buyer or justify an IPO.
Another factor pushing series A rounds up is, paradoxically, the continuing disappointment of the venture financing climate overall (Slow quarter for venture funding could dim hopes of a pick-up, October 17, 2013). Companies and their backers know that a second VC round may be harder to raise.
Disease focus is key as well; four of the top ten series A rounds, including the top three, have been completed by companies focused on cancer. Clovis raised $146m in mid-2009 and went on to an IPO just over two years later. The company was hoping to be bought, but a recent licensing deal suggests an independent future for now (On a wing and a prayer, Clovis calls the top, September 18, 2013).
The oncology and infectious disease firm Ascletis has tapped emerging markets for its funds; it has a US-based management team but a Chinese workforce, and raised much of its 2011 $100m round from investors based in China. The company has not needed to raise money since.
But a successful first funding round is not a guarantor of success. Verus Pharmaceuticals and Cerimon Pharmaceuticals, which raised $78m and $70m respectively in 2005, have come unstuck. Verus was dissolved in 2008 after selling its Twinjet epinephrine autoinjector to Sciele Pharma for just $29m, and Cerimon has sunk without a trace – nothing has been heard of the drug delivery concern since 2011.
Juno and its venture backers can take comfort from the fact that, if there were two failures, there were four successful exits. As well as Clovis, the painkiller company Zogenix, which recently pulled off a coup in FDA approval of Zohydro ER, and Tesaro, also with a cancer focus, have floated. And Movetis, which licensed products from Janssen Pharmaceutica and Ortho-McNeil Pharmaceutical, was picked up by Shire in late 2010 for a total of $566m.
When the $120m finally begins to run out Juno’s management will no doubt be hoping to have various options to consider, including pursuing an IPO or a buyout. Whether it will be in a position to do so depends on immuno-oncology living up to its promise.
|Largest series A rounds to date|
|Financing date||Company||Investment ($m)||Main focus||Fate of company|
|May 2009||Clovis Oncology||146||Oncology||Floated in November 2011|
|December 2013||Juno Therapeutics||120||Oncology||?|
|April 2011||Ascletis||100||Oncology and infectious disease||No further fundraising|
|November 2007||Zosano Pharma||90||Drug delivery||Two further fundraisings|
|June 2005||Verus Pharmaceuticals||78||Paediatric disease||Dissolved|
|October 2005||Cerimon Pharmaceuticals||70||Drug delivery||Assumed bankrupt/inactive|
|January 2007||Movetis||64||Gastro-intestinal disease||Acquired by Shire in November 2010|
|August 2006||Zogenix||60||Central nervous system||Floated in November 2011|
|September 2013||Intra-Cellular Therapies||60||Central nervous system||One further fundraising|
|May 2010||Tesaro||60||Oncology||Floated in June 2012|