Cleave Biosciences’ impressive $42m series A venture financing round announced today is further evidence that decent early stage money can still be found. It helps of course if the ticket contains two senior executives who have been involved in lucrative trade sale exits in recent times and the deal fits the theme that bigger and stronger investor syndicates are being forged earlier, at the expense of follow-on financings (Vantage Point – VC funding slump in first half points to tougher times ahead, August 17, 2011).
The $42m raised ranks as the ninth biggest series A biotech based investment over the last five years, and second major series A of 2011 following Ultragenyx Pharmaceutical’s $45m financing in June (see table below). Yet set against the background that venture financing money is supposed to be increasingly targeted at later stage companies and products, what is impressive about Cleave’s hefty investment is that the company remains some way off even entering the clinic with a candidate from its protein homeostasis technology.
The table below, extracted from EvaluatePharma’s venture financing data, shows the top ten series A investments over the last five years for biotech or in-house research companies. It therefore excludes the likes of Clovis Oncology, Ascletis and Tesaro who raised large series A investments but are focused on in-licensing products.
|Top 10 biotech based Series A venture financing rounds in last five years|
|1||2007||Zosano Pharma||90||HBM Bioventures; New Enterprise Associates; Nomura Phase4 Ventures; Proquest Investments|
|2||2007||Movetis||64||BIP Investment Partners; Gimv; KBC; Life Science Partners (LSP); Quest Management; Sofinnova Partners; Sofinnova Ventures|
|3||2006||CoGenesys||55||Hunt BioVentures; New Enterprise Associates; OrbiMed Advisors; Red Abbey Venture Partners|
|4||2009||Intellikine||51||Biogen Idec; FinTech Global Capital; Novartis Venture Funds; US Venture Partners|
|5||2009||Virdante Pharmaceuticals||48||Biogen Idec New Ventures; Clarus Ventures; MedImmune Ventures; Osage Partners; Thomas, McNerney & Partners; Venrock Associates|
|6||2011||Ultragenyx Pharmaceutical||45||Fidelity Biosciences; HealthCap; Pappas Ventures; TPG Biotech|
|7||2008||Proteostasis Therapeutics||45||Fidelity Biosciences; Genzyme Ventures; HealthCare Ventures; New Enterprise Associates; Novartis|
|8||2010||Incline Therapeutics||43||5AM Ventures; Adams Capital Management; Emergent Medical Partners; Frazier Healthcare Ventures; Saints Capital; Technology Partners|
|9||2011||Cleave Biosciences||42||U.S. Venture Partners, 5AM Ventures, Clarus Ventures, OrbiMed Advisors and Astellas Venture Management|
|10||2007||Tragara Pharmaceuticals||40||Domain Associates; Mitsubishi International Corporation; Morgenthaler Ventures; Oxford Bioscience Partners; Proquest Investments|
Cleave is being led by Laura Shawver, previously at 5AM Ventures who participated in the financing, chief scientific officer Mark Rolfe, at Facet Biotech when it was acquired by Abbott Laboratories, and Francesco Parlati, senior director of biology who was at Proteolix which was acquired by Onyx Pharmaceuticals.
With investors more willing to put larger amounts of money behind experienced individuals who provided decent returns in the past – the recent formation of Puma Biotechnology a case in point (New company Puma roars with Pfizer licensing deal, October 6, 2011) – it is clear the track record of Cleave’s management team played a role in securing such a decent initial investment.
Another factor in Cleave’s favour is undoubtedly its technology which offers the potential of personalised medicine, the holy grail of drug development.
Cleave intends to develop small molecule compounds to interact with certain protein pathways involved in the development of cancer but which are specific to the individual concerned. By matching targeted drugs to subsets of patients whose tumours are regulated by the same pathways, Cleave hopes to be able to identify the patients most likely to benefit and thereby increase the probability of success in the clinic. Thereafter of course, regulators and payers are likely to take a more favourable view of these products.
Yet these pathways have still to be validated so Cleave has some way to go. Proteostasis Therapeutics, which raised a similarly impressive $45m in a series A in 2008, is developing a similar technology but has yet to bring a candidate into the clinic.
Nevertheless, it seems that if the story is compelling enough, venture finance money on a level comparable to pre-credit crunch days is still available.