Sofinnova plans to play it safe with new $650 million venture fund
The climate for biopharma venture capital has chilled. But that’s not such a problem for Sofinnova Ventures, which just closed a $650 million fund this week.
With its new Fund X, the San Francisco firm will focus on mid- to later-stage biopharma upstarts, chasing companies that are past their proof-of-concept phase, general partner Dr. Jim Healy told STAT.
In other words, it's not likely to fall into the Theranos trap. “We’re on the other end of the spectrum,” said Healy, who earned both an MD and a PhD in immunology from Stanford. He projects the fund will invest in some 25 to 30 companies, funneling $15 to $35 million into each.
Healy was about as candid about the firm’s areas of interest as any VC: Sofinnova is chasing areas where there’s a “high unmet medical need” and making investment decisions “from a patient perspective.”
An example of its sweet spot: An investment in Hyperion Therapeutics, which develops drugs for urea cycle disorders — in which children can’t process or remove ammonia from their bodies. Until Hyperion came up with a liquid formulation, kids had to take something like 30 pills per day. Horizon Pharma bought Hyperion last year for $1.1 billion.
As for the venture financing climate, Healy sees that as a plus.
“With the market correction last fall and earlier this year, most of the generalist investors have left, so it’s primarily specialists investing in biopharma,” Healy said. “And that’s an environment in which we thrive.”
Flexy fibers could light up brain tumors
This hydrogel is like a tiny, light-refracting strand of licorice, and it might one day be implanted into brains. (MIT and Harvard)
The optogenetics industry could get a boost from this new, biocompatible optical fiber created by biomedical engineers at Harvard and MIT.
Optogenetics involves delivering bursts of light to the body to activate specific cells, like neurons in the brain, in an effort to treat disease. The current approach uses stiff fibers that can pose a risk to human brain tissue. This new material, by contrast, is able to flex with the body without breaking. It's an early-stage model — it has only been tested in the lab. But the fibers were able to transmit light effectively.
They were also able to signal when and where they'd been tugged on or touched — a capability the scientists say could one day be harnessed to monitor a tumor's activity from inside the body.
Where are all the cool med tech startups?
While biotech is still riding (relatively) high on a years-long boom, things aren’t looking so great on the device side. The pace of company creation has fallen by almost two-thirds over the past three decades, and med tech’s share of share of venture capital dollars has plummeted from 13 percent in 1992 to just 4 percent in 2014.
That’s all according to a new report from AdvaMed, which is a bit like a PhRMA for med tech. The problem, according to the report, stems from opaque regulations that make it hard for investors and entrepreneurs to find a path to profits. And that’s compounded by a fast-consolidating industry that is often more interested in expanding its global footprint than taking chances on new ideas.
Part of the issue is risk. In biotech, big companies generally buy small companies when their products are still in development. But in med tech, acquisitions don’t usually come until a company has at least won FDA clearance for its device. That means startups — and their investors — have to slog through a long, complicated process before getting a shot at a return, which removes some of the incentive to get started in the first place.
How can things be improved? Entrepreneurs consulted by AdvaMed suggest shortening the approval time for new devices and coupling FDA decisions with all-important coverage rulings from CMS, which would make the development process much more efficient. At the same time, the titans of med tech should be more willing to make risky acquisitions, investors said, taking a page from the Big Pharma companies that snap up early stage assets in hopes that one hit will pay for the inevitable misses.
Biopharma’s plan to replace opioids hits a snag
Blocking a protein called NGF has long looked like a promising way to treat pain, potentially sparing patients with chronic agony from having to use opioid therapy. The trouble is, NGF antibodies keep running into safety problems.
Such was the case for Regeneron, which on Monday disclosed that the FDA forced a clinical hold on its NGF trial in lower back pain after a patient developed serious joint problems. That same issue led the FDA to pause all NGF development back in 2012; the agency only allowed trials to resume last year.
For its part, Regeneron says the latest safety issue won’t derail its plans for late-stage studies in lower back pain. The patient who developed joint side effects also had advanced osteoarthritis, the company said. Regeneron and partner Teva plan to screen out such patients in later studies.
But that’s not likely to matter in the long run, according to Leerink analyst Geoffrey Porges. “Based on this hold, and the history of the class, we are reducing our probability of success to zero,” Porges wrote in a note to investors. Teva, which paid $250 million last month to partner with Regeneron, might be wise to cut the cord now before it spends any more money on development, EvercoreISI’s Umer Raffat wrote.
The troublesome safety of NGF antibodies has already led Johnson & Johnson and AbbVie to walk away from the field. Others, meanwhile have invested in drugs aimed at different biological targets.
The Biotech Devil's Dictionary
There’s a lot of jargon, coded language, and outright nonsense in biotech, and we want to clear up — and celebrate — as much of it as we can through this glossary. Have a phrase to contribute? Email it over.
2.0 (adj.): A largely meaningless modifier one can append to anything meant to sound at once improved but also predictably improvable. Seen as a clever way to compare the frightening world of biology to the more linear space of software engineering.
“Biotech 1.0 is the ‘Hopes And Dreams Model,’ but biotech 2.0 is the 'Nirvana Model.'" — Credit Suisse analyst Ravi Mehrotra
- Could CRISPR lead to a cure for Duchenne muscular dystrophy? (MIT Tech Review)
- Celgene's latest data on a much-watched treatment for Crohn's disease left investors nonplussed. (TheStreet)
- Genome sequencing company Veritas Genetics raised $30 million from an investor syndicate that includes Eli Lilly. (Boston Globe)
- Pfizer is planning to launch a biosimilar of Johnson & Johnson's Remicade in November, planning to sell it at a 15 percent discount. (Press release)