Jon Vandermosten with the top 5 PE deals in biotech in Q2 of 2018

Allogene Therapeutics, Grail, Brii BioSciences, Moderna Therapeutics, Precision BioSciences, Kaleido Biosciences, Constellation Pharmaceuticals, Stealth BioTherapeutics, PACT Pharma, Beam Therapeutics.
Healthcare was 15% of total deal activity in the quarter, making up $5.3 billion of the total, up from $3.0 billion in the second quarter of last year.

There were 216 deals in the quarter. Some of the names that were awarded funding include:

The big fundraiser in the quarter was Grail which is developing a blood test to detect cancer by the presence of DNA fragments. They netted $300 million in a Series B round from several Chinese VC firms. Some cancers, such as ovarian or pancreatic, are difficult to detect at an early stage and Grail’s screening tool has shown early promise in these malignancies. They have raised over $1.5 billion since 2016 and have enrolled more than 73 thousand participants in their clinical studies.
Another emerging company that received funding in 2Q is Allogene Therapeutics which received $300 million. They are working in the CAR-T space, and some of our followers may remember when I discussed on an earlier show the approvals in CAR-T that occurred late last summer. They are working on an allogenic version (vs. autologous for Kymriah & Yescarta) of CAR-T which can have several advantages compared to the two approved therapies now available. Recall that Kymriah and Yescarta require cells to be taken from patients, modified in the lab, and then be returned to the patient to specifically activate the immune system against the cancer. An allogenic CAR-T will avoid the constraint of being patient specific and be available off the shelf, reducing cost and time to administration. Allogene’s assets were sourced from Pfizer who was focused on developing the technology to address blood cancers.

Moderna Therapeutics is a messenger RNA drugmaker that raised $500 MM earlier this year and now has over $1 billion in cash on its balance sheet. We’ve talked about interference RNA before which can block the production of proteins. Well, Moderna is able to inject synthetic mRNA into cells to produce proteins. Moderna has over 20 programs in place, with 10 already in human trials and they are partnering with big pharma on several of them including Merck, AstraZeneca and DARPA.
Precision Biosciences is a gene editing company that was able to raise $110 million in June. They are using what is called a homing endonuclease which can potentially recognize very specific DNA sequences and replace them with new DNA sequences. The popular gene editing techniques currently widely discussed are CRISPR-Cas9 and TALENS which are frequently discussed in the media. Precision uses something different known as the ARC Nuclease which leverages computer and lab based efforts to precisely identify the section of DNA to be replaces and the impact. The technology is called ARCUS and the company’s main efforts are in the field of cancer.
Beam Therapeutics was another of the top capital getters with its gene editing platform focused on CRISPR-Cas9. They launched with earliest stage Series A funding of $87 million led by F-Prime Capital Partners and ARCH Venture Partners. While the gene editing platforms have been hot over the last few years, a study was published earlier this week that suggested CRISPR could have some negative consequences, deleting large chunks of DNA unintentionally. It just goes to show we are still in the early stages of the process of understanding gene editing and that we need to learn more. There are some human trials taking place in China, but as far as I know, we are still in the preclinical stage in the US and Europe.

John Vandermosten
Senior Biotechnology Analyst
Zacks Small Cap Research