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Life Science 2017 snapshots & 2018 ahead...

January 5, 2018

 

2017 was a strong growth year for life science venture capital fund raising and public company performance.  New funds raised in 2017 include Flagship Pioneering ($618M) and Third Rock Ventures ($616M). In June, Atlas Ventures announced a new $350M fund for Biotech seed investment.  Many of the top public Life Science Tool and Diagnostic companies had a great year on Wall Street.  From the GenomeWeb index, winners included Exact Sciences (+293%), Foundation Medicine (+285%) and Myriad (+106%).  Historically solid instrument companies soared too.  Shares of Illumina grew 70%, Brucker 62%, Agilent 47% and Thermo 34%.  Some of the losers included GenMark Diagnostics and NanoString Technologies whos CDx partnership with Merck was ended.  The window opened a bit in 2017 which resulted in 40+ Biotech IPOs including Quanterix.  

 

Technologies associated with Molecular Diagnostics and Gene Editing continued to grow. The liquid biopsy market has been hot. Guardant kicked off 2017 by announcing a partnership with MD Anderson to make an annual liquid biopsy test a standard of care for early detection of cancer, when it is most curable.  Then raised $360M in May to get it done. Grail too sees this market as highly important and believes cash is a competitive advantage as they have raised $1.1B so far. They are working with Dennis Lo in Hong Kong, a world’s leader in liquid biopsy.  Bill Gates, Jeff Bezos, Illumina, and Google Ventures financially backed Grails’ approach.  In December, Grail hired a female CEO, Jennifer Cook who most recently joins from Genentech/Roche.  Personal Genome diagnostics announced this month the close of $75M.  This will finance the next few years of decentralized IVD assay development for their pharma partners by securing regulatory clearances for IVD tests including ctDNA.

 

Fifty Gene Editing companies raised a combine total of $1.7B in 2017. Ginko Bioworks closed on $275M to develop their organism engineering platform and there were many IPOs including Editas Medicine, Twist Biosciences, Calyxt and Synthego.   

 

Moving forward into 2018, things to watch.

 

VCs: In order to move technology out of the basements of academia and into companies that can utilize it,  Venture Capitalists are starting to do more heavy lifting.  Atlas Ventures announced a new effort, an invitation-only university-focused biotech entrepreneurship event aimed at building connectivity across the academic, tech transfer, and venture communities.  The kickoff event is scheduled for April 24, 2018 at the Broad Institute.  Flagship Pioneering and Third Rock have venture creation groups where they can “pioneer” their own ideas, not just invest.

 

MolDx: There will be more small companies jumping into the fray which may be gobbled up by bigger firms that have regulatory and distribution experience.  One potential cloud over LDT (lab developed tests) including some for liquid biopsy is that in December 2017, the CMC’s draft National Coverage decision offered more restrictive criteria that could decrease access to these types of tests.  This could be good for large companies who have the resources to get FDA approval and national insurance coverage reimbursement but more difficult for small companies.

 

Gene Editing:  Since there has been heavy investing in biotechs leveraging gene editing biopharma companies such as Editas Medicine, Audentes Therapeutics, Intellia Therapeutic and CRISPR Therapeutics will be ones to watch. 2018 should bring the realization of industrial applications promised by Microbe Engineering firms such as Zymergen and Gingko Bioworks.

 

Bioinformatics: Long term, wet technologies can not be truly scaled and integrated into patient care without significant advancement in informatics.  The good news is that DNAnexus started 2018 closing on $58M in financing. Medley Genomics, a Newco which deconvolutes molecular sequencing data to better inform initial therapeutic decisions announced that they hired Patrice Milos as CEO, from Clartias and Pfizer.  I think this market will continue to be one to watch.

 

Protein Analytical tools:    Given the exciting growth in the development of protein therapeutics especially in immuntherapy, look for new technologies and services in bio processing and protein analysis from companies such as Redshift BioAnaytics, Avitide, 908 Devices and others.   

 

These are all initial thoughts for 2018 as I write from my snowy desk in Boston.  But I am sure that JP Morgan next week under the palm trees of Union Square will offer more signals for the year ahead…

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