China is funding the future of American biotech

Silicon Valley is in the midst of a health craze, and it is being driven by “Eastern” medicine. It’s been a record year for US medical investing, but investors in Beijing and Shanghai are now increasingly leading the largest deals for US life science and biotech companies. In fact, Chinese venture firms have invested more this […]

Silicon Valley is in the midst of a health craze, and it is being driven by “Eastern” medicine.

It’s been a record year for US medical investing, but investors in Beijing and Shanghai are now increasingly leading the largest deals for US life science and biotech companies. In fact, Chinese venture firms have invested more this year into life science and biotech in the US than they have back home, providing financing for over 300 US-based companies, per Pitchbook. That’s the story at Viela Bio, a Maryland-based company exploring treatments for inflammation and autoimmune diseases, which raised a $250 million Series A led by three Chinese firms.

Chinese capital’s newfound appetite also flows into the mainland. Business is booming for Chinese medical startups, who are also seeing the strongest year of venture investment ever, with over one hundred companies receiving $4 billion in investment.

As Chinese investors continue to shift their strategies towards life science and biotech, China is emphatically positioning itself to be a leader in medical investing with a growing influence on the world’s future major health institutions.

Chinese VCs seek healthy returns

We like to talk about things we can interact with or be entertained by. And so as nine-figure checks flow in and out of China with stunning regularity, we fixate on the internet giants, the gaming leaders or the latest media platform backed by Tencent or Alibaba.

However, if we follow the money, it’s clear that the top venture firms in China have actually been turning their focus towards the country’s deficient health system.

A clear leader in China’s strategy shift has been Sequoia Capital China, one of the country’s most heralded venture firms tied to multiple billion-dollar IPOs just this year.

Historically, Sequoia didn’t have much interest in the medical sector.  Health was one of the firm’s smallest investment categories, and it participated in only three health-related deals from 2015-16, making up just 4% of its total investing activity. 

Recently, however, life sciences have piqued Sequoia’s fascination, confirms a spokesperson with the firm.  Sequoia dove into six health-related deals in 2017 and has already participated in 14 in 2018 so far.  The firm now sits among the most active health investors in China and the medical sector has become its second biggest investment area, with life science and biotech companies accounting for nearly 30% of its investing activity in recent years.

Health-related investment data for 2015-18 compiled from Pitchbook, Crunchbase, and SEC Edgar

There’s no shortage of areas in need of transformation within Chinese medical care, and a wide range of strategies are being employed by China’s VCs. While some investors hope to address influenza, others are focused on innovative treatments for hypertension, diabetes and other chronic diseases.

For instance, according to the Chinese Journal of Cancer, in 2015, 36% of world’s lung cancer diagnoses came from China, yet the country’s cancer survival rate was 17% below the global average. Sequoia has set its sights on tackling China’s high rate of cancer and its low survival rate, with roughly 70% of its deals in the past two years focusing on cancer detection and treatment.

That is driven in part by investments like the firm’s $90 million Series A investment into Shanghai-based JW Therapeutics, a company developing innovative immunotherapy cancer treatments. The company is a quintessential example of how Chinese VCs are building the country’s next set of health startups using their international footprints and learnings from across the globe.

Founded as a joint-venture offshoot between US-based Juno Therapeutics and China’s WuXi AppTec, JW benefits from Juno’s experience as a top developer of cancer immunotherapy drugs, as well as WuXi’s expertise as one of the world’s leading contract research organizations, focusing on all aspects of the drug R&D and development cycle.

Specifically, JW is focused on the next-generation of cell-based immunotherapy cancer treatments using chimeric antigen receptor T-cell (CAR-T) technologies. (Yeah…I know…) For the WebMD warriors and the rest of us with a medical background that stopped at tenth-grade chemistry, CAR-T essentially looks to attack cancer cells by utilizing the body’s own immune system.

Past waves of biotech startups often focused on other immunologic treatments that used genetically-modified antibodies created in animals.  The antibodies would effectively act as “police,” identifying and attaching to “bad guy” targets in order to turn off or quiet down malignant cells.  CAR-T looks instead to modify the body’s native immune cells to attack and kill the bad guys directly.

Chinese VCs are investing in a wide range of innovative life science and biotech startups. (Photo by Eugeneonline via Getty Images)

The international and interdisciplinary pedigree of China’s new medical leaders not only applies to the organizations themselves but also to those running the show.

At the helm of JW sits James Li.  In a past life, the co-founder and CEO held stints as an executive heading up operations in China for the world’s biggest biopharmaceutical companies including Amgen and Merck.  Li was also once a partner at the Silicon Valley brand-name investor, Kleiner Perkins.

JW embodies the benefits that can come from importing insights and expertise, a practice that will come to define the companies leading the medical future as the country’s smartest capital increasingly finds its way overseas.

GV and Founders Fund look to keep the Valley competitive

Despite heavy investment by China’s leading VCs, Silicon Valley is doubling down in the US health sector.  (AFP PHOTO / POOL / JASON LEE)

Innovation in medicine transcends borders. Sickness and death are unfortunately universal, and groundbreaking discoveries in one country can save lives in the rest.

The boom in China’s life science industry has left valuations lofty and cross-border investment and import regulations in China have improved.

As such, Chinese venture firms are now increasingly searching for innovation abroad, looking to capitalize on expanding opportunities in the more mature US medical industry that can offer innovative technologies and advanced processes that can be brought back to the East.

In April, Qiming Venture Partners, another Chinese venture titan, closed a $120 million fund focused on early-stage US healthcare. Qiming has been ramping up its participation in the medical space, investing in 24 companies over the 2017-18 period.

New firms diving into the space hasn’t frightened the Bay Area’s notable investors, who have doubled down in the US medical space alongside their Chinese counterparts.

Partner directories for America’s most influential firms are increasingly populated with former doctors and medically-versed VCs who can find the best medical startups and have a growing influence on the flow of venture dollars in the US.

At the top of the list is Krishna Yeshwant, the GV (formerly Google Ventures) general partner leading the firm’s aggressive push into the medical industry.

Krishna Yeshwant (GV) at TechCrunch Disrupt NY 2017

A doctor by trade, Yeshwant’s interest runs the gamut of the medical spectrum, leading investments focusing on anything from real-time patient care insights to antibody and therapeutic technologies for cancer and neurodegenerative disorders.

Per data from Pitchbook and Crunchbase, Krishna has been GV’s most active partner over the past two years, participating in deals that total over a billion dollars in aggregate funding.

Backed by the efforts of Yeshwant and select others, the medical industry has become one of the most prominent investment areas for Google’s venture capital arm, driving roughly 30% of its investments in 2017 compared to just under 15% in 2015.

GV’s affinity for medical-investing has found renewed life, but life science is also part of the firm’s DNA.  Like many brand-name Valley investors, GV founder Bill Maris has long held a passion for the health startups.  After leaving GV in 2016, Maris launched his own fund, Section 32, focused specifically on biotech, healthcare and life sciences. 

In the same vein, life science and health investing has been part of the lifeblood for some major US funds including Founders Fund, which has consistently dedicated over 25% of its deployed capital to the space since at least 2015.

The tides may be changing, however, as the recent expansion of oversight for the Committee on Foreign Investment in the United States (CFIUS) may severely impact the flow of Chinese capital into areas of the US health sector. 

Under its extended purview, CFIUS will review – and possibly block – any investment or transaction involving a foreign entity related to the production, design or testing of technology that falls under a list of 27 critical industries, including biotech research and development.

The true implications of the expanded rules will depend on how aggressively and how often CFIUS exercises its power.  But a lengthy review process and the threat of regulatory blocks may significantly increase the burden on Chinese investors, effectively shutting off the Chinese money spigot.

Regardless of CFIUS, while China’s active presence in the US health markets hasn’t deterred Valley mainstays, with a severely broken health system and an improved investment environment backed by government support, China’s commitment to medical innovation is only getting stronger.

VCs target a disastrous health system

Deficiencies in China’s health sector has historically led to troublesome outcomes.  Now the government is jump-starting investment through supportive policy. (Photo by Alexander Tessmer / EyeEm via Getty Images)

They say successful startups identify real problems that need solving. Marred with inefficiencies, poor results, and compounding consumer frustration, China’s health industry has many

Outside of a wealthy few, citizens are forced to make often lengthy treks to overcrowded and understaffed hospitals in urban centers.  Reception areas exist only in concept, as any open space is quickly filled by hordes of the concerned, sick, and fearful settling in for wait times that can last multiple days. 

If and when patients are finally seen, they are frequently met by overworked or inexperienced medical staff, rushing to get people in and out in hopes of servicing the endless line behind them. 

Historically, when patients were diagnosed, treatment options were limited and ineffective, as import laws and affordability issues made many globally approved drugs unavailable.

As one would assume, poor detection and treatment have led to problematic outcomes. Heart disease, stroke, diabetes and chronic lung disease accounts for 80% of deaths in China, according to a recent report from the World Bank

Recurring issues of misconduct, deception and dishonesty have amplified the population’s mounting frustration.

After past cases of widespread sickness caused by improperly handled vaccinations, China’s vaccine crisis reached a breaking point earlier this year.  It was revealed that 250,000 children had been given defective and fallacious rabies vaccinations, a fact that inspectors had discovered months prior and swept under the rug.

Fracturing public trust around medical treatment has serious, potentially destabilizing effects. And with deficiencies permeating nearly all aspects of China’s health and medical infrastructure, there is a gaping set of opportunities for disruptive change.

In response to these issues, China’s government placed more emphasis on the search for medical innovation by rolling out policies that improve the chances of success for health startups, while reducing costs and risk for investors.

Billions of public investment flooded into the life science sector, and easier approval processes for patents, research grants, and generic drugs, suddenly made the prospect of building a life science or biotech company in China less daunting. 

For Chinese venture capitalists, on top of financial incentives and a higher-growth local medical sector, loosening of drug import laws opened up opportunities to improve China’s medical system through innovation abroad.

Liquidity has also improved due to swelling global interest in healthcare. Plus, the Hong Kong Stock Exchange recently announced changes to allow the listing of pre-revenue biotech companies.

The changes implemented across China’s major institutions have effectively provided Chinese health investors with a much broader opportunity set, faster growth companies, faster liquidity, and increased certainty, all at lower cost.

However, while the structural and regulatory changes in China’s healthcare system has led to more medical startups with more growth, it hasn’t necessarily driven quality.

US and Western investors haven’t taken the same cross-border approach as their peers in Beijing. From talking with those in the industry, the laxity of the Chinese system, and others, have made many US investors weary of investing in life science companies overseas.

And with the Valley similarly stepping up its focus on startups that sprout from the strong American university system, bubbling valuations have started to raise concern.

But with China dedicating more and more billions across the globe, the country is determined to patch the massive holes in its medical system and establish itself as the next leader in international health innovation.

uBiome is jumping into therapeutics with a healthy $83 million in Series C financing

23andMe, IBM and now uBiome is the next tech company to jump into the lucrative multi-billion dollar drug discovery market. The company started out with a consumer gut health test to check whether your intestines carry the right kind of bacteria for healthy digestion but has since expanded to include over 250,000 samples for everything […]

23andMe, IBM and now uBiome is the next tech company to jump into the lucrative multi-billion dollar drug discovery market.

The company started out with a consumer gut health test to check whether your intestines carry the right kind of bacteria for healthy digestion but has since expanded to include over 250,000 samples for everything from the microbes on your skin to vaginal health — the largest data set in the world for these types of samples, according to the company.

Founder Jessica Richman now says there’s a wider opportunity to use this data to create value in therapeutics.

To support its new drug discovery efforts, the San Francisco-based startup will be moving its therapeutics unit into new Cambridge, Massachusetts headquarters and appointing former Novartis CEO Joseph Jimenez to the board of directors as well.

The company has a healthy pile of cash to help build out that new HQ, too, with a fresh $83 million Series C, lead by OS Fund and in participation with 8VC, Y Combinator, Dentsu Ventures and others.

The drug discovery market is slated to be worth nearly $86 billion by 2022, according to BCC Research numbers. New technologies — those that solve logistics issues and shorten the time between research and getting a drug to market in particular — are driving the growth and that’s where uBiome thinks it can get into the game.

“This financing allows us to expand our product portfolio, increase our focus on patent assets and further raise our clinical profile, especially as we begin to focus on commercialization of drug discovery and development of our patent assets,” Richman said.

Though its unclear at this time which drug maker the company might partner up with, Richman did say there would be plenty to announce later on that front.

So far, the company has published over 30 peer-reviewed papers on microbiome research, has entered into research partnerships with the likes of the Center for Disease Control (CDC) and leading research institutions such as Harvard, MIT and Stanford and has previously raised $22 million in funding. The additional VC cash puts the total amount raised to $105 million to date.

Interview with Priscilla Chan: Her super-donor origin story

Priscilla Chan is so much more than Mark Zuckerberg’s wife. A teacher, doctor, and now one of the world’s top philanthropists, she’s a dexterous empath determined to help. We’ve all heard Facebook’s dorm-room origin story, but Chan’s epiphany of impact came on a playground. In this touching interview this week at TechCrunch Disrupt SF, Chan […]

Priscilla Chan is so much more than Mark Zuckerberg’s wife. A teacher, doctor, and now one of the world’s top philanthropists, she’s a dexterous empath determined to help. We’ve all heard Facebook’s dorm-room origin story, but Chan’s epiphany of impact came on a playground.

In this touching interview this week at TechCrunch Disrupt SF, Chan reveals how a child too embarrassed to go to class because of their broken front teeth inspired her to tackle healthcare. “How could I have prevented it? Who hurt her? And has she gotten healthcare, has she gotten the right dental care to prevent infection and treat pain? That moment compelled me, like, ‘I need more skills to fight these problems.'”

That’s led to a $3 billion pledge towards curing all disease from the Chan Zuckerberg Initiative’s $45 billion-plus charitable foundation. Constantly expressing gratitude for being lifted out of the struggle of her refugee parents, she says “I knew there were so many more deserving children and I got lucky”.

Here, Chan shares her vision for cause-based philanthropy designed to bring equity of opportunity to the underserved, especially in Facebook’s backyard in The Bay. She defends CZI’s apolitical approach, making allies across the aisle despite the looming spectre of the Oval Office. And she reveals how she handles digital well-being and distinguishes between good and bad screen time for her young daughters Max and August. Rather than fielding questions about Mark, this was Priscilla’s time to open up about her own motivations.

Most importantly, Chan calls on us all to contribute in whatever way feels authentic. Not everyone can sign the Giving Pledge or dedicate their full-time work to worthy causes. But it’s time for tech’s rank-and-file rich to dig a little deeper. Sometimes that means applying their engineering and product skills to develop sustainable answers to big problems. Sometimes that means challenging the power structures that led to the concentration of wealth in their own hands. She concludes, “You can only try to break the rules so many times before you realize the whole system’s broken.”

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CB Therapeutics’ lab-grown cannabinoids could unlock new medicines and make others affordable

Marijuana may still be on shaky legal ground, but the therapeutic benefits of the psychoactive molecules — cannabinoids — inside the plant are solidly established. Unfortunately, cultivation of that plant is resource-intensive and yields only tiny amounts of some useful medicines. CB Therapeutics, a new biotech company launching today at the Disrupt SF Startup Battlefield, […]

Marijuana may still be on shaky legal ground, but the therapeutic benefits of the psychoactive molecules — cannabinoids — inside the plant are solidly established. Unfortunately, cultivation of that plant is resource-intensive and yields only tiny amounts of some useful medicines. CB Therapeutics, a new biotech company launching today at the Disrupt SF Startup Battlefield, aims to change the game with cannabinoids produced cleanly and cheaply in the lab — out of sugar.

Co-founder and CEO Sher Ali Butt says the idea struck him when he was working at cannabis testing lab Steep Hill. CBD, a compound found in the plant but in much lower concentrations than THC, the primary intoxicant, was producing extremely helpful pain and anxiety alleviation for some people without a high. The medicinal possibilities were obvious, but high-CBD strains of cannabis are not only uncommon, but a pain to cultivate and process for that purpose.

“CBD had all these applications, and I just thought that there’s got to be a better way to do this. The idea just stuck in my brain,” he told me.

After working on the problem on and off for years he decided to pursue it in earnest. Serendipitously, around this time he ran into Jacob Vogan, an old friend from college who was working in the field of bioengineering. It seemed like a natural fit to them to start the company together.

What CB Therapeutics has done is bioengineer microorganisms — specifically yeast — to manufacture cannabinoids out of plain-old sugars. This type of bioreactor isn’t a new idea; yeast and other organisms are used to create and isolate lots of drugs and substances.

“The vitamin C that we take in tablets, for instance — they didn’t squeeze oranges and lemons to get that,” Butt points out. “There isn’t enough agriculture to supply the global demand. It was produced synthetically and put in a box.”

CB Therapeutics is just doing the same thing for cannabinoids, and not just CBD.

“There are 118 cannabinoids, and only five have been studied,” Butt says. “These compounds are like .1, .01, even .001 percent in the cannabis bud. When you want to extract these, a kilogram can be like $100,000 to $350,000. How is someone supposed to do research with that?”

But the yeast don’t care. They take in sugar and output whatever molecule their biosynthesis pathway has been modified to produce — within reason, of course. You couldn’t output large, complex non-organics, but cannabinoids — even the rare ones — are well within their capabilities.

“The only thing we need to add is sugar — that’s the beauty of what we’ve done,” Butt beamed. “The yeast platform is agnostic, it makes everything for the same price.”

This has several benefits. First, it can bring down the price of a known and useful cannabinoid like CBD. Second, it allows the rarer ones to be studied for a reasonable price, and eventually distributed as well. And third, it takes pressure off the agricultural component of the cannabis industry.

That last is not only good from an ecological perspective, since demand is growing and these plants require a lot of water and land, but from the health side as well. Butt points out that a huge majority of cannabis products tested are found to be contaminated to some degree with pesticides and other unwanted compounds.

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It’s getting better as the marijuana industry becomes an above-board one, but the problem is far from eliminated, and at any rate pesticides and other potentially harmful chemicals don’t cease to be a nuisance just because something is legal. The risk is there for the foreseeable future that, ironically, the “natural” option of using the plant itself is going to produce more impurities in the product, not less. But the yeast don’t — can’t, really — taint the product. So what comes out of the bioreactor should theoretically be as pure as the driven snow. (CB Therapeutics does test it, of course.)

It’s worth noting that the company’s main intellectual property is is the cannabinoid biosynthesis pathway it has developed. That hadn’t been fully documented or explored, Butt says, until their work.

Butt sees this change as more or less just the latest example of a useful class of molecules going from difficult to relatively easy to acquire.

“When you aren’t able to provide for the demand, that makes prices artificially high. People are going out and spending tens of thousands on CBD, for medical applications,” he said. “Insulin used to be harvested from pig pancreases, then Genentech solved that. Aspirin used to come from tree bark. This is inevitable for many compounds. We need to bring the cannabis price down to where anybody can use it.”

The pricing and volume are still somewhat of a question mark — once testing and the regulatory hurdles are taken care of, like any pharmaceutical it’s going to be a moving target. But scaling production shouldn’t be hard should the demand grow, and the backlog of new cannabinoids to isolate for testing should provide a source of income as well.

Medicine can be a risky sector for startups but CB Therapeutics seems to have it as close to sewn up as one can reasonably expect; in a way it’s almost alchemical, this ability to cheaply produce something so valuable. But really, it’s just science.

George Church’s genetics on the blockchain startup just raised $4.3 million from Khosla

Nebula Genomics, the startup that wants to put your whole genome on the blockchain, has announced the raise of $4.3 million in Series A from Khosla Ventures and other leading tech VC’s such as Arch Venture Partners, Fenbushi Capital, Mayfield, F-Prime Capital Partners, Great Point Ventures, Windham Venture Partners, Hemi Ventures, Mirae Asset, Hikma Ventures and […]

Nebula Genomics, the startup that wants to put your whole genome on the blockchain, has announced the raise of $4.3 million in Series A from Khosla Ventures and other leading tech VC’s such as Arch Venture Partners, Fenbushi Capital, Mayfield, F-Prime Capital Partners, Great Point Ventures, Windham Venture Partners, Hemi Ventures, Mirae Asset, Hikma Ventures and Heartbeat Labs.

Nebula has also has forged a partnership with genome sequencing company Veritas Genetics.

Veritas was one of the first companies to sequence the entire human genome for less than $1,000 in 2015, later adding all that info to the touch of a button on your smartphone. Both Nebula and Veritas were cofounded by MIT professor and “godfather” of the Human Genome Project, George Church.

The partnership between the two companies will allow the Nebula marketplace, or the place where those consenting to share their genetic data can earn Nebula’s cryptocurrency called “Nebula tokens” to build upon Veritas open-source software platform Arvados, which can process and share large amounts of genetic information and other big data. According to the company, this crossover offers privacy and security for the physical storage and management of various data sets according to local rules and regulations.

“As our own database grows to many petabytes, together with the Nebula team we are taking the lead in our industry to protect the privacy of consumers while enabling them to participate in research and benefit from the blockchain-based marketplace Nebula is building,” Veritas CEO Mirza Cifric said in a statement.

The partnership will work with various academic institutions and industry researchers to provide genomic data from individual consumers looking to cash in by sharing their own data, rather than by freely giving it as they might through another genomics company like 23andMe .

“Compared to centralized databases, Nebula’s decentralized and federated architecture will help address privacy concerns and incentivize data sharing,” added Nebula Genomics co-founder Dennis Grishin. “Our goal is to create a data flow that will accelerate medical research and catalyze a transformation of health care.”

HP is ‘printing’ drugs for the CDC to speed up antibiotic testing

At least 2 million people in the U.S. become infected with so-called “super bugs” and at least 23,000 people die as a direct result of these infections each year, according to the Centers for Disease Control (CDC). Now, HP’s Biohacker technology is working with the CDC on a pilot program to “print” and test antibiotics […]

At least 2 million people in the U.S. become infected with so-called “super bugs” and at least 23,000 people die as a direct result of these infections each year, according to the Centers for Disease Control (CDC). Now, HP’s Biohacker technology is working with the CDC on a pilot program to “print” and test antibiotics in an effort to catch these antimicrobial resistant strains from spreading faster.

The HP D300e Digital Dispenser BioPrinter technology works by using the same set up as a regular ink printer but instead dispenses any combination of drugs in volumes from picoliters to microliters to be used for research purposes.

Part of the reason these bugs spread so rapidly often comes down to mis-use of antibiotics, leading the bacteria to develop a resistance to the drugs available. The CDC hopes to give hospital providers access to the technology nationwide to cut down on the problem.

“Once a drug is approved for use, the countdown begins until resistance emerges,” Jean Patel, PH.D. D (ABMM), Science Team Lead, Antibiotic Resistance Coordination and Strategy Unit at CDC said in a statement. “To save lives and protect people, it is vital to make technology accessible to hospital labs nationwide. We hope this pilot will help ensure our newest drugs last longer and put gold-standard lab results in healthcare providers’ hands faster.”

The 3D bioprinting sector has been experiencing rapid growth over the last few years and will continue on pace through the next decade, mainly due to R&D, according to market researchers. Innovation in the space includes printing of organs, human tissue and drug research and development.

Further, this potentially valuable antibiotic resistance research could help patient care teams stem a grim future where we experience a regression in health and life spans due to no longer having the ability to treat currently curable diseases.

The HP BioPrinter is currently used by labs and pharmaceutical companies such as Gilead, which tests for drugs used against the Ebola virus. It is also being used in various CRISPR applications. The CDC will use these printers in four regional areas spread throughout the U.S. within the Antibiotic Resistance (AR) Lab Network to develop antimicrobial susceptibility test methods for new drugs, according to HP.

RDMD attacks rare diseases with data mined from health records

You wouldn’t expect a medical app to get its start as a Snapchat competitor. Neither did video chat startup TapTalk’s founder Onno Faber. But four years ago he was diagnosed with a rare disease called Neurofibromatosis Type 2 that caused tumors leading Onno to lose hearing in one ear. He’s amongst the one in ten people with […]

You wouldn’t expect a medical app to get its start as a Snapchat competitor. Neither did video chat startup TapTalk’s founder Onno Faber. But four years ago he was diagnosed with a rare disease called Neurofibromatosis Type 2 that caused tumors leading Onno to lose hearing in one ear. He’s amongst the one in ten people with an uncommon health condition suffering from the lack of data designed to invent treatments for their ails. And he’s now the co-founder of RDMD.

Emerging from stealth today, RDMD aggregates and analyzes medical records and sells the de-identified data to pharmaceutical companies to help them develop medicines. In exchange for access to the data, patients gets their fragmented medical records organized into an app they can use to track their treatment and get second opinions. It’s like Flatiron Health, the Google-backed cancer data startup that just got bought for $2 billion, but for rare diseases.

Now RDMD is announcing it’s raised a $3 million seed round led by Lux Capital and joined by Village Global, Shasta, Garuda, First Round’s Healthcare Coop, and a ton of top healthtech angels including Flatiron investors and board members. The cash will help RDMD expand to build out its product and address more rare diseases.

RDMD founders (from left): Nancy Yu and Onno Faber

We believe that the traditional way rare disease R&D is done needs to change” RDMD CEO Nancy Yu tells TechCrunch. The former head of corp dev at 23andme explains that, “There are over 7,000 rare diseases and growing, yet <5% of them have an FDA-approved therapy . . . it’s a massive problem.” 

While data infrastructure supports development of treatments for more common diseases like cancer and diabetes, rare diseases have been ignored because it’s wildly expensive and difficult to collect the high-quality data required to invent new medicines. But “RDMD generates research-grade, regulatory-grade data from patient medical records for use in rare disease drug R&D” says Yu. The more data it can collect, the more pharma companies can do to help patients.

Trading Utility For Patient Data

With RDMD’s app, a patient’s medical data that’s strewn across hospitals and health facilities can be compiled, organized and synthesized. Handwritten physicians’ notes and faxes are digitized with optical character recognition, structuring the data for scientific research. RDMD lays out a patients’ records in a disease-specific timeline that summarizes their data that can be kept updated, delivered to specialists for consultations, or shared with their family and caregivers.

If users opt in, that data can be anonymized and provided to research organizations, hospitals, and pharma companies that pay RDMD, though these patients can delete their accounts at any time. Since it’s straight from the medical records, the data is reliable enough to be regulation-compliant and research-ready. That allows it to accelerate the drug development process that’s both lucrative and life-saving. “It normally takes millions of dollars over several years to gather this type of data in rare diseases” Yu notes. “For the first time, we have a centralized and consented set of data for use in translational research, in a fraction of the time and cost.”

So far, RDMD has enrolled 150 patients with neurofibromatosis. But the potential to expand to other rare diseases attracted a previous pre-seed round from Village Global and new funding from angels like Clover Health CEO and Flatiron board member Vivek Garipalli, Flatiron investor and GV (Google Ventures) partner Vineeta Agarwala, Twitter CTO Parag Agrawal, former 23andme president Andy Page, and the husband and wife duo of former Instagram VP of product Kevin Weil and 137 Ventures managing director Elizabeth Weil.

“Onno and Nancy realized there’s an opportunity to do in rare diseases what Flatiron has done in oncology — to aggregate clinical data from patients, and to leverage that data in clinical trials and other use cases for biotech and pharma” says Shasta partner Nikhil Basu Trivedi. RDMD will be competing against pharma contract research organizations that incur high costs for collecting data the startup gets for free from patients in exchange for its product. Luckily, Flatiron’s exit paved the way for industry acceptance of RDMD’s model.

“The biggest risk for our company is if we lose our focus on providing real, immediate value to rare disease patients and families. Patients are the reason we are all here, and only with their trust can we fundamentally change how rare disease drug research is done” says Yu. RDMD will have to ensure it can protect the privacy of patients, the security of data, and the efficacy of its application to drug development.

Hindering this process is just one more consequence of our fractured medical records. Hopefully if startups like RDMD and Flatiron can demonstrate the massive value created by unifying medical data, it will pressure the healthcare power players to cooperate on a true industry standard.

Cytera Cellworks aims to bring cell culture automation to your dinner plate

Cytera Cellworks hopes to revolutionize the so-called ‘clean meat’ industry through the automation of cell cultures — and that could mean one day, if all goes to plan, the company’s products could be in every grocery store in America. Cytera is a ways off from that happening, though. Founded in 2017 by two college students in […]

Cytera Cellworks hopes to revolutionize the so-called ‘clean meat’ industry through the automation of cell cultures — and that could mean one day, if all goes to plan, the company’s products could be in every grocery store in America.

Cytera is a ways off from that happening, though. Founded in 2017 by two college students in the U.K., Ignacio Willats and Ali Afshar, Cytera uses robotic automation to configure cell cultures used in things like growing turkey meat from a petri dish or testing stem cells.

The two founders — Willats, the events and startups guy and Afshar the scientist, like to do things differently to better configure the lab as well — like strapping GoPros to lab workers’ heads, for instance. The two came together at the Imperial College of London to run an event for automation in the lab and from there formed their friendship and their company.

“At the time, lab automation felt suboptimal,” Afshar told TechCrunch, further explaining he wanted to do something with a higher impact.

Cellular agriculture, or growing animal cells in a lab, seems to hit that button and the two are currently enrolled in Y Combinator’s Summer 2018 cohort to help them get to the next step.

There’s been an explosion in the lab-made meat industry, which relies on taking a biopsy of animal cells and then growing them in a lab to make the meat versus getting it from an actual living, breathing animal. In just the last couple of years startups like Memphis Meats have started to pop up, offering lab meat to restaurants. Even the company known for its vegan mayo products Hampton Creek (now called Just) is creating a lab-grown foie gras.

Originally, the company was going to go for general automation in the lab but had enough interest from clients and potential business in just the cell culture automation aspect they changed the name for clarity. Cytera already has some promising prospects, too, including a leading gene therapy company the two couldn’t name just yet.

Of course, automation in the lab is nothing new and big pharma has already poured billions into it for drug discovery. One could imagine a giant pharma company teaming up with a meat company looking to get into the lab-made meat industry and doing something similar but so far Willats and Afshar says they haven’t really seen that happening. They say bigger companies are much more likely to partner with smaller startups like theirs to get the job done.

Obviously, there are trade-offs at either end. But, should Cytera make it, you may find yourself eating a chicken breast one day built by a company who bought the cells made in the Cytera lab.

Mammoth Biosciences raises $23 million for its CRISPR-based disease detection engine

Mammoth Biosciences, the biotech company that grew out of a close relationship with CRISPR legend Jennifer Doudna, has raised $23 million in a sturdy Series A. Mammoth previously raised $120,000 from NFX and the company continued quietly picking up funding as it built toward its exit from stealth mode in April 2018. Its current round […]

Mammoth Biosciences, the biotech company that grew out of a close relationship with CRISPR legend Jennifer Doudna, has raised $23 million in a sturdy Series A. Mammoth previously raised $120,000 from NFX and the company continued quietly picking up funding as it built toward its exit from stealth mode in April 2018. Its current round was led by Mayfield with participation from NFX and 8VC.

Mammoth also has some high profile interest from individual investors. Apple’s Tim Cook and Jeff Huber, former CEO of early cancer screening company Grail, also quietly participated in the round for an unspecified amount.

The discovery of CRISPR, by all accounts a transformative scientific and technological breakthrough, is many things to many people, but for Mammoth Biosciences, it’s all about the search functionality.

“CRISPR is biology’s search engine first,” Mammoth co-founder and CEO Trevor Martin told TechCrunch in an interview. That means using a guide RNA to direct a CRISPR protein to search for any specific DNA or RNA sequence. That process provides a world of utility across fields like genotyping, oncology, infectious disease and even agriculture.

Mammoth plans to use the funding to make key hires and flesh out its IP portfolio, but most of the company’s resources will be used toward developing the platform that allows the company’s partners to plug in and search for their own biomarkers. Martin adds that the funding will also allow Mammoth to educate people about how CRISPR can play a powerful role in diagnostics.

Mammoth is led by two Stanford PhDs, Trevor Martin (CEO) and Ashley Tehranchi (CTO) who work with a small research team of PhDs from UC Berkeley. Jennifer Doudna is a Mammoth co-founder and chair of the company’s advisory board. Along with its funding news, Mammoth adds protein engineering expert Dave Savage and infectious disease specialist Charles Chui to its scientific advisory board.

Future partnerships are central to Mammoth’s business, and the company aims to make its CRISPR-powered search engine the platform of choice for disease detection. The company is particularly keen on building out partnerships in the pharmaceutical and agricultural world, though also has long term plans to provide affordable point-of-care testing in the developing world.

“Mammoth has developed a transformative platform, able to detect nucleic acid assays on DNA and RNA without an associated device,” Mayfield’s Ursheet Parikh said of the company’s mission. “This has the potential to significantly reduce costs in diagnostics, which is a fundamental driving force in transforming healthcare.”

Home run exits happen stealthily for biotech

Joanna Glasner Contributor More posts by this contributor While tech waffles on going public, biotech IPOs boom Shoe startups aren’t dragging their feet Startup exit tallies commonly underestimate biotech returns. Unlike most tech deals, the biggest profits in bio often come long after an IPO or acquisition. Take Juno Therapeutics, a publicly traded cancer immunology company […]

Startup exit tallies commonly underestimate biotech returns. Unlike most tech deals, the biggest profits in bio often come long after an IPO or acquisition.

Take Juno Therapeutics, a publicly traded cancer immunology company that sold to pharma giant Celgene this year for $9 billion. At first glance, it doesn’t seem like a deal that would impact Juno’s early investors.

After all, Juno went public back in 2014. Though the Seattle company raised more than $300 million as a private company, pre-IPO backers had years to cash out at healthy multiples.

Yet some held on. Bob Nelsen, managing director of ARCH Venture Partners, Juno’s largest VC backer, told Crunchbase News that his firm was still holding nearly its entire 15 percent pre-IPO stake when Celgene bought the company.

In the end, the acquisition netted ARCH’s limited partners 23 times their money, bringing in close to a billion dollars. It’s an exceptional return, even by venture home run standards.1

“We tend to distribute on milestones, not financing events,” Nelsen said of his firm’s approach to exiting a portfolio investment. That often means holding for years after an IPO awaiting positive clinical trial outcomes or other value-creating inflection points.

For public companies, that can be done over time or all at once, and usually comes in the form of company shares rather than cash.

So when is it an exit?

It’s outcomes like Juno that help explain why life sciences, despite bringing fewer first-day IPO pops and buzz-generating unicorn exits than the tech sector, still consistently attracts roughly a third of venture investment. Big exits do happen. But oftentimes it’s not with a lot of fanfare and usually not with a public market debut.

“I don’t think IPOs are ever an exit in biotech. It’s always a financing event,” Nelsen says. While ARCH may hold shares longer than the typical VC, he says it’s not uncommon to hang on the stakes for a while post-IPO.

That IPO-and-hold strategy appears to have worked out well for the firm on other occasions. Other portfolio companies that went public and were later acquired for multiple billions include Receptos, a drug developer, and Kythera Biopharmaceuticals, best known for an injectable to reduce chin fat.

Using Crunchbase data, we looked to see how common it is for a venture-backed biotech company to go public and then sell a few years later for multiple billions. We found at least eight examples of companies selling for $2 billion or more in the past five years that went public less than four years before the acquisition. (See list here.) Altogether, these acquisitions were valued at more than $47 billion.

Racking up post-IPO gains

It’s also not uncommon for biotech startups to grow into multi-billion dollar public companies a few years after IPO.

Using Crunchbase data, we put together a list of a dozen life science companies that went public in roughly the past five years and have recent market values ranging from $1.5 billion to nearly $9 billion. (This is a sampling, not a comprehensive data set, and was assembled based on exits of several top-tier life science VCs.)

On top was gene therapy juggernaut Bluebird Bio, which has seen a seven-fold rise in its stock price since going public five years ago. Next was Sage Therapeutics, a developer of therapies for central nervous system disorders, up more than six-fold since its IPO four years ago, reaching a market cap of nearly $8 billion.

Then on the device side there’s Inogen, a maker of portable oxygen concentrators for patients with respiratory ailments. It went public at a valuation of less than $300 million in 2014. Today it’s worth around $4.3 billion.

Yes, it’s true tech stocks can see massive gains a few years after going public, too. But the drivers are usually different. In tech, a company may see its stock jump after a big rise in sales, but it probably had sales in prior quarters. The business hasn’t fundamentally changed; it’s just improved.

Moreover, tech venture capitalists do generally consider an IPO an exit. While insiders usually can’t sell shares immediately, they’re typically comfortable liquidating when they can around the IPO price.

For bio, hitting key milestones changes the entire value proposition. A company can go from having no marketable product and no sales to quickly having one or both of those things.

Milestones and money

Returns from biotech startup M&A exits are also hard to pin down because of the widespread use of milestone payments. Buyers pay an upfront price with the agreement of more to come following favorable clinical trial results and a commercially successful therapy.

Often, it’s several multiples more to come if milestones are met. Take Impact Biomedicines, one of this year’s biggest private company exits. Celgene bought the company for $1.1 billion. However, the deal could be valued at up to $7 billion over time.

But the probability of hitting all the milestones seems low. To get the full $7 billion, global annual net sales of Impact’s therapies would have to exceed $5 billion. However, some milestones look more feasible, such as a $1.25 billion payment for obtaining regulatory approval.

This kind of deal structure is pretty common, and not just for M&A. A study by medical news site STAT analyzed nearly 700 biotech licensing deals and found that, on average, just 14 percent of the total announced value was paid out up front.

As with returns from post-IPO acquisitions, it’s hard to gauge just how well investors end up doing on these milestone-based purchases. The largest payoffs can be years down the road.

The opposite of tech

If it seems like the dynamics of a bio exit are, in many ways, the opposite of a tech exit, it’s worth considering how different the two sectors are at the early stages, too.

In the tech startup world, it’s common for a company to launch with an idea that sounds silly (tweeting, scooter sharing, air mattress rentals) and then suddenly be worth billions.

Bio companies are kind of the reverse. Practically every one sounds like a great idea (curing cancer, alleviating pain, treating neurodegenerative disease), and many turn out to be worth nothing. Investments that work out, however, may take a while, but eventually deliver in a big way.

  1. Making 23 times your money back is exceptional at all stages of investment. However, when it does happen, it’s most common at the seed stage for investment, where investors put in single digit millions or less. In the case of ARCH, 23X it is a particularly high return because it encompasses all the rounds Juno raised before going public.