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Funding the Development of Antibody Innovations: Part 3: Crossover Investors

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By Tom Burt (Partner, Sofinnova Partners) & Nick Hutchinson (BSG Lead, Mammalian Cell Culture, FUJIFILM Diosynth Biotechnologies)

The development of antibody therapeutics requires large amounts of cash to sustain nascent companies while they demonstrate the safety and efficacy of their products in clinical trials. It is estimated that it takes over a billion dollars to bring an antibody therapeutic to market. In our last post (1) we described how biotech firms use pre-seed and seed funding to get their ideas off the ground, but following these, they typically rely on VCs for their next rounds of finance. The first round of VC funding or Series A funding can run into tens of millions of dollars.

Ori Biotech, a company developing a manufacturing platform for cell and gene therapies, raised $30 million of additional funds from a group of VCs, having initially raised $10 million in seed funding. The team believe the Series A funding is sufficient to develop a minimum viable product, the earliest version of the technology that can be released to the first customers for them to provide feedback and allow subsequent improvement cycles.

In an interview published in March 2021, Ori Biotech CEO, Jason Foster, advised start-up companies seeking Series A investment to start by developing a comprehensive understanding of the market for the technology and how to pitch effectively to potential investors. Secondly, he recommended firms target the right investors, as different investors specialize in different sectors and investment stages. Finally, he emphasized that fundraising is a full-time job, so companies should ensure they have sufficient support and time allocated to this critical activity (2).

Series B Venture Capital funding

AgomAb, is a Belgium start-up that is working on regenerative pathway modulators in inflammatory, metabolic and fibrotic diseases. It has raised two rounds of VC funding. Scientists at the company have drawn upon research from the 1990s that suggested hepatocyte growth factor (HGF) and the HGF-MET pathway might have regenerative potential. Founded in 2017, the company raised $25 million in 2019 in a Series A funding round, which it used to perform research on a set of full and partial MET agonists.  These had been discovered through a partnership with argenx, which gave AgomAb access to the SIMPLE antibodyTM technology platform that raises antibodies with variable regions derived from the immune systems of ‘outbred’ llamas.

AgomAb’s Series A funding allowed it to progress its lead antibody candidate, AGMB-101, into Investigational New Drug-enabling toxicology studies, but the company needed additional funding to enter the clinic and so raised a further $74 million in Series B funding. Significantly, AgomAb considers that AGMB-101 could be efficacious in a range of disorders and represent a pipeline-in-a-product; however, it is also seeking to expand its pipeline beyond this lead candidate (3).

So, what’s the difference between Series A and Series B funding? Tom Burt of Sofinnova Partners points out, “The AgomAb example highlights that the amount of capital raised in Series B is larger, which in this case this is helpful because of the high costs of clinical development activities, and that the scope of what the business must achieve has evolved. In many instances, the two rounds of funding might seem similar and represent a continuum, with the Series B round being led by the same Series A investors. Redmile and Cormorant, two well-known US-based crossover funds, led this funding round.”

“Crossover investors can be considered as VCs that invest in promising companies that have the near-term potential to list their shares on a stock exchange in a financing round known as an Initial Public Offering [IPO]. They are a relatively new addition to the venture capital continuum. While a crossover investor will still need to be convinced of the potential in the company’s pipeline, they also have a focus on the public markets,” he says.

Cross-over investors can be more flexible around the clinical stage of development and can finance preclinical to Phase 3 clinical-stage companies if they believe that sufficient appetite exists amongst public market investors for the IPO candidate. Typically, the crossover investor[s] will seek to raise a significant amount of funds in a Series B [and sometimes Series A round] with the committed intention of supporting any IPO round alongside traditional institutional investors.

In our final post of this 4-part series, we will look at the final stages of the financing cycle, including how crossover investing has altered valuations of early-stage biotech companies. We’ll examine the case of EpiMab and discuss how investors in  a company like this might look to exit and generate a return on their investments.

We hope you’ll join us next week for the final post in this series, Exit Strategies for Investors in Antibodies.

(1)    Burt T. & Hutchinson N. (2021). Funding the Development of Antibody Innovations. Part 2: Business Angels and Venture Capitalists.

(2)    Finerva (2021). Ori Biotech – Fundraising & Growth. March 12, 2021.

(3)    Taylor, P. T. (2021) AgromAb raises $74M to develop regenerative pathway modulators. Fierce Biotech. March 10, 2021.

Funding the Development of Antibody Innovations, Part 1: Entrepreneurial Antibody Scientists

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By Tom Burt (Partner, Sofinnova Partners) & Nick Hutchinson (BSG Lead, Mammalian Cell Culture, FUJIFILM Diosynth Biotechnologies)

The Antibody Society has partnered with Tom Burt, Partner at Sofinnova Partners, a leading European venture capital firm in life sciences, specializing in healthcare and sustainability to produce a 4-part series of articles explaining the basics of financing a start-up biotech company. Our aim is to support and inspire researchers working in labs with a passion for their science and the drive to push their ideas as far as they will go. In Part 1, we discuss the characteristics of the entrepreneurial antibody scientist.

As of 2021, the pipeline of therapeutic antibodies is strong and the biopharmaceutical industry is enjoying unprecedented success in bringing new products to market (1). The launch of new antibody drugs can have a tremendous impact on the lives of patients suffering from diseases for which there are either no existing treatments or current treatments are lacking. Technological developments, such as Fc engineering, bi- and multi-specific antibody formats and antibody-drug conjugates will lead to improved antibody treatments in the future. Not all advances in antibody science are new drugs, however, and many are leading to new enabling research tools and novel diagnostics. The amount of innovation in the sector, driven by creative scientists working in labs around the world, is startling.

Scientists developing antibody therapeutics must progress the idea through discovery and development phases, including preclinical and clinical testing, with various regulatory hurdles that must be navigated before commercial launch can take place. Large pharma and biotech companies are well versed in managing the complexity and costs of antibody development and commercialization, but there is always room in the market for smaller, more agile players who can compete on an equal footing with these giants.

Entrepreneurial scientists are eschewing the traditional career pathways of staying in academia or joining large pharma companies (2) in favor of establishing their own companies. They are raising money to finance discovery and development, while managing their biotech businesses in order to turn their ideas into a reality. By adopting this approach, founders can retain much greater control of their inventions, can align the development of their technology with their own values, and furthermore, stand to benefit financially if their candidate is shown to be successful.

“It’s an excellent time to be considering raising finance for biotech start-ups. Investors have lots of capital that is waiting to be deployed and society is re-considering how it values medtech innovations in light of the pandemic,” explained Tom.

Investors’ attitudes to these different types of start-up will vary depending on the size of the investment that the company will need, the level of risk associated with the investment, the size of the likely return and the time it will take to see a return. Raising finance for different types of antibody start-up companies will depend on the business model and the nature of the innovation being commercialized. A technology for antibody discovery embedded in a piece of equipment will differ from an amino acid sequence that can be licensed, which will differ from an antibody therapeutic requiring ten years and hundreds of millions if not billions of dollars before any revenues are generated.

“Investors in therapeutics are very wary of “one-trick ponies” with only a single drug candidate,” says Tom. “We look for companies with innovative technologies that might be applied to a number of candidates for multiple disease targets. This reduces risks by ensuring the start-up can have multiple shots on goal.”

One such example is the start-up antibody company Gigagen, which was recently acquired by Grifols, a specialist in plasma-derived medicine. Gigagen’s Magnify Platform enables the identification of rare novel targets within the tumor microenvironment, which in turn can be fed into its Surge Platform, allowing the production of recombinant polyclonal antibodies derived from mammalian repertoires. The company has an oncology pipeline containing monoclonal and bispecific antibodies and a recombinant polyclonal immunoglobulin pipeline, which includes treatments for COVID-19 and other infectious diseases.

Like other start-up biotechs, Gigagen had licensed these platforms technologies to other antibody discovery and development companies in order to generate early revenues, before using them as a springboard to launch their own candidate development programmes.

In the next three posts in this series, we’ll explain the start-up financing cycle and how it relates to antibody companies, especially those developing antibody products for therapeutic use. We’ll use industry examples to describe different types of investors in antibody innovations, what they look for in a company or idea, and their expectations as to how the funding is utilized. We will also explain how the funding cycle is changing, which will help inventors fund the clinical journey more easily.

Watch for our second post next week!

1.       Kaplon H & Reichert JM (2021) Antibodies to watch in 2021. mAbs.

2.       Friedman J. How Biotech Startup Funding Will Changing in the Next 10 Years.