To balance out the bad news on GNOM, there are two exciting stories of DNA sequencing beginning to generate a revenue stream AND a clinical impact.
Both Foundation Medicine and Verinata announced the commercial availability of broad diagnostic tests based on DNA sequencing. (FoundationOne for cancer, Verinata for prenatal health.)
These tests are exciting because they represent the first commercial adoption of NGS for diagnostic purposes. (Also exciting: neither company is seeking FDA approval for the tests, using the "homebrew" exception to bring them to market, but that's a story for another day.)
Verinata's news is particularly exciting because the technology requires only a maternal blood sample. This simple blood draw makes possible a number of fetal genetic tests that would otherwise require a risky fetal sample. (Think BIG needle and a chance of long term damage.)
Verinata is one of the brain children of Dr. Stephen Quake, a Stanford bioengineering researcher, founder of two public biotechs (Helicos and Fluidigm), and as of this week, recipient of the very impressive Lemelson-MIT Prize.
Biotech lacks "rock stars," which are seemingly so abundant in other industries, particularly computers and the internet, where CEOs like Steve Jobs or Mark Zuckerberg are widely known, and even VCs are get cover stories (like Reid Huffman.) I'd like to see the day where a prolific medicinal chemist is as well-known for his/her efforts as Jonny Ive is for his design of Apple products.
(Note: I'm focusing narrowly on biotech people with a commercial impact. Academic scientists like James Watson, Sydney Brenner, and others of course have had HUGE impact, and many have been so honored with Nobel prizes (and the like.) I don't know of any organized honors for commercial success.)
It'll take some time and a lot more success before the pantheon of biotech rock stars intakes root, but Dr. Quake is a great, if singular example of a biotech rock star.
(A few other nominees as biotech rockstars: Jonathan Rothberg, RJ Kirk, Henri Termeer, Alejandro Zaffaroni, Dr. Brian Druker, Arthur Levinson, and Susan Desmond-Hellman. Got any other nominees? Please nominate other names in the comments section.)
Showing posts with label RJ Kirk. Show all posts
Showing posts with label RJ Kirk. Show all posts
Thursday, June 7, 2012
Friday, May 18, 2012
Intrexon In-trouble?
Ever used Google Alerts? They're a great way to keep tabs on interesting companies without the press appeal of, say, Apple or Pfizer. One such company that I follow is Intrexon - a company that aims to be to synthetic biology what Microsoft or Google are to software or the internet - broad, dominant, and in certain regards the 800-pound gorilla of the sector.
Usually my Intrexon alerts are full of Halozyme and Ziopharm references - they're small-cap partners of Intrexon and never shy about touting their connection to Intrexon and RJ Kirk. This weeks' alert, though, linked to a message board post from an Intrexon employee who's position was being eliminated in a bad way. Not a huge deal, but it did prompt me to check the Intrexon management page and some LinkedIn connections. Turns out there's been leadership turnover and layoffs at the extremely well funded company. At least two long-term leaders at the company have been booted (COO who was formerly CEO, and the head of the AgBio division), and the number of open positions on their career page has been reduced to a trickle.
Intrexon is highly secretive, so what has happened will probably never reach the press. I'll guess, though, that somebody realized that a time-out was necessary since 1) the company probably has/had a seven-digit monthly burn rate, while intentionally foregoing revenues, and that 2) the company's core technology is over a decade old. Other guesses might be that an expected partnership didn't materialize, or, possibly the Prometheus, Myriad, and other legal cases prompted doubt over whether Intrexon's synthetic biology IP strategy was defensible.
One other possibility: the realization has taken hold that synthetic biology is just a new name for cool(er) genetic engineering, and that a category-killer company in this segment just isn't in demand.
Thursday, February 9, 2012
Interesting deals......
Two transactions from the last month that intrigued me:
Transgenomic (TBIO) raised $22M from a group of investors. Congrats to TBIO, as they attracted new capital equal to about 40% of their market cap including from a very serious investor (RJ Kirk's Third Security.) This financing allows TBIO to rise above the small cap services/genomics/diagnostics crowd, and lets them focus more on business than on financing. Gaining the imprimatur of RJ Kirk isn't bad either.
(Also an acknowledgement of TBIO's very nice 3-yr stock performance.)
What made me curious about the deal is:
1) the size. While one blogger calls the raise too large relative to their $1M/yr cash burn, I'd expect that TBIO has some really good uses in mind for the fresh capital, perhaps to shop around earlier, younger diagnostics plays to plug assays into their sales channel. My perception is that acedemics are asking for stiff terms to commercialize novel diagnostic IP, bargains can be found among capital starved start-ups.
2) the fact that Kirk/Third Security are injecting equity into TBIO.......to repay the debt owed to Third Security by TBIO. (TBIO owes ~$8M as part of their prior deal to buy Clinical Data/s (i.e. Kirk's) prior PGx assets.
This isn't anything unscrupulous, like, say Elan's early 2000's Enron-esque equity investments to get R&D expense off of their books while pumping their book value. (Wish I could find a link for this.) Instead, it's an interesting way for Kirk to continue to bet on pharmacogenomics while also returning some value on the investment in the short run. (The definition of "short run" is liberally applied here. Kirk's PGx investment interest goes all the way back to the purchase of Genaissance (2004?)) Kirk & team have turned over a tertiary asset from their Forest Labs/Clinical Data deal into an interesting chunk of a publicly traded company. (albeit OTC BB)
One of these days I'll have to dive deeper into Kirk's activity, particularly Intrexon, his synthetic biology company, and affiliates such as Ziopharm and Adeona.....
The other transaction that caught my eye:
Warp Drive Bio founded with $125M in seed financing.
When I first heard of this deal, I was stunned by its' size. I've come down a bit after learning more details, but I still can't rationalize it. (Never mind the realization that the headline science of Warp Drive combines two absolute graveyard priorities: natural products and genomics. That's a conversation for another day)
It looks like only $75M is committed cash financing. My guess is that Sanofi is contributing $50M in research support, less any research assets contributed. The press release suggests that this will cover 5 years of operations. (Let's ignore that business plans & research agendas change over 5 years.)
If you're an early stage VC, you're targeting a 40% annual ROI, but you won't pull the trigger that doesn't look like a potential 10X return. If the VCs behind the deal expect 10X liquidity in 5 years, then they'd target an enterprise value for Warp Drive in 5 years of $1.25B (158% IRR), but be happy with 5.4X (40% IRR on $675M EV in 5yrs.)
These figures are nuts, but I guess that's how Third Rock (not Third Security) does it - they also started Foundation Medicine with an enormous seed round ($34M last year.)
I really hope this isn't the only way that start-ups will get off the ground in the future. By now it is apparent that there's a big gap between start-up requirements and VC interest - VCs really need to deploy large amounts of capital ($5M chunks minimum, likely in syndicate with other firms resulting in rounds of $10-$20M in new capital. Only deploying capital at this level makes their VC models economical, while most early stage discovery companies think in terms of $1M-$5M rounds, otherwise their interests are diluted to nothing.
If Warp Drive is the rule, rather than the exception, only big ticket discovery efforts with star quality SABs and pharma partners at launch will draw financing, meaning that pre-clinical discovery will slow significantly.
My guess is that Warp Drive and Foundation are the exception rather than the rule, and that their VC parents have the 'curse' of too much capital to manage.
Or at least I hope so.
Transgenomic (TBIO) raised $22M from a group of investors. Congrats to TBIO, as they attracted new capital equal to about 40% of their market cap including from a very serious investor (RJ Kirk's Third Security.) This financing allows TBIO to rise above the small cap services/genomics/diagnostics crowd, and lets them focus more on business than on financing. Gaining the imprimatur of RJ Kirk isn't bad either.
(Also an acknowledgement of TBIO's very nice 3-yr stock performance.)
What made me curious about the deal is:
1) the size. While one blogger calls the raise too large relative to their $1M/yr cash burn, I'd expect that TBIO has some really good uses in mind for the fresh capital, perhaps to shop around earlier, younger diagnostics plays to plug assays into their sales channel. My perception is that acedemics are asking for stiff terms to commercialize novel diagnostic IP, bargains can be found among capital starved start-ups.
2) the fact that Kirk/Third Security are injecting equity into TBIO.......to repay the debt owed to Third Security by TBIO. (TBIO owes ~$8M as part of their prior deal to buy Clinical Data/s (i.e. Kirk's) prior PGx assets.
This isn't anything unscrupulous, like, say Elan's early 2000's Enron-esque equity investments to get R&D expense off of their books while pumping their book value. (Wish I could find a link for this.) Instead, it's an interesting way for Kirk to continue to bet on pharmacogenomics while also returning some value on the investment in the short run. (The definition of "short run" is liberally applied here. Kirk's PGx investment interest goes all the way back to the purchase of Genaissance (2004?)) Kirk & team have turned over a tertiary asset from their Forest Labs/Clinical Data deal into an interesting chunk of a publicly traded company. (albeit OTC BB)
One of these days I'll have to dive deeper into Kirk's activity, particularly Intrexon, his synthetic biology company, and affiliates such as Ziopharm and Adeona.....
The other transaction that caught my eye:
Warp Drive Bio founded with $125M in seed financing.
When I first heard of this deal, I was stunned by its' size. I've come down a bit after learning more details, but I still can't rationalize it. (Never mind the realization that the headline science of Warp Drive combines two absolute graveyard priorities: natural products and genomics. That's a conversation for another day)
It looks like only $75M is committed cash financing. My guess is that Sanofi is contributing $50M in research support, less any research assets contributed. The press release suggests that this will cover 5 years of operations. (Let's ignore that business plans & research agendas change over 5 years.)
If you're an early stage VC, you're targeting a 40% annual ROI, but you won't pull the trigger that doesn't look like a potential 10X return. If the VCs behind the deal expect 10X liquidity in 5 years, then they'd target an enterprise value for Warp Drive in 5 years of $1.25B (158% IRR), but be happy with 5.4X (40% IRR on $675M EV in 5yrs.)
These figures are nuts, but I guess that's how Third Rock (not Third Security) does it - they also started Foundation Medicine with an enormous seed round ($34M last year.)
I really hope this isn't the only way that start-ups will get off the ground in the future. By now it is apparent that there's a big gap between start-up requirements and VC interest - VCs really need to deploy large amounts of capital ($5M chunks minimum, likely in syndicate with other firms resulting in rounds of $10-$20M in new capital. Only deploying capital at this level makes their VC models economical, while most early stage discovery companies think in terms of $1M-$5M rounds, otherwise their interests are diluted to nothing.
If Warp Drive is the rule, rather than the exception, only big ticket discovery efforts with star quality SABs and pharma partners at launch will draw financing, meaning that pre-clinical discovery will slow significantly.
My guess is that Warp Drive and Foundation are the exception rather than the rule, and that their VC parents have the 'curse' of too much capital to manage.
Or at least I hope so.
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