Biotech investors are still holding the purse strings tight as the market slowly rebounds from its downturn in recent years.
Cell and gene therapy investments have taken a particular turn for the worse. As of late August, cell and gene therapy companies had raised only about $500 million this year — far below an $8.2 billion funding peak in 2021. Despite curative potential, hurdles in cell therapy manufacturing and sluggish uptake for many of the approved gene therapies have showcased the challenges to making the treatments lucrative for pharma.
Investors are also less eager to gamble on drugs that have yet to be tested in the clinic. Late last month, Tome Biosciences, which specializes in gene editing, announced it’s laying off nearly all of its staff, citing the challenging investment market for preclinical treatments as a main cause of its troubles.
A few companies have bucked market trends and pulled in major fundraising hauls. Most notably, Xaira Therapeutics launched in April with an impressive $1 billion in committed capital and a mission to “re-engineer” how drugs are developed through emerging AI.
And in general, AI, along with therapies that are differentiated from potential rivals, can still be catnip for biotech investors. In a year marked by modest funding rounds, here are three biotechs that managed to pass the multimillion-dollar mark and what made them stand out.
Candid Therapeutics
Latest fundraising round: Series A, Sept. 9
Amount raised: $370 million
The story: A longtime biotech executive, Dr. Ken Song has already scored big in the industry. Last December, the CEO led radiopharmaceutical specialist RayzeBio to a $4.1 billion acquisition by Bristol Myers Squibb meant to bolster the Big Pharma’s oncology prowess.
Now, Song is back at it again with a new company and technology. And as CEO, chairman and president of Candid Therapeutics, Song recently guided the startup through one of the most successful debut funding rounds of the year.
After examining a range of emerging therapies for his new venture, Song zeroed in on the potential of T cell engagers — a bispecific antibody that harnesses the immune system to find and attack disease-causing cells. If successful, the approach, which has been already won approvals in cancer, could deliver safer and easier-to-manufacture cell therapies that are also a good fit for autoimmune diseases.
Candid built an early-stage pipeline by acquiring rights to two candidates that target a subset of immune cells called B lymphocytes and hopes to start clinical trials in autoimmune diseases next year. The company said it’s aiming to be the first to “bring these novel therapies to market.”
AresenalBio
Latest funding round: Series C, Sept. 4
Amount raised: $325 million
The story: Manufacturing and commercialization challenges have dogged the cell and gene therapy space, cooling market momentum for emerging biotechs. But earlier this month, ArsenalBio demonstrated there’s still investor appetite for differentiated therapies moving into the clinic.
AresenalBio’s programmable CAR-T cell therapies leverage a proprietary dual antigen sensing “logic gate,” creating a more targeted cancer treatment designed to avoid off-tumor toxicity. ArsenalBio plans to use the latest haul to scale manufacturing and advance development for its lead candidates, which are both in early-stage development. Data for the lead ovarian cancer treatment could come later this year.
ArsenalBio is led by CEO, co-founder and chairman, Dr. Ken Drazan, a liver transplant surgeon and the former president and chief business officer of Grail, which Illumina bought in 2021. The company also has preclinical assets for solid tumors with partner Bristol Myers Squibb.
Formation Bio
Latest funding round: Series D, June 26
Amount raised: $372 million
The story: The number of AI companies in pharma has swelled in recent years. But Formation Bio stands out thanks to big-name financial backers — like OpenAI CEO Sam Altman — and a diversified business model as a solutions provider for pharma companies that has its own pipeline of drugs.
Launched in 2016 as TrialSpark, the company created an AI platform aimed at accelerating the entire drug development life cycle through tools that optimize workflows such as trial design. Formation has also acquired or licensed a pipeline of clinical candidates including a phase 3 JAK inhibitor for chronic hand eczema.
Its latest funding round included “significant participation” from Sanofi and brings its total amount raised to about $600 million.
