Rejuvenate Bio, Inc.

iStock, SvetaZi Big-name venture capital firms are raising billions again, though funding a small number of de-risked companies. Meanwhile, smaller VC firms are catching the less flashy companies they think could be future pillars of the sector. The biotech industry’s largest venture capital firms are reloading with billion-dollar funds for the next generation of biotechs, a welcome sign of good times ahead. But that high-pro is largely earmarked for clinical-stage companies with well-known executives and data to show. Sara Choi, a partner with Wing Venture Capital, said when a billion-dollar VC fund is announced it’s important to “double click” on what they’re focused on. If they incubate their own companies, the major raise is likely going to just a handful of splashy companies. Think Flagship Pioneering, the “venture creation” firm that does just that, incubating innovative companies and pumping hundreds of millions into early raises. Flagship raised $3.6 billion in July, which will be used to support 25 new companies . Another is ARCH Venture Partners, a familiar name in some of the buzziest biotech raises of the past year including Metsera and Xaira Therapeutics . ARCH raised $3 billion recently to found and invest in early-stage companies, with a particular focus on companies working with AI and data-driven biology. Those new funds are good news for the biotech sector, said Cain McClary, managing partner and founder of KdT Ventures. “It’s good for us that those larger companies exist. They’re taking big swings.” But venture capitalists who spoke with BioSpace pointed out that these huge new funds do not provide a full picture of companies outside of that orbit that may be smaller with preclinical or more experimental science. That’s where smaller VC firms like Choi’s or McClary’s come in. Both say they’ve been plenty busy funding early-stage companies, even if their work has a lower profile. “A lot of dollars are being raised. Where they’re going to really matters,” Choi said. “I would like to see more funding at the pure-play series B stage, because to me, that’s where the drop off is happening.” Setting the Table Jakob Dupont, executive partner with Sofinnova Investments, said that small companies need to do their research before approaching a VC firm. That’s always been important but has become more so given the market’s current preference for de-risked, late-stage assets. “It’s important to recognize that all funds are not created equal,” he told BioSpace . Sofinnova, a veteran life sciences investment firm that’s been around since the 1970s, lives between the smaller funds and the billion-dollar raisers. The firm is currently on the back-half of its 11th fund, according to Dupont, which was $510 million. Sofinnova targets clinical-stage private companies and the fund has so far contributed to 10 investments. It’s latest was Seaport Therapeutics, the neuroscience biotech from the former leaders of Karuna Therapeutics, which just raised $255 million in a quick Series B after emerging from stealth in April. Other VC firms may be focused on seed funding, angel investing or early Series A rounds. They may be looking for more platform companies or singleassets. Are they oncology experts or into cell therapy? All of these specifics are need-to-knows before going out to investors in this market to ensure you’re not wasting anyone’s time, Dupont said. The market is full of biotechs with proven leadership teams and existing investor syndicates to tap into right now, Dupont pointed out. In addition to Seaport, BioAge is another good example in Sofinnova’s portfolio. “If you’re a relatively unproven management team, then maybe think that the table is not going to be set for you in the same way,” he said. “What’s happening to a degree now is that we’re still in a somewhat conservative space where we’re more interested in investing in proven management teams [and] de-risked clinical data.” Dupont hopes that will change and preclinical, riskier bets will rise again. But for now, companies need to hit the books and do their research to find the right investors. A Return to Normal, Whatever That Is While the larger market stays on the conservative side, smaller VC firms like Wing and KdT that target earlier-stage biotechs are more than willing to take some bets on new science. Wing’s portfolio companies include Cartography Biosciences , which launched in July 2022 with $57 million and a focus on developing immunotherapies using computational technology to identify targets. Another is Veo Therapeutics, which also launched in 2022 with $12 million to find drugs using an in vivo data generation platform. Over at KdT, the portfolio includes Rejuvenate Bio, which is developing a gene therapy to treat multiple age-related diseases that will initially be tested in dogs to assess its ability to extend lifespan. The biotech launched in 2022 with $10 million. Another biotech that KdT has supported, generative AI–focused Terray Therapeutics, announced a multi-target small molecule discovery agreement with Bristol Myers Squibb in December 2023. Seed and series A funding is definitely still happening, according to Choi, but biotechs are facing a higher burden of proof than companies that started out in the post-pandemic frenzy of 2021. During that time, megarounds were everyday occurrences for early-stage companies. There was plenty of money to go around for riskier bets, plus interest from outside investors. Now, fundraises pushing $100 million or more require a bit more convincing. “There has been a—quote, unquote—return to normalcy or correction when it comes to valuations,” Choi said. “On the front lines, things haven’t really slowed down.” McClary said smaller VC firms are a great proving ground for early biotech leaders, and that’s what he hopes to be a part of with KdT. He started the firm in 2017, riding through the pandemic when cash for biotechs was easy to come by. “Folks have moved the goalpost on earlier stage companies and are requiring clinical data and are requiring you to go longer with less,” McClary said. That has required KdT’s companies to be extremely judicious with resources and carefully prioritize their pipelines. These companies have to work harder in this earlier stage to make it to the late-stage when larger firms will take notice, he added. Just like its larger peers, KdT has recently reloaded , collecting $100 million in its fourth fund. That brings the firm’s total assets under management to $250 million. KdT made a point of keeping the fund small, although it was up on the $80 million raised in the last round. McClary said KdT actually turned down some money, aiming to keep the fund small. “We’re willing to sacrifice the upfront, the fee flow that a lot of these larger funds have to stay myopically focused on that zero to one stage,” McClary explained. “Not having unlimited capital for these early-stage checks forces a much more thoughtful process in underwriting these early-stage opportunities.” KdT has also pointed companies toward government dollars to additionally bolster cash reserves when possible, McClary said. “We’ve actually done quite a bit of work in trying to build relationships and bridges with different governmental entities to make sure that we have access to any and all capital, and not just equity capital for our companies,” he said. Dupont said larger firms want to see discipline as companies transition into the later stage. Instead of the heady days of the pandemic when a slate of pipeline projects showed depth, investors want to see one or two of the strongest assets. They also want to know that clinical trials are well designed, the FDA has been engaged and the potential patient population and unmet need has been studied. Being careful with the capital you have is also key when thinking about future investment needs. That means keeping the staff and executive team as small as possible, according to Dupont. “Just keep it small, keep it lean,” he said. “Really protect that money that you have, because it is still a bit of an uncertain fundraising environment.”

Life sciences VC shop KdT Ventures disclosed its $100 million fourth fund on Wednesday morning, just over two years after announcing an $80 million fund. The seven-year-old firm said the new money will mainly go toward its bread-and-butter investment type: writing the first institutional check to a fledgling life sciences startup. KdT has backed companies including gene therapy developer Rejuvenate Bio , Africa-focused genomics company 54gene , lab operations platform Elemental Machines, AI-driven small molecule maker Terray Therapeutics, and Sid Mukherjee -associated biotech Faeth Therapeutics . The firm raised the fund quickly after telling investors about its plans at an annual meeting in March. “Basically, immediately after the annual meeting, we were full,” managing partner Cain McClary told Endpoints News . It said it had to turn away multiple investors for its previous fund because the firm prefers to stay “disciplined on fund size,” he said. The KdT team thinks of itself as the third, fourth and fifth employee at many of its portfolio companies, McClary said, so the firm didn’t want to drastically grow its fund size beyond its recent efforts. “Our special sauce and core competency is really that zero-to-one step of these companies, and the feeling at the firm is that potentially when you have a much larger asset base, you are distracted by the later and larger checks,” McClary said. With a portfolio of over 70 companies, KdT is also creating its first in-house company based around a clinical-stage therapeutic that it in-licensed, McClary said. “If things go well, I think that folks will hear about it early next year,” McClary said. But the firm is likely going to focus on its core mission of helping other entrepreneurs build their own companies, the KdT founder said. It typically invests $500,000 to $5 million for initial checks. “Generally we are a crawl, walk, run type of firm,” McClary said. The firm is based in Austin, TX, but has a venture partner in Houston and two people on the ground in Research Triangle Park, NC, McClary said, though it invests across regions. KdT’s investors are mainly individuals, family offices, fund of funds, large institutions and endowments, McClary said.

GC Therapeutics is based around TFome, a cellular programming platform built to “plug and play”—that is, to deliver off-the-shelf iPSC-based medicines up to 100 times faster than traditional methods. GC Therapeutics has entered gameplay with the mission of unlocking a new generation of cell therapies, uploading with $75 million for its “plug-and-play” tech developed in the lab of—and with cells from—George Church, Ph.D.“George donated his skin cells, which were reprogrammed into the stem cells that were used. So, he truly has skin in the game,” GCTx co-founder and Chief Scientific Officer Alex Ng, Ph.D., told Fierce Biotech. “Along with this deep contribution, we're really proud to have his initials on our door. Of course, GC Therapeutics could also mean gene and cell therapeutics, or the letters of DNA.” The biotech has capped off a $65 million series A financing led by Cormorant Asset Management with participation from Mubadala Capital and Andreessen Horowitz (a16z) Bio + Health, among others. That brings the company’s total capital raised since its 2019 inception to $75 million, according to a Sept. 19 release. From science fiction to reality  GCTx is based around TFome, a cellular programming platform built to “plug and play”—that is, to deliver off-the-shelf induced pluripotent stem cell (iPSC)-based medicines up to 100 times faster than conventional methods. The single-step process combines synthetic biology, gene editing, cell engineering and machine learning in efforts to boost potency, efficiency and quality, according to the company. “This approach harnesses the transformative potential of transcription factor biology to guide iPSC cell fate into any differentiated cell type in a single, seamless step,” GCTx co-founder Church said in the company release. “By transcending the limitations of natural processes, it holds the promise to create cells that surpass the capabilities of those found in nature, generating a groundbreaking new class of SuperCell medicines to address diverse disease areas and reduce healthcare burdens.” Church, a professor of genetics at Harvard Medical School and director of synthetic biology at the Wyss Institute, is a pioneer in genomics and synthetic biology. The scientist is tied to a slew of biotechs, including Nebula Genomics, Ally Therapeutics, Rejuvenate Bio and Manifold Bio.This time, Church formed GCTx alongside CEO Parastoo Khoshakhlagh, Ph.D., and CSO Ng.“Professor George Church's lab is the hot spot for people like me,” Khoshakhlagh told Fierce. “He does bring science fiction to reality.” “The reason that I immediately fell in love with the project … was because of the significant contrast between the current state of the field and what the TFome platform can actually achieve,” the CEO continued. “Traditional cell therapies often take weeks to months to develop, and they typically have low quality and efficiency. Now, in contrast, our technology enables the production of the same cell type in a four-day process—and a single-step process—and with up to 99% efficiency and really high quality.”TFome is designed to go beyond traditional developmental biology by isolating one single biological process specific to cell fate, a process that is actually governed by the key transcription factors, or what Khoshakhlagh calls “the genetic master knobs,” which act in concert to program cells to become a specialized cell type.The biotech is shortcutting the entire process, a streamlining effort that also cuts down manufacturing timelines. The approach allows for a more direct and precise control over cell fate, according to Ng. GCTx has validated its programming approach across diverse cell types both in vitro and in vivo, Ng said in the company's release, adding that the company has also engineered cells into SuperCells to tailor them for specific disease applications.  These SuperCells are designed in two different ways, Khoshakhlagh explained. The first way is by improving existing functions the cells already have, while the second route is introducing new functions that the cell doesn’t typically have. The ultimate goal for SuperCells is having a higher potency and thereby reducing the number of cells a patient needs transplanted, according to the CEO.GCTx’s initial focus will be on gastrointestinal, neurological and immunological diseases to broaden access to cell therapies.“These are the disease areas that really we believe that are waiting to be transformed by cell therapy,” Khoshakhlagh said.While the 35-member team hasn’t yet revealed development timelines for the programs, Khoshakhlagh said the biotech is moving “full speed ahead with a sense of urgency based on the strength of the platform and also the robustness of our preclinical data.”“We really want to ensure that we are bringing the safest option to patients as soon as we can, because we know that patients are waiting,” the CEO said. “My cousin, who has a progressive form of MS, he literally texts me every week, if not every day … asking ‘When? When are therapies like ours going to be available to patients who have no other options?’ And this is what we are working towards—giving hope to patients with no options.” 'Two unmarriable concepts' The Cambridge, Massachusetts-based biotech could be the first iPSC-based cell therapy company to pursue multiple cell products from one starting point using a similar manufacturing strategy for more accelerated development.The platform’s versatility and efficiency have allowed GCTx to build out a rich repertoire of cell types, which subsequently allows the biotech to unlock strategic business development opportunities, according to Khoshakhlagh. The company is open to having “selective partnerships” in biotech and pharma that accelerate certain programs into the clinic, she said. “GC Therapeutics’ groundbreaking approach to cell therapy has the potential to redefine the industry,” Alaa Halawa, executive director and head of U.S. ventures at Mubadala Capital, said in the company release. “By accelerating the production of iPSC-based therapies, the TFome platform unlocks unprecedented efficiency and scalability, which could lead to faster patient access to life-changing treatments.”Halawa has joined GCTx’s board, alongside Cormorant Asset Management’s Ray Kelleher, M.D., Ph.D.; a16z’s Vineeta Agarwala, M.D., Ph.D.; Alnylam founding CEO and JMM Innovations CEO John Maraganore, Ph.D.; plus former Karuna Therapeutics CEO and past Eli Lilly exec Steve Paul, M.D.“Our platform really allows us to re-envision cell therapy manufacturing and marry the two unmarriable concepts, improving our quality while simultaneously increasing cost efficiency,” Khoshakhlagh said. “These are the challenges that we believe have been delaying cell therapy to become a more widespread modality.”“I can envision a world where we have banks of cell products and no patients are suffering due to lack of accessibility to these types of advanced treatment options,” the CEO concluded. “That's my dream.”