With Drugs in Clinic, Constellation Nabs $55M For IPO Push

Xconomy Boston — 

Cancer drug developer Constellation Pharmaceuticals of Cambridge, MA, has reeled in $55 million in what it describes as a mezzanine round of funding, typically a final financial push before a company tries to go public.

The news jibes with what Constellation CEO Keith Dionne told Xconomy in August. Dionne was in a mood to celebrate at the time. Xconomy broke the news that Constellation’s drug development partner Genentech had turned down its option to buy Constellation. On its Twitter feed, Constellation showed pictures of champagne glasses and fireworks. The company had been ready to move on independently “for a while,” Dionne said.

An acquisition had been a possibility ever since the two companies struck a deal in 2012 that immediately paid Constellation $95 million and gave Genentech a three-year acquisition window.

At that time, Genentech’s top deal maker James Sabry told Xconomy that the quality of work of Constellation’s scientists “was akin to ours.”

Constellation is developing cancer drugs that interact with the complicated switches in and around DNA that turn genes on and off, a field called epigenetics.

An IPO try from Constellation will make for an interesting case. Constellation is a clinical stage company, but barely. Its lead anti-cancer compound is currently in Phase 1, and a second compound just recently advanced into Phase 1, according to the company. Even in good times, biotechs working in cutting-edge fields with little to no clinical track record can be a tough sell to public investors. But after an unprecedented three-year run, the biotech IPO window has been a tighter squeeze since the markets went south earlier this fall.

The new round of funding was led by Topspin Partners and included other new undisclosed investors. Previous investors Third Rock Ventures, which was the company’s original investor, The Column Group, Venrock, and SROne (the VC arm of GlaxoSmithKline) also participated. Constellation has now raised at least $125 million in venture funding.