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In Venture Reinvention, Versant Sees Gains Amid Biotech Boom Times

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missed when I first heard it. “Blue Lion Bioscience? What does that mean?” I asked Bolzon.)

Celgene has followed Versant north, kicking in operating cash for Blueline and gaining options to negotiate deals with companies that emerge from the incubator—another source of build-to-buy deals. Blueline’s first company is Northern Biologics, which Versant is backing with a $10 million Series A.

Versant has not only expanded sightlines to Canada and bolstered its European footprint, it has made biopharmaceuticals the main thrust. (It used to be roughly half drugs, half medical devices.)

Build-to-buy startups account for only 20 to 30 percent of the entities in Versant’s total portfolio. The rest of the time, Versant goes more traditional, finding a syndicate of VCs to help move a biotech forward. Even then, however, the fingerprints of the lean times are often evident. One of its “traditional” companies, Flexion Therapeutics (NASDAQ: FLXN), actually started as a creative attempt to crank out pharma-friendly assets before shifting gears.

And today’s spotlight on CRISPR Therapeutics—a startup working in gene editing, one of the most promising and, now, controversial areas of biomedical research—reveals a similar pivot.

Before launch more than a year ago, Versant was thinking CRISPR could add to its build-to-buy ranks. The platform technology would be part of a “mothership” that would spin out products into satellite companies, which in turn, might attract prearranged deals.

One satellite had already been drawn up: a program to fight sickle cell disease called Tracer Hematology, run by Stanford pediatrician and cancer researcher Matthew Porteus. Eighteen months later, however, that model “is gone,” says CRISPR CEO Rodger Novak, who says Tracer has merged back into the CRISPR mothership. “We don’t think there will be a single-asset sale.”

“All the programs are under one roof,” says Versant managing director Tom Woiwode, a Californian who spends most of his time in Versant’s Basel, Switzerland office. “We’re going to build a premier gene editing company. It’s fair to say the IPO markets have had an influence.”

In other words, why break an idea into little pieces when the bigger picture could be worth a billion dollars or more on the open market? Apparently other investors think so, too. CRISPR said today it has topped off its Series A, with New Enterprise Associates, GlaxoSmithKline’s SROne venture arm, and Abingworth joining Versant to add $35 million. It also has raised a $29 million Series B round, led by Celgene, making a total of nearly $90 million into CRISPR so far.
The company is also moving most of its operations to Cambridge, MA, from London, where Woiwode, Novak, and CRISPR-Cas9 pioneer Emmanuelle Charpentier launched it with an exclusive license to Charpentier’s intellectual property. (Two rivals, Editas Medicine and Intellia Therapeutics, are also in Cambridge.)

By bringing on Celgene as a major investor, CRISPR now also has a potential development partner close at hand, although when asked about Celgene’s interest in CRISPR-Cas9 technology, Golumbeski cautions that Celgene has done straight equity deals before simply for “information rights”—the chance to learn more about an emerging field—without ever advancing to a product or licensing arrangement.

In the biopharma world, partnership deals can bring nondilutive cash and push off the need for more investment; or they can be a stamp of approval for a smaller company to entice curious investors and boost its value. (The investment, however, brings Celgene no special rights to the startup’s products or technology, says Novak.)

There’s no guarantee of a partnership or an IPO, of course; there are many reasons a company based on CRISPR-Cas9 gene editing technology could founder. It’s a great research tool, but turning it into human medicine has miles to go, as I explained in February.

Adapting to tough times was a big part of Versant’s build to buy rationale. The IPO trade winds are enticing now for something even as cutting-edge and risky as CRISPR-Cas9, but Bolzon won’t be too seduced. “Three or four years ago, it took a lot more courage to go public,” he says. “Today there’s not as much pressure to do build-to-buy [deals], but could be talking two years from now and be back where we were.” That is, in a situation where investors are once again skating on thin ice.

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2 responses to “In Venture Reinvention, Versant Sees Gains Amid Biotech Boom Times”

  1. MedTech Catalyst says:

    We often do this similar strategy for medical devices and diagnostic technologies. We mitigate the front-end risk of valuable intellectual property to prepare the technologies for commercialization.

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