Serial biotech entrepreneur Jonathan Lim has raised a whopping $200 million to advance multiple candidates at his latest cancer drug development venture, Erasca, into human testing.
Lim (pictured) sold his previous company, Ignyta, to Roche for $1.7 billion. On Monday Erasca—a portmanteau of “erase” and “cancer”—announced it had completed a Series B financing round jointly led by Arch Venture Partners and Cormorant Asset Management.
The San Diego-based biotech, which started operations about 18 months ago, made its public debut in December 2018 with $42 million. In March 2019 it extended the Series A, tacking on $22 million more. Now it has an additional $200 million that the company says will support clinical development of multiple oncology programs and further advance its in-house drug discovery pipeline. In addition to discoveries it has made internally, Erasca says its portfolio includes assets licensed from other organizations. The company hasn’t talked much about its programs, including the type of therapies it is designing, other than saying they are intended to “drug various biological drivers of cancer”; it also hasn’t disclosed the targets the treatments are designed to hit.
City Hill Ventures, an investment firm started by Lim, and Cormorant Asset Management led Erasca’s initial $42 million haul. Cormorant is a so-called “crossover” investor, which holds public stock and takes stakes in pre-IPO private companies. Does Erasca’s backing by Cormorant and similar investors indicate the biotech is eying the public markets, even during a historically unpredictable global economy? In recent weeks it has been done—and successfully.
But Lim doesn’t sound eager for the company to join the handful of biotechs that have made the transition—at least not yet.
“We are in a fortunate position where we were able to raise money from like-minded institutional and private investors who are supportive of our mission over the long-term,” he tells Xconomy. “By being a private company, we are spared from the daily market volatility, and can continue to build the company in a way that maximizes our ability to benefit patients.”
With $200 million in fresh cash, it shouldn’t need other sources of fundraising for some time. New investors in Erasca’s Series B financing include Singapore-based investor EDBI, Invus, Terra Magnum Capital Partners, and other unnamed private and strategic entities. City Hill, Colt Ventures, and LifeSci Venture Partners also participated.
Mega-rounds, or financings totaling at least $100 million, were once relatively rare in venture capital, according to data from analytics firm PitchBook. A decade ago PitchBook recorded four such deals by pharma and biotech companies totaling $800 million. By 2015, the annual deal value climbed to $2.7 billion, the data show. In each of the past two years, it has topped $5 billion.
PitchBook tracked 19 US VC mega-deals in the first quarter, agreements totaling $2.8 billion in deal value. Kymera and Generation Bio, both Cambridge, MA-based companies, and Pliant Therapeutics, in South San Francisco, among others, each announced financings last quarter of at least $100 million—albeit Series C rounds, which are generally larger than earlier rounds.
Last quarter’s tally topped the 15 such rounds raised by software companies, for which such financings are much more common. Still, the 15 mega-rounds raised in the software sector pulled in more cash: $4.2 billion, the PitchBook data show. It’s unclear how the pandemic will affect such financings for early-stage pharma and biotech companies going forward.