With $310M And Public Investors Aboard, Could a Juno IPO Come Next?

Xconomy Seattle — 

We won’t know for some time whether the cancer immunotherapies under development at high-powered Seattle startup Juno Therapeutics are the real deal. But there are plenty of investors willing to bet on them.

Juno announced today that it has raised a $134 million Series B round from all of its “major” prior investors—the company didn’t specify, but ARCH Venture Partners and the state of Alaska’s oil revenue fund are among its previous backers—and ten “public mutual funds and healthcare-focused funds” that it declined to name.

Unlike most biotech venture financings, the cash is all up front, says Juno CEO Hans Bishop, which means Juno has now raised $310 million in less than a year.

With investors now on board that are best known for backing public companies, it would be a surprise if Juno did not attempt to go public this year or in 2015.

Hans Bishop, CEO of Juno Therapeutics

Hans Bishop, CEO of Juno Therapeutics

“We’ll talk about that when the time comes,” Bishop says, when asked if Juno is considering an IPO. “The [funds] coming into this round are really some of the deepest pools of capital in the country, and it’s long-term capital that has an outstanding track record of company-building. The benefit of these types of investors…is, it gives us optionality. If the right thing to do later is to IPO, they’ll be supportive of that. If the right thing is to stay private, they’ll be supportive of that.”

In the current long window for biotech IPOs, open since the start of 2013, many firms have used a “crossover” financing strategy, bringing public funds into a final private round, a signal that an IPO is in the company’s sights. Some recent examples: Sage Therapeutics (NASDAQ: SAGE), Zafgen (NASDAQ: ZFGN), and Dicerna Pharmaceuticals (NASDAQ: DRNA).

What makes Juno so sure that these investors will in fact stick around rather than sell Juno’s stock soon after a successful IPO? Bishop says, without naming names, that they’re known for “picking carefully and then sticking with their companies and supporting their build-out.”

ARCH managing director and Juno co-founder Bob Nelsen adds that the average holding time for the investors Juno has brought in is about 11 years, and says that Juno could’ve raised much more cash if that had been its goal.

“This was purely a relationship round,” Nelsen says, while declining to comment about a potential IPO. “This is about figuring out who the best long-term shareholder base is. We really [now] have the shareholder base of a commercial operating company that has a $50 billion market cap.”

Juno is nowhere near actually building that value. For that, like any other biotech, Juno will need to amass more data. Juno splashed onto the scene in December, formed around technologies at three research institutions: the Fred Hutchinson Cancer Research Center and Seattle Children’s Research Institute in Washington, and the Memorial Sloan-Kettering Cancer Center in New York.

It was started up by Arch and the Alaska Permanent Fund, raised a mammoth $176 million Series A, assembled a big-name advisory board with the likes of Rockefeller University president (and former Genentech chief scientific officer) Marc Tessier-Lavigne and others, and has lured former Morgan Stanley biotech investment banking head Steve Harr to become its CFO.

The big bet—one of the biggest in the history of biotech, seeing how much cash has been raised in such a short time—is that Juno can become a major developer in the new wave of cell-based cancer immunotherapies.

The programs under Juno’s roof are “autologous,” which means they remove a sick patient’s own T cells, engineer them to turn them into better cancer killers, and infuse them back into the patient.

One of the programs, known as … Next Page »

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