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Gene therapy firms seek financing amid biotech market slump, CEOs say

Dozens of companies in the genetic medicine space have raised substantial capital rounds in recent years and many more are looking for investors, fueled by the successes over the last decade in newly approved genetic medicines and advances in areas such as gene editing, mRNA therapy, and sRNA therapy, they said. Many new firms are focused on novel drug delivery technologies using adeno-associated virus vectors (AAV) that can deliver therapeutic payloads to replace or alter genes at a molecular level.  

Genetic medicine hit a milestone in 2017 with US Food and Drug Administration approvals of two new cancer gene therapies, Kymriah, made by Novartis [NYSE:NVS], and Yescarta, made by Gilead Sciences [NASDAQ:GILD]. They were followed by gene-based Covid-19 vaccines from Pfizer [NYSE:PFE] in partnership with BioNTech [NASDAQ:BNTX], and Moderna [NASDAQ:MRNA], followed by a series of FDA approvals this year for gene therapies that address rare diseases. 

But with traditional initial public offerings on the US exchanges at a 32-year low, insiders say private financings and company sales are among the few options available to keep these emerging biotech firms going.

What follows is a selection of privately held gene therapy companies that plan to raise capital in the coming months, according to executives at the Chardan Genetic Medicines Conference.

Lacerta Therapeutics, a spin out of the University of Florida, is looking to raise a Series B round that is “north of USD 50m,” according to CEO Edgar Rodriguez. The Alachua, Florida-based company, which in 2017 raised USD 30m from partner Sarepta Therapeutics [NASDAQ:SRPT], is now talking to venture capital funds for the next raise. The company says it is in pre-clinical development of proprietary treatments for rare diseases including Pompe disease and Friedreich’s ataxia, while also developing novel drug delivery technology utilizing AAV vectors with partners including Eli Lilly, UCB Pharmaceuticals and Sarepta. Lacerta employs 61 people.

iECURE, a gene editing company that last year raised a USD 50m Series A round from Versant Ventures and OrbiMed Advisors, is likely to seek a Series B round of roughly the same size next year, according to CEO Joseph Truitt. The Philadelphia-based firm is developing a treatment for ornithine transcarbamylase deficiency (OTC), a rare but often deadly genetic disorder in newborns. “There is no one else working on pediatric gene insertion,” said Truitt, who said iECURE will likely conduct its first clinical trials in 2024. The company's therapy is based on research from the University of Pennsylvania gene therapy center, and it is working with development partners Catalent and The Center For Breakthrough Medicines.  

Coave Therapeutics, a Paris-based clinical stage gene therapy company developing treatments for rare ocular and central nervous system (CNS) disorders, is in the process of raising EUR 50m in a Series B round, according to CEO Rodolphe Clerval. The company, which has raised EUR 35m from international investment funds since inception in 2015, is targeting strategics and financial investors for the latest round, the CEO said. Coave is entering Phase 3 clinical trials for a treatment for inherited retinal dystrophy and has three other programs in pre-clinical development for Parkinson’s disease, ALS and multiple system atrophy, according to its website. Coave uses proprietary AAV-ligand conjugates to deliver life-altering payloads for eye and CNS functions, it said, and it is also advancing protein degradation, a hot new area of clinical research.  

HAYA Therapeutics, based in Lausanne, Switzerland, and San Diego, is looking to raise a Series A round between USD 50m and USD 80m to advance treatments for fibrotic diseases and other age-related diseases, according to CEO and co-founder Samir Ounzain. Its lead drug candidate, HTX-001, is in preclinical trials and found to have blocked cardiac fibrosis in animal studies, he said. The company, which is focused on finding drug candidates within the “dark matter” of the human genome, raised USD 25m in a seed round in May 2021, according to company materials.  

Cove Therapeutics, a spinout of Johns Hopkins University that was launched in November 2021, is looking to raise USD 20m to USD 25m in a Series A round to advance non-viral nanopartical gene therapies for ocular and neuromuscular disorders such as macular degeneration and Duchenne muscular dystrophy, according to Niren Shah, the co-founder and CEO. San Marcos, California-based Cove had been operating in ‘stealth mode,’ he said.  

Capsigen, a gene therapy company focused on developing novel viral capsids, or nanometer-sized containers that transport genetic payloads, is looking to raise anywhere from USD 20m to USD 50m in venture funding, according to John Bial, the founder and CEO. The Vancouver, Washington-based company has a partnership with Biogen in neuroscience applications and is looking for several other corporate partnerships this year, Bial said. “Every pharma company that is doing gene therapy these days needs a new capsid,” he said. The company, which launched in 2020 with founder capital, has not yet begun a new capital round, he said.  

Purespring Therapeutics, a UK-based gene therapy company focused on treatments to treat kidney disease, will likely look to raise a Series B of undisclosed size sometime next year, according to Richard Francis, the CEO. The company, which raised a GBP 45m Series A round from UK investment group Syncona [LSE:SYNC] in November 2020, is “well capitalized” but “it won’t be long before we raise a Series B,” he said. Purespring has three kidney disease candidates in preclinical development that Francis declined to describe for competitive reasons.  

Flamingo Therapeutics, a gene therapy company focused on oncology treatments, is looking to raise USD 30m to USD 40m in a Series B round, according to CEO and co-founder Michael Garrett. The Leuven, Belgium-based company, which has operations in San Diego, previously raised around USD 17m in bridge and equity funding, said Garrett. The company is focused on RNA-targeting therapies and has a partnership with Ionis Pharmaceuticals to develop cancer treatments.