VenBio Scores Again as Genentech Pays $1.7B+ for Seragon Pharma

VenBio Scores AGain as Genentech Pays $1.7B+ for Seragon Pharma. Check out the story below.

Jul 2, 2014 at 2:01PM

Editor's Note: Genentech is a subsidiary of Roche Holding (NASDAQOTH:RHHBY)

The big year for San Francisco, CA-based life sciences venture firm venBio just got bigger.

Genentech, the big cancer drugmaker from the Bay Area, has agreed to buy a less than one-year-old San Diego, CA-based start-up called Seragon Pharmaceuticals for a whopping $725 million up front. Seragon's backers—the Column Group, OrbiMed Advisors, Aisling Capital, venBio, and TopSpin Partners—could see another $1 billion in payouts if the start-up's prospective breast cancer treatment hits a variety of milestones. The buyout is expected to close during the third quarter.

The deal gives Genentech a platform for developing so-called selective estrogen receptor degraders, or SERDs. The big idea is that they don't just bind to estrogen receptors, like the hormone therapies that are used to treat many cancers but ultimately fail as tumors develop a resistance to them. Instead, the SERDs are meant to actually bind to, and then degrade the receptors, eroding their signaling abilities. The biotech's most advanced program is a prospective breast cancer drug called ARN-810, which is currently in Phase 1 testing for patients with late-stage estrogen receptor positive breast cancer. Genentech noted that SERD treatments could also potentially treat early stage breast cancer and become a "cornerstone" of future combination therapies.

While the deal marks a big victory for all of Seragon's venture backers, it's also notable for a few other reasons. For one, it continues a big run for venBio, which has now ripped off three venture exits via big buyouts since 2013. First, in June 2013, Johnson & Johnson (NYSE: JNJ) snapped up Aragon Pharmaceuticals and its prostate cancer treatment for $650 million up front and $350 million more in potential milestones. (VenBio joined on late as an investor in Aragon, leading its $50 million Series D round in 2012—the company was founded within the offices of the Column Group). Then, just a month ago, Teva Pharmaceutical Industries snapped up another portfolio company, San Mateo, CA-based Labrys Biologics, for $200 million up front and another $625 million in milestones. That deal came less than two years after Labrys was formed, and venBio partner and co-founder Corey Goodman told Xconomy at the time that venBio had contributed $8.5 million of Labrys' $31 million Series A round plus an "extra kicker" for putting the deal together. VenBio's cut of the Labrys and Aragon upfront payments were more than the firm's $180 million fund has drawn down from its investors, Goodman said at the time.

Secondly, this a large part of the management team behind Seragon was also involved in Aragon. When J&J bought Aragon, it agreed to spin out a second asset, a potential breast cancer drug. That became the foundation for Seragon, which was formed in August 2013—just 11 months ago—and attracted $30 million in venture funding to get going. Many of the same executives from Aragon, including CEO Richard Heyman, were involved in both companies.

It's also huge validation for the work done to get Seragon going. Genentech, as one biotech executive told Xconomy last year, is the proverbial "goose that keeps laying golden eggs"—particularly big-time cancer drugs like rituximab. The fact that it's willing to pay up big numbers for an early stage program from outside the company speaks volumes.

"This year, breast cancer will claim the lives of nearly 40,000 women in the United States, and up to half of these women will have a disease that is driven by the estrogen receptor," said Richard Scheller, executive vice president and head of Genentech Research and Early Development, in a statement. "We believe these investigational oral SERDs could one day redefine the standard of care for hormone receptor-positive breast cancer.

Leaked: This coming blockbuster will make every biotech jealous
The best biotech investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns you will need The Motley Fool's new free report on the dream-team responsible for this game-changing blockbuster. CLICK HERE NOW.

This article originally appeared on Xconomy, along with:

Ben Fidler has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson and Teva Pharmaceutical Industries. The Motley Fool owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information