May Financial Focus: San Diego Early-Stage Funding Soars in First Quarter of 2018

By Marie Daghlian
Early stage venture financing in the San Diego area experienced a massive boom in capital raised in the first quarter of 2018 as four biotech companies raised an impressive $240 million. It was more than twice the amount raised in early stage rounds in all of 2017.
Early Stage Venture Capital Funding in San Diego by Quarter

Source: PwC MoneyTree/CB Insights

Indeed, the four companies accounted for almost three quarters of the money raised:

Company Raised Category Principal Activity
Gossamer Bio 100.0M Therapeutics Autoimmune; inflammation
Singlera Genomics 60.0M Diagnostics Genomic tests
Expansion Therapeutics 55.3M Therapeutics Small molecule RNA target binders
Pairwise Plants 25.0M Industrial/Ag Gene editing in crops

In total, ten biotech companies raised $336 million in venture financing in Q1 2018, the most money raised in the region in a quarter since Q1 2014 when 22 companies raised $355 million, according to data from PwC Moneytree/CB Insights. While the amount of venture capital invested in health-related companies was impressive—up 188 percent compared to the previous quarter—the number of companies receiving funding remained flat. Five companies received $304 million of the total $336 million invested.
Venture Capital Funding in San Diego by Quarter

Source: PwC MoneyTree/CB Insights

Series A rounds accounted for five of the ten financings, led by Gossamer Bio’s $100 million launch and Expansion Therapeutics’ $55.3 million emergence from stealth mode at the beginning of the year.
Almost three years after selling Receptos to Celgene for $7.2 billion, the team of Faheem Hasnain and Sheila Gujrathi launched Gossamer Bio to develop innovative therapies for areas of high unmet need in immunology, inflammation, fibrosis, and oncology. The company is backed by Omega Funds, which provided seed funding, and ARCH Venture Partners. The capital will be used to quickly ramp up the company, progress clinical trials for a number of early and late-stage drug candidates, and to further augment the company’s pipeline.
Hasnain and Gujrathi had been leveraging what they said was an asset-rich in-licensing environment, and assessing and acquiring therapies at various stages of development in multiple disease areas that they say could have a great impact on the lives of patients. The biotech plans to begin by developing its lead program, a phase 2b/3 oral, once daily therapy targeting specific patients across different indications with the potential for a pipeline within a product.
Incubated in 5AM Venture’s 4:59 Initiative and seeded by 5AM and Sanofi, Expansion Therapeutics emerged from stealth mode at the beginning of 2018 with $55.3 million in a series A financing co-led by 5AM Ventures, Kleiner Perkins, Novartis Venture Fund, and Sanofi Ventures with participation from RA Capital Management and Alexandria Venture Investments. The company also named Kevin M. Forrest as President and CEO. He had previously served as founding COO and CFO of San Diego-based anti-infectives company Cidara Therapeutics.
Expansion plans to use the funding to discover and develop novel small molecule drugs targeting key human disease-driving RNAs to treat rare diseases. The initial focus is on expansion repeat disorders, about 30 genetic diseases that currently don’t have satisfactory treatments. The biotech’s science is based on pioneering work from the lab of Matthew Disney of The Scripps Research Institute Florida.
Backed by a syndicate of investors based in China, Singlera Genomics raised$60 million in a series A+ financing round at the end of March led by Green Pine Capital Partners and Prosperico Ventures with participation from new and existing investors, UCF Medical Investment, Jointown Pharmaceutical Group, and Lilly Asia Ventures among others.
Singlera, based in La Jolla and Shanghai, is developing non-invasive genetic tests to detect early-stage cancer.  The biotech applies high-throughput sequencing of methylated circulating tumor DNA and machine learning to detect and diagnose early-stage cancer. Singlera’s products address early-stage cancer detection, personalized cancer treatment, prenatal diagnosis, and pre-implantation genetic screening. The company also provides customized next generation sequencing services to pharmaceutical companies and medical research institutions.
Pairwise Plants raised $25 million in a series A financing in March from Deerfield Management and Monsanto Growth Ventures. The agricultural biotech is focused on using gene editing and leveraging natural diversity in agricultural crops in new ways to address global food challenges. Pairwise licensed programmable base editing technology from Harvard University and plans to develop new gene-editing applications that it will make available to food and agricultural companies for a wide variety of crops. It also signed a collaboration deal with Monsanto to advance research and development of gene-editing for agricultural applications.
Finally, Crinetics Pharmaceuticals raised $63.5 million in a series B financing led by Perceptive Advisors that includes new investors RA Capital and OrbiMed, and existing investors 5AM Ventures, Versant Ventures and Vivo Capital. Crinetics is focused on rare endocrine disorders and endocrine-related cancers. The biopharma plans to use the proceeds to fund the continuing development of CRN00808, an oral nonpeptide somatostatin agonist for the potential treatment of acromegaly, to develop additional new targeted therapeutics for endocrine disorders and endocrine related cancers, and for general corporate purposes.
Three San Diego biotechs raised $96 million in April 2018: gene-editing biotech Poseida Therapeutics raised $30.5 million in a series B round from Longitude Capital, Vivo Capital, and Tavistock Group; repurposed drug developer 10xBio raised $2.7 million in a series A round; and Synthorx, which uses synthetic biology to develop cancer immunotherapies, raise $63 million in a series C round from a syndicate that includes OrbiMed, Medicxi, Osage University Partners, Avalon Ventures, RA Capital Management, and Correlation Ventures.