Juno shows life science startups can be unicorns, too: VCJ

Internet startups can become viral sensations overnight and attract huge sums of venture capital.

Life science startups, on the other hand, take years just to launch trials, and there’s always a shortage of willing investors.

That’s long been the mainstream views of funding patterns for the venture capital industry’s two largest investment areas. With new high-flying “unicorn” Internet companies soaring to billion-dollar-plus valuations every month, it may seem particularly true today.

However, recent funding announcements offer proof that the unicorn club isn’t limited to tech startups. Recently, Juno Therapeutics, a developer of therapeutics that re-engineer the body’s immune response to fight cancer, closed a $134 million Series B round, bringing total funding to more than $300 million. That’s an enormous sum for any venture-backed company, let alone a biotech founded just last December.

Much of the investor interest stems from Juno’s unique appeal. It’s drawn scientists from three of the leading U.S. cancer centers, taken on a staggeringly ambitious mission, and shown some impressive early trial results.

The company is also a fairly early player in what’s expected to be a fast-growing area of cancer research called immunal oncology, which combines advances in synthetic biology, immunology and other fields to re-engineer a patient’s own immune response to eradicate cancerous tumors.

Juno’s not the only newly launched life science startup to attract the kind of big funding round usually reserved for later-stage ventures. A number of biotech teams that combine prominent scientists, big ideas, and early backers with track records for scaling startups have raised rounds of $40 million or more within a year or two of launch.

“It’s been the most productive year in oncology in the history of ever,” said Robert Nelsen, a managing director at ARCH Venture Partners, which was the sole VC investing, alongside the Alaska Permanent Fund, in Juno’s seed round last year.

A great indicator of that is Juno itself, which is a collaboration between scientists at Fred Hutchinson Cancer Research Center, Memorial Sloan Kettering Cancer Center and Seattle Children’s Research Institute. Each institute had enough promising research on its own to launch a venture-backed company, though they settled on pooling their resources to have a bigger and faster impact.

The enthusiasm around Juno comes as investors’ appetite for capital intensive early-stage life science companies is on the rise.

In oncology and gene therapy, VCs and non-traditional investors are backing rounds for ambitious, recently formed startups. Examples include:

  • Spark Therapeutics, which is developing gene-based medicines for serious ailments including inherited blindness, neurodegenerative disease, raised $73 million in a May round led by Sofinnova Ventures. The company launched in October 2013 with $50 million capital commitment from The Children’s Hospital of Philadelphia, where its research team is based.
  • Dimension Therapeutics, which is working on gene therapies for rare diseases, launched in 2013 and by June had raised a $50 $30million round backed by OrbiMed Advisors and Fidelity Biosciences.
  • Voyager Therapeutics, a developer of gene therapies for diseases of the central nervous system, launched this year with $45 million in funding from Third Rock Ventures.

Third Rock Partner Alexis Borisy said the growth of big early rounds is driven by gene therapy-based treatments showing tremendous efficacy in early trials. It helps that federal agencies are taking steps to lessen regulatory burdens for companies developing cures for serious illnesses.

Meanwhile, portfolio companies are managing to attract non-traditional investors. For instance, Juno’s most recent round was financed by firms that primarily invest in public markets.

This story first appeared in Reuters Venture Capital Journal. Subscribers can read the full story here. To subscribe to VCJ, click here for the Marketplace.

Story has been corrected to note that Dimension Therapeutics recently raised $30 million from OrbiMed and Fidelity, not $50 million as previously reported.

Photo illustration of test tubes from Shutterstock.

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