DUBLIN – Seventure Partners has raised more than half of its target of over €200 million (US$226.6 million) for its second microbiome-focused venture capital fund, Health for Life Capital II, and aims to reach a final close before the summer.

The Paris-based fund has carved out a distinctive identity by investing across a range of technologies and sectors – including pharmaceuticals, probiotics and live biotherapeutics products (LBPs), companion diagnostics, biomarkers, nutrition and digital apps – that are all based on insights into the links between the gut microbiome and human health. Health for Life Capital I, which it launched in 2014, has invested €160 million across a portfolio of 20 companies.

This time around, investors are more knowledgeable about the microbiome, Seventure CEO and Managing Partner Isabelle de Cremoux told BioWorld, although some remain cagey about its potential to generate financial returns.

"Some investors are still skeptical about the field and prefer to invest in more mature areas, which they perceive as less risky," she said. "What would convince the skeptics I think is phase II or phase III data." Much of the clinical data generated to date has come from compassionate use studies, she said, but a large number of phase II trials is due to read out this year. "Of course, not all of them will be positive," she said. But 2019 could become an important inflection point for the field.

Stockholm-based Infant Bacterial Therapeutics AB – not a portfolio firm – has already generated positive clinical data, she noted. The company is now embarking on a phase III trial of IBP-9414 in the prevention of necrotizing enterocolitis, a life-threatening gastrointestinal condition that affects premature infants. The therapy contains Lactobacillus reuteri, a bacterial strain found in human breast milk.

Believers in the microbiome see it as a whole new industry, de Cremoux said – a means of developing new solutions for underserved chronic indications. There are, however, doctrinal differences among the faithful. Some probe microbiome biology to discover new drug targets that can be addressed by the usual modalities, believing that introducing new bacterial species to alter the composition of the microbiome is not feasible. Others – IBT included – are doing just that, however, and have based their product development strategies around live biotherapeutic products (LBPs).

"Each company preaches in their own church," de Cremoux said. "In our view, as an investor and leader in this field, we need to look at the big picture."

Fecal microbiota transplant (FMT) has long been the poster child of the LBP segment. The therapy is now being extended from its initial use in the treatment of gastrointestinal Clostridium difficile infection to tackle a range of other indications, including irritable bowel disease, obesity, graft-vs.-host disease, various cancer indications, obesity and liver failure, among others. In parallel, the procedure is being increasingly "productized" by biotech firms, in terms of developing standardized manufacturing processes and pill formulations. "I think that's the way forward for FMT," de Cremoux said.

The FDA has yet to rule definitively on how it plans to regulate FMT – as a drug, as a device, procedure or as part of a different category. Some patient advocates and physician groups, including the American Gastroenterological Association, have raised fears that excessive regulation of FMT will limit access while pushing up prices. A lot hinges on the regulatory position it adopts, therefore.

Three firms, Roseville, Minn.-based Rebiotix Inc., Cambridge, Mass.-based Seres Therapeutics Inc. and Seventure investee Vedanta Biosciences Inc., also of Cambridge, recently formed the Microbiome Therapeutics Innovation Group to promote their collective view.

Deals getting bigger

On the drug discovery and development side, the scale of big pharma licensing deals is increasing, de Cremoux said, citing deals that portfolio firm Enterome SA, of Paris, entered with New York-based Bristol-Myers Squibb Co. in immuno-oncology in 2016 and with Osaka, Japan-based Takeda Pharmaceutical Co. Ltd. in Crohn's disease in 2018. The former was worth $15 million up front and an undisclosed level of milestones, whereas the latter was worth $50 million initially and up to $640 million in milestones, plus a $15 million investment commitment. (See BioWorld, Nov. 17, 2016, and Oct. 24, 2018.)

"The numbers are getting bigger and bigger," de Cremoux said. "We're waiting for the $1 billion deal – that will come."

So far, Seventure has logged just one exit from its first microbiome fund, the sale, for an undisclosed sum, of medical nutrition firm Cambrooke Therapeutics Inc., of Ayer, Mass., to the U.S. subsidiary of Tokyo-based food products firm Ajinomoto Co. Inc. "If the markets stay open, we're anticipating a few IPOs in 2019," de Cremoux said.

Seventure has already completed two investments from the new fund. It took the lead in a $25 million series B round at Axial Biotherapeutics Inc., of Waltham, Mass., which is targeting the gut-brain axis to develop therapies for central nervous system conditions, including Parkinson's disease and autism spectrum disorder. It has also invested in Galecto Biotech A/S, which raised €79 million in series C funding last fall to take forward a portfolio of galectin inhibitors in fibrosis and other indications. It is of interest to Seventure because its lead drug candidate targets galectin 3, which, like the microbiome, is involved in immune homeostasis. (See BioWorld, Oct. 26, 2018.)

Seventure has several more term sheets in hand, which could lead to further deals. "There should be two more by the summer," de Cremoux said.