DUBLIN – Kurma Partners closed its third biotech fund, Kurma Biofund III, at €160 million (US$174 million), €10 million ahead of its initial target. The Paris-based fund will allocate the bulk of the capital to therapeutics firms, but it is also open to opportunistic investments in med tech, particularly in digital health applications and in biotech-med tech convergence, partner Peter Neubeck told BioWorld.
The fund has been some time in the making – Kurma announced an initial close in December 2018 – but its completion at this point offers a small shot of optimism for European life sciences firms, most of which are still operating under full or partial lockdowns.
Neubeck recently joined Kurma to bring its investment strategy, which combines company creation efforts with more traditional venture capital dealmaking, to the German-speaking world. That involves cultivating close relationships with academic scientists. “That’s the essence of what we do,” said Neubeck, who operates from Kurma’s Munich office. “You would often be talking to people who would not have the phenotype to create their own company.”
Kurma’s first German “creation” is Berlin-based Tacalyx GmbH, a spin-out from the Potsdam-based Max Planck Institute for Colloids and Interfaces, which is developing antibodies that target tumor-associated carbohydrate antigens (TACAs) on cancer cells. It raised €7 million in a seed financing round co-led by Kurma’s new fund and Boehringer Ingelheim Venture Fund last fall.
In all, the new fund has already completed eight investments, including five newly created startups and three venture capital deals. It participated in Utrecht, the Netherlands-based AM Pharma BV’s €139 million series E round, which was completed last month, and in Lyon, France-based Alizé Pharma 3 SAS’s €67 million series A round last summer. It also co-founded, with Strasbourg, France-based Domain Therapeutics SA, Paris-based Ermium Therapeutics SAS, which is developing therapies for autoimmune disease based on novel insights into the role of the chemokine receptor CXCR4 in controlling inflammation.
Company creation is no riskier than regular venture investing, Managing Partner Rémi Droller told BioWorld, despite its perception as a high-risk activity. “This is a question all our LPs [limited partners] have asked,” he said. But repeating the activity derisks individual investments, given the experience and expertise that Kurma has built up in-house and among a network of service providers who can perform industrial-grade toxicology and pharmacology work, for example. “It creates a full ecosystem around our companies,” Droller said. It also makes it easier for investees to hire good quality staff. Moreover, Kurma does not necessarily commit large amounts of cash up front to those early stage ventures.
However, several firms created through its Biofund II, which raised just €55 million in total, subsequently completed much larger rounds, including Marseille, France-based Imcheck Therapeutics SAS, which closed a €48 million series B round late last year to fund the development of antibodies targeting gamma delta T cells for cancer. Strasbourg-based Dynacure SAS raised €50 million in a series C round earlier this month, to continue clinical development of an antisense drug for rare genetic muscular disorders, which it licensed from Carlsbad, Calif.-based Ionis Pharmaceuticals Inc. And Pharvaris BV, of Leiden, the Netherlands, raised $66 million in a series B round last year to develop oral B2 receptor antagonists for hereditary angioedema and other B-2-associated indications.
‘We’ll continue to do deals’
The current investment strategy does not differ hugely from what it previously pursued. There is something of an “overhang” in oncology, so Kurma will branch out more into other indications, Neubeck said. Its technology focus will also remain broad – its portfolio and its prospective investees include companies involved in cell and gene therapy, including novel CAR T development, as well as antibody and small-molecule drug development.
The dealmaking is not going to stop, despite the current lockdown, from which some European countries are now slowly beginning to emerge. “It’s not totally clear what’s going to happen – we’ll continue to do deals,” Neubeck said. It aims to complete two to four more transactions this year. “We will have to find a modus operandi to execute these deals, even if we cannot meet the people,” he said. The COVID-19 pandemic is not shifting its investment priorities, even if some portfolio firms – especially in the autoimmune disease space – may have offerings that could be relevant.
In all, Kurma aims to build a portfolio of 12 to 15 firms. Although the vast majority of those will be biotech firms, it is open to med-tech opportunities, especially in places where med tech and biotech converge and in the digital health space. In the latter sphere, it is more interested in opportunities that involve a measurable clinical or physiological effect, Neubeck said, than in compliance or monitoring apps. Pain modulation represents one example. As a general principle, med-tech investments would need to be at a much later stage than the early stage biotech firms it routinely invests in – either near commercialization or already on the market, he said. But most med-tech investing will continue to be conducted by its sister fund, Kurma Diagnostics.
Kurma now has more than €400 million under management. Investors in the new fund include Bpifrance, Investissements d’Avenir, the European Investment Fund, Idinvest Partners, the Pasteur Institute, NRW.Bank and Les Laboratoires Servier SAS.