Surface Oncology, a US-based startup developing immunoetherapies for cancer, raised $35m on Thursday in a series A round that provided more evidence of the ongoing funding success being experienced by oncology companies at present.
Lilly Ventures, the corporate venturing unit of pharmaceutical firm Eli Lilly, co-led the round with venture capital firm Atlas Venture, which funded Surface’s seed round last year, as well as Fidelity Biosciences, one of financial services firm Fidelity’s investment units, and VC firm New Enterprise Associates.
Two other pharmaceutical companies, Amgen and Novartis, also participated, through subsidiaries Amgen Ventures and Novartis Institute for Biomedical Research, along with Elliott Sigal, who was formerly biopharmaceutical company Bristol Myers Squibb’s head of research and development.
Surface is developing several pre-clinical therapeutic candidates that it hopes will advance work already conducted on first-generation immune therapies, targeting the mechanisms through which cancerous cells avoid detection by the body’s immune system.
David Grayzel, Surface’s chairman and also a partner at Atlas Venture, explained in a statement: “Immunotherapy is one of the most significant breakthroughs for cancer treatment in the past several decades, and while current approaches are transformative for the field, they remain insufficient.
“By targeting novel areas of biology at the intersection of innate and adaptive immunity, we hope to expand the arsenal of immunotherapies, with the goal of treating a greater number of patients across a wider range of tumour types than are addressed by these agents today.”
Surface’s completion of the round made it the second cancer treatment developer this week to close a $30m+ corporate-backed round, following Aduro Biotech, which raised $51.4m on Monday from investors including pharmaceutical firm Johnson & Johnson for immuno-oncology drug candidates that will target pancreatic cancer.
In addition to the equity rounds, another cancer-focused company, blood cancers test developer Sequenta, was acquired on Wednesday by medical diagnostics technology producer Adaptive Biotechnologies for a price likely to be close to $100m.
The ongoing funding secured by businesses seeking to combat cancer can be seen as evidence of what Jonathan Norris of Silicon Valley Bank told Global Corporate Venturing in August, when he identified oncology as a sector that has been among the most popular for M&A deals in recent times.
An SVB report released at the time indicated oncology companies had attracted twice as many new investments as the next nearest subsector over 2012 and 2013. Oncology was also responsible for five of the 13 ‘big exits’ achieved by healthcare companies in 2013, according to the report.
The cash raised by cancer-focused pharmaceutical companies at VC stage also has to be analysed alongside the comparative success of a healthcare sector that has witnessed record breaking IPO activity during 2014, indicating both a surge in funding and exits for oncology, if the subsector can maintain its position at the head of the pack.
As Surface’s series A haul shows, corporates are also increasingly playing a part at early stage, as opposed to primarily accessing research through acquisitions or licensing deals.
The approach indicates pharmaceutical companies, many of which have long maintained investment units, are following the lead of corporates in other sectors that are used to beefing up their research and development activities through strategic early-stage investments. It remains to be seen if oncology will continue to play as large a part in healthcare VC, particularly with healthcare IT increasingly emerging as a significant piece of the funding pie, but for now investors seem to be as bullish as ever.