Thursday, August 1, 2013

Dicerna in Record $60M Fund Raising for a Privately Held RNAi Therapeutics Company

Although we are still only in the middle innings of the RNAi Therapeutics resurgence according to my Mayan RNAi investment calendar (late 2011-late 2014), the investment appetite in the space shows no signs of letting up.  With over $400M raised since 2012, privately held Dicerna today announces a record $60M venture capital investment.  This follows an $18M VC investment in RNAiTherapeutics start-up Solstice Biologics and confirms that VCs, a group for which RNAi Therapeutics had become untouchable following the Roche pull-back, have now fairly good visibility regarding RNAi Therapeutics drug development and Big Pharma interest in the space.

Persistence paying off

Although the valuations of the fund raising are unclear, given the recent, in many ways similar private offering by Arrowhead Research, those investors holding through the dark days and who are adding capital now are standing to be rewarded handsomely for their persistence.  In fact, all five existing investors (Abingworth, Domain Associates, Oxford Bioscience Partners of Sirna Therapeutics fame, Skyline Ventures, and GSK VC arm SR One) have participated in this Series C.  It is their investments plus a few milestone payments from Japanese partner Kyowa Hakko that have kept the company alive.   

Oversubscribed offering

It is important to note that this capital raise was oversubscribed.  Remarkably, it was led by RA Capital which featured prominently in the Arrowhead Research ~36M secondary.  It thus seems that aside from Alnylam, the size of the other RNAi Therapeutics players and their offerings are not large enough (yet) to satisfy the investment appetite of some funds.  Witness also the rapid increase in the share price of Arrowhead Research (almost a double over the last month) which strongly suggest that at least one good-sized fund is gobbling up shares on the open market.

There are a number of factors driving this interest.  Firstly, it is the clinical gene knockdown results by Alnylam, utilizing Tekmira’s SNALP delivery technology, which de-risked the once ridiculed RNAi Therapeutics approach for many observers.  The ~$3B market cap by Alnylam also represents a juicy target for those that believe 20-30x differences in valuations grossly undervalues the likes of Arrowhead Research, Tekmira, and Silence Therapeutics.

For those companies that have technology ready for prime time and are thus only capital constraint in terms of expansion, the lowered cost of capital makes them even better investments.

Of course, this is happening within the context of a wider boom in biotechnology investments, orphan drug development, and an environment where small caps are outperforming large caps on the public markets.  However, it is my strong opinion, supported by the fact that RNAi Therapeutics share prices have lagged the general market recovery, that none of that would have helped without the clinical results by Alnylam.

Dicerna, just a cancer company?

Dicerna stated that the proceeds would be used to bring at least two RNAi Therapeutics candidates into the clinic starting in 2014.  An interesting question will be whether Dicerna will exclusively focus on oncology or whether it will also embrace severe orphan diseases which are so attractive for a genetic platform like RNAi Therapeutics.  Based on their work in delivery, liposomal nanoparticles for cancer delivery, it would surprise me, however, if the first two clinical candidates were not in oncology.

In any case, congrats to the fund raising, and who knows, maybe we will see a Dicerna IPO in the not-too-distant future.


FMS said...

Hi Dirk,

here I go into MRNA again... seems dead; acts dead; looks dead; it's not, though...

What do you think?

Anonymous said...

Would you ever want to be a professional life-science investor?

Dirk Haussecker said...

A life-science investor? Professional or for your personal account, combining biology and money is certainly what drives me.

experiencedmentor said...

Investors may ignore Dirk at their own peril.

Anonymous said...

Which healthcare funds would you want to work with?

Dirk Haussecker said...

I've always toyed around with the idea of an RNA(i) Therapeutics fund, sometimes more seriously than at other times. Most people that I have talked with, however, thought the investment opportunities were too limited. Just looking at the public markets, I think that's wrong, at least today.

The one area the I am lacking in is in the setup of such a fund, esp. the legalities and tax issues.

Anonymous said...

CALAA-01- Amgen is looking for Melanoma treatments- it has been a full year since hearing anything on the San Antonio tests- is there anything there?

CRLX101- the recent tests in Russia came back disappointing- is there anything to the CeruleanRx tests combining CRLX101 w/ Avastin?

Rossi is co-founder of Dicerna and he is on the Arrowhead Science Board- any connections? Also, Dicerna’s CEO, Douglas M. Fambrough is quoted as placing his bets on liver cancer- will they use the Roche assets for delivery?

Can you comment on the financial implications of success in any of the above three endeavors?

Can you comment on the Benitec restructure and can you give any insights into their HCV project?

Anonymous said...

Anyone who has followed Dirk's advice has been left behind while the real leaders in RNA have made money. Dirk clings to hapless TKMR. TKMR is a microcap. If ALNY had the slightest interest in the future of TKMR's technology, they would have swallowed the country long ago. ALNY's scientists have evaluated TKMR and know it's a loser. That's why ALNY keeps paying in these nuisance suits when it would have been cheaper to buy TKMR whole. Meanwhile, Dirk entertains his delusions of grandeur.

Anonymous said...

In previous comment, read "company" for "country."

Anonymous said...

Johnny CEO sold 76% of his stock. Maybe you should ask him which company he is investing in, because it is definitely not Alnylam :)

Anonymous said...


any comments on dicerna's lnp delivery? they dont have a patent on this so are they using tekmira technology under license? they have branded their own marketing term for this "Encore"..

By Dirk Haussecker. All rights reserved.

Disclaimer: This blog is not intended for distribution to or use by any person or entity who is a citizen or resident of, or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject the author or any of his collaborators and contributors to any registration or licensing requirement within such jurisdiction. This blog expresses only my opinions, they may be flawed and are for entertainment purposes only. Opinions expressed are a direct result of information which may or may not be accurate, and I do not assume any responsibility for material errors or to provide updates should circumstances change. Opinions expressed in this blog may have been disseminated before to others. This blog should not be taken as investment, legal or tax advice. The investments referred to herein may not be suitable for you. Investments particularly in the field of RNAi Therapeutics and biotechnology carry a high risk of total loss. You, the reader must make your own investment decisions in consultation with your professional advisors in light of your specific circumstances. I reserve the right to buy, sell, or short any security including those that may or may not be discussed on my blog.