Big deal: Touchstone helps inject $73m into Cell Medica

Immunotherapy, a treatment that uses the body’s own immune system to fight cancer, is big business – that is as true of the startup world as it is of the R&D departments of established pharmaceutical firms and of university research labs.

Pharma companies Bristol Myers-Squibb and Merck by some measure lead the pack for now, with both already having two successful treatments on the market that rake in hundreds of millions of dollars – the former’s Opdivo and the latter’s Keytruda.

But immunotherapy’s lure can be treacherous. When Bristol Myers-Squibb decided to widen the potential usage of Opdivo last year, it launched a clinical trial that ultimately failed and wiped $21bn off of the company’s market value in August.

That has not deterred early-stage businesses. In the past year alone, spinouts from institutions as varied as Albert Einstein College of Medicine, Pittsburgh University, Rockefeller University and University Medical Centre Utrecht have raised capital to develop their take on immunotherapy.

While many start out by focusing on a single cancer indication, Cell Medica is more ambitious. The cellular immunotherapy developer co-founded a decade ago by Touchstone Innovations, the commercialisation firm spun out of Imperial College London, last week closed a £60m ($73m) series C round to commercialise three technology platforms.

Touchstone, which participated in the latest deal as well as every transaction to date, contributed £13.7m to the round, while Invesco Perpetual and Woodford Investment Management, through respective unspecified funds, also committed cash.

Immunotherapy, in essence, modifies a patient’s immune system to give it the ability to recognise and attack foreign cells. Cell Medica takes a two-pronged approach to this – the company both manufactures naturally occurring and gene-modified products.

The company’s lead oncology candidate, baltaleucel-T, is currently undergoing a phase 2 clinical trial for patients with advanced lymphomas associated with the Epstein Barr virus, one of the eight herpes viruses and the cause of glandular fever, though it is also associated with several kinds of cancer, such as Hodgkin’s lymphoma, and conditions associated with HIV.

The immunotherapy producer has further entered collaboration agreements with University College London and Baylor College of Medicine to commercialise additional product candidates.

Interestingly, Cell Medica is also using technology known as Streptamer, a selection technique that labels or isolates antigen-specific T-cells – a natural part of the immune system that forms one of the pillars of several immunotherapies.

The technology is licensed from Juno Therapeutics, a joint venture involving Fred Hutchinson Cancer Research Centre, Seattle Children’s Research Institute and Memorial Sloan-Kettering Cancer Centre which made countless headlines on GUV from a huge $120m series A round in 2013 that eventually closed at $176m in mid-2014 all the way to an IPO in late 2014 that sent stocks soaring.

The good news kept on coming until last year when Juno hit a wall and five patients died in clinical trials. Development of that particular drug candidate was halted earlier this month.

While Cell Medica appears to be a way off those heights – and, hopefully, lows – the fact that it is collaborating with one of the arguably former darlings of the university venturing world is still promising.

With the money going to the commercialisation of three technology platforms, Cell Medica is also making sure not to put all its eggs in one basket and increasing the odds of hitting the jackpot.

And even if a $73m series C round may not be record-breaking, in the spinout world where sums tend to be significantly lower in general that is still a notable level of funding. The company has also proven it does not particularly need jaw-dropping amounts, as its £50m series B round raised in 2014 lasted it several years.

The series B round was led by Touchstone, then known as Imperial Innovations, with participation from Invesco and Woodford.

Touchstone previously led a £17m series A round in 2012, while Invesco Perpetual and Cancer Prevention and Research Institute of Texas also took part. Wellcome Trust converted a previous loan into equity at the same time.

In 2007, Touchstone supplied an undisclosed amount of seed funding.

Gregg Sando, co-founder and chief executive of Cell Medica, said: “With the strong support of our key shareholders, Cell Medica will implement the next phase of our development program, bringing a new generation of cell-based immunotherapy products into phase 1 clinical trials as well as completing our phase 2 program for baltaleucel-T.

“This funding enables us to continue our efforts to unlock the full potential of cellular immunotherapy for the benefit of cancer patients.”