Johnson & Johnson, Pfizer, Eli Lilly and other big pharmas are backing this San Diego biotech with $175M Local biotech Capstan Therapeutics exceeded its fundraising goal by $50 million despite a tough venture capital environment. A San Diego biotech is working on therapies that could tackle life-altering conditions, like autoimmune diseases and cancer, by modifying cells. But instead of engineering cells in a lab, they’re doing it inside your body. Thanks to that novel approach and the support of some of the biggest names in the pharmaceutical industry, Capstan Therapeutics has netted $175 million in a fundraising round, despite a sluggish venture capital environment for startups. La Jolla-based Capstan, which made the announcement Wednesday, exceeded its fundraising goal of $125 million in a Series B round led by RA Capital Management. The firm explained that it is employing the cutting-edge messenger-RNA technology that made the COVID-19 vaccine possible and marrying it with the science behind cell therapy. “If it weren’t for cell therapy, Capstan wouldn’t exist. If it weren’t for the COVID-19 vaccine, Capstan wouldn’t exist. It’s almost like the two had a baby and they created Capstan,” said Laura Shawver, the company’s president and CEO. She said the company is working on a cheaper and less complex multi-step process for getting essential therapies to more patients. Beyond the major funding, Capstan boasts backing from more than a handful of big pharma companies such as Johnson & Johnson Innovation (JJDC), Bristol Myers Squibb, Eli Lilly and Co., Leaps by Bayer, Novartis Venture Fund and Pfizer Ventures. Capstan was founded in 2021 and has raised $340 million to date. The scientific research behind Capstan came out of the University of Pennsylvania. Its founders are pioneers of CAR-T cell technology, which has led to revolutionary therapies that modify immune system cells, or T-cells, in a lab to help a patient’s body target and destroy disease causing cells, like cancer. Capstan is developing therapies that modulate unhealthy cells inside the body — rather than editing the cells outside of the body — through RNA delivery methods. Shawver explained that while CAR-T cell therapies have proven effective, they are not widely accessible to most patients and they are costly. It requires the extraction of samples from patients, external manufacturing, and then the patients have to undergo chemotherapy to prepare their bodies for the integration of the cell therapy. “It’s just impractical to get it to most people,” Shawver said. “So as a result, a number of companies are trying in vivo (inside the body) approaches to deliver directly to T-cells that can then fight the diseases once they’re engineered in the body. “This is why our industry needs to have a different approach so that we can bring it forward to more people in an easier way.” Capstan encodes mRNA and packages it in a lipid nanoparticle that is “decorated” with an antibody, which directs the body’s T-cells to attack problematic cells. There are broad applications for this platform technology, Shawver said, but right now Capstan is looking at ways to treat cancer, fibrosis, and autoimmune and genetic blood disorders. In essence, its lead therapy for autoimmune disorders targets the B-cells that are causing an overreaction of the immune system, which translates to symptoms. It would clear away those B-cells and make room for new, young cells that aren’t triggered to overreact. She said the latest round of funding will help the company expand its operations a little bit and advance its lead therapy to the clinic. The company has 79 employees and operates out of Alexandria GradLabs in La Jolla. Capstan also has major institutional investors who participated in its latest fundraising round, including Forbion, Mubadala Capital, Perceptive Advisors, Sofinnova Investments, Alexandria Venture Investments, OrbiMed, Polaris Partners and Vida Ventures. Shawver said she’s grateful that they have the support of investors from both big pharma and traditional firms who believe in Capstan’s potential. While it’s true San Diego has seen deals pick up in recent months, it’s been harder for startups to raise funds. Overall, venture capitalists are being more selective about investments compared to the heydays of 2021 when money was flowing at record levels. Shawver has been around to see the pendulum swing both ways in this industry. Prior to leading Capstan, Shawver was CEO of Silverback Therapeutics and also Synthorx, which was acquired by Sanofi. In 2023, financing rounds for biotech companies exceeding $100 million were rare. But Shawver said things picked up following some big deals — like the $4.1 billion acquisition of RayzeBio by Bristol Myers Squibb — in the fourth quarter of last year when Capstan started fundraising for this latest round. “These M&A exits freed up some capital for investors to reinvest in new companies,” she said. Market interest in local life science companies has picked up more recently. This month, San Diego saw its first two life science IPOs in months — Boundless Bio and Contineum Therapeutics — to kick off 2024. On Tuesday, local biotech Engrail Therapeutics said it exceeded its financing goal by closing a $157 million Series B round.
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