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VC Daily : Venture Capitalists Push Back Against Drug-Pricing Bill

09/16/2021 | 09:44am EDT

Good day. A bill in Congress aimed at lowering prescription-drug prices would derail biotechnology venture investment, venture capitalists said in a press conference Wednesday.

The bill, H.R. 3, would enable Medicare to negotiate with drugmakers for certain expensive and commonly used drugs, and these prices couldn't exceed 120% of the drug's average price in a group of international countries, The Wall Street Journal has reported. If companies refused to negotiate or didn't agree to the price, they would be subject to an excise tax of up to 95% of that drug's sales.

Supporters of the bill have said it is needed to curb what they see as unjustified drug price hikes.

In a news conference in Washington, organized by Incubate, a coalition of life sciences venture capitalists, venture investors said such measures amount to price controls that would cause biotech venture funding to collapse.

Speakers included Peter Kolchinsky, a managing partner of RA Capital Management, Jean-François Formela, a partner with Atlas Venture, Arjun Goyal, a managing director of Vida Ventures, and others.

In an interview, Incubate Executive Director John Stanford said biotech venture capitalists' winning companies have to compensate for the losses they take on those that don't pan out, and then some.

If price controls are enacted on drugs, investment will no longer flow to innovative new biotech treatments, he said.

And now on to the news...

Top News

Medical-device reimbursement. Some venture capitalists and entrepreneurs say investment in medical devices could fall if Medicare scraps a proposed rule to speed up its coverage of breakthrough medical technologies over concerns it could put patients at risk.

It often takes years for medical-device companies to secure Medicare coverage after products earn Food and Drug Administration approval. A rule proposed by Medicare would speed that process by tying temporary coverage by the national health insurance program to FDA authorization of certain medical devices.

Devices would qualify for four years of Medicare coverage when the FDA deems them breakthrough technologies for treating or diagnosing life-threatening or debilitating diseases. After that period, manufacturers would need to seek permanent coverage to ensure Medicare reimbursement. Several medtech industry watchers hoped it would go into effect this year.

The Centers for Medicare and Medicaid Services this week urged scuttling the proposed rule, citing objections, including ones over different standards Medicare and FDA use to review devices. CMS will issue a decision on the proposed rule after a 30-day comment period.

$3.01 Billion

The amount raised by U.S. medical-device startups during the first half of this year, on pace to top the total collected in all of 2020, according to Silicon Valley Bank.

FTC Moves Toward Stricter Antitrust Scrutiny of Vertical Mergers

A divided Federal Trade Commission on Wednesday withdrew guidelines adopted just last year on how the government reviews so-called vertical mergers of companies that don't directly compete with one another, the latest signal the agency is looking to escalate antitrust scrutiny of deal making, The Wall Street Journal reports. FTC Chairwoman Lina Khan, during a virtual public meeting, said she was concerned that the recent Trump-era guidelines gave too much credit to business efficiencies and other potential upsides of vertical mergers while not fully recognizing the harms that some of those deals could create in the marketplace.

Aldrich Capital Hits $450 Million Hard Cap for Second Fund

Lower midmarket growth firm Aldrich Capital Partners has secured $450 million for its second investment vehicle, hitting its hard cap amid strong demand from institutional investors, WSJ Pro's Chris Cumming reports. The vehicle, Aldrich Capital Partners Fund II, exceeded both the firm's $350 million target and the $256 million that Aldrich raised for its first fund, which closed in June 2018. Based in Vienna, Va., Aldrich focuses on healthcare information technology, financial technology and application software companies, typically backing those with revenue of $10 million to $30 million, said Mirza Baig, an Aldrich managing partner.

Industry News

People

European biopharma investor BioGeneration Ventures appointed Keno Gutierrez as partner, and Wouter Verhoeven as venture partner. Mr. Gutierrez was previously vice president at M Ventures. Mr. Wouter was chief business officer at NBE-Therapeutics.

Clinical pharmacy services provider Aspen RxHealth appointed Chris Dattaro as chief operating officer. He was most recently the regional general manager of Lyft's transit, bikes and scooters business for the Mid-Atlantic region. In January, Aspen RxHealth said it raised a $23 million Series B round led by Bessemer Venture Partners.

Kyverna Therapeutics Inc., a cell therapy company engineering a new class of treatments for serious autoimmune diseases, appointed Karen Walker as chief technology officer and Ian Clark as chair of the company's board. Ms. Walker joins the company from Roche/Genentech, where she was senior advisor, cell and gene therapy manufacturing. Mr. Clark was previously chief executive of Genentech. Emeryville, Calif.-based Kyverna is backed by Westlake Village BioPartners, Vida Ventures and Gilead Sciences.

Neogene Therapeutics Inc., a developer of T-cell receptor therapies to treat cancer, named Han Lee to the post of chief financial officer. He most recently held the same position at Arcellx Inc. Neogene Therapeutics, which is based in Santa Monica, Calif. and Amsterdam, last year raised a $110 million Series A round led by EcoR1 Capital, Jeito and Syncona.

AltruBio Inc., a developer of novel therapeutics for the treatment of immunological diseases, added Jesse Hall as chief medical officer. He was previously executive vice president and chief medical officer at Sublimity Therapeutics. Earlier this year, San Francisco-based AltruBio raised a $63 million Series A round from aMoon, BVF Partners and CAM Capital.

Exits

Scientist.com, which operates a marketplace for outsourced pharmaceutical research, acquired InsideScientific, an online educational platform for life science researchers. Terms weren't disclosed. Solana Beach, Calif.-based Scientist.com is backed by investors including Transformation Capital, 5AM Ventures, Heritage Provider Network and Bootstrap Ventures Partners.

Enterprise healthcare operations provider symplr agreed to purchase Halo Health, a clinical communication and collaboration software startup, for an undisclosed amount. Houston-based symplr is backed by private equity firms Clearlake Capital Group and Charlesbank Capital Partners. Halo Health, of Cincinnati, is backed by Bain Capital Ventures.

New Money

Vanqua Bio, a Chicago-based startup developing next-generation medicines for neurodegenerative diseases, closed an $85 million Series B round. Omega Funds led the investment, which included participation from OrbiMed, Surveyor Capital, Avoro Ventures, Casdin Capital, Pontifax Venture Capital, Eli Lilly & Co., Logos Capital and Osage University Partners.

Rome Therapeutics, a Cambridge, Mass.-based startup developing novel therapies for cancer and autoimmune diseases, completed a $77 million Series B investment led by Section 32. Additional new investors Sanofi Ventures, Casdin Capital, Andreessen Horowitz and Alexandria Venture Investments also participated in the round, along with previous backers ARCH Ventures, GV and Mass General Brigham Ventures. Section 32's Steven J. Kafka and Sanofi Ventures' Jim Trenkle joined the company's board.

Allay Therapeutics, a developer of analgesic products for post-surgical pain management and recuperation, raised $60 million in an oversubscribed Series C round. Arboretum Ventures led the investment, with Managing Partner Nicole J. Walker joining the board. New Enterprise Associates, Temasek Holdings, Pavilion Capital, Brandon Capital Partners, Vertex Growth, Vertex Ventures HC and WTT Investment also contributed to the new funding. Allay Therapeutics has offices in Menlo Park, Calif. and Singapore.

Francis Medical Inc., a Maple Grove, Minn.-based startup developing a water vapor ablation therapy for the treatment of prostate, kidney and bladder cancer, landed $55 million in Series B funding. Lead investor Solas BioVentures was joined by Arboretum Ventures and others in the round.

Alebund Pharmaceuticals, a Shanghai-based startup developing treatments for renal diseases and related chronic conditions, secured $54.5 million in Series B+ financing. 3H Health Investment, Loyal Valley Capital and Morningside Ventures led the round, which included support from YuanBio Venture Capital, Octagon Capital, Verition Fund Management, HT Capital, Lilly Asia Ventures, Quan Capital, 3E Bioventures Capital and Sherpa Healthcare Partners.

Prospection, a Sydney-based healthcare data technology provider, picked up a $45 million Series B round from Ellerston Capital, Main Sequence Ventures and Horizons Ventures.

accuRx, a London-based healthcare communication platform, nabbed GBP27.5 million ($38 million) in Series B funding. Lakestar led the round, which included support from British Patient Capital, Atomico and Encore Capital.

RecoveryOne, a Walnut Creek, Calif.-based virtual physical therapy provider, snagged $33 million in Series C funding. Cobalt Ventures and Telus Ventures co-led the investment, which saw additional participation from Cigna Ventures, 7wireVentures and Leverage Health Solutions.

Flywheel, a Minneapolis-based biomedical research data management provider, raised $22 million in Series C financing led by 8VC and acquired Radiologics.

Babyscripts, a Washington, D.C.-based virtual care platform for managing obstetrics, fetched $12 million in Series B funding led by MemorialCare Innovation Fund.

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09-16-21 0943ET

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