Uprooted by the success of its seed-and-feed approach to growing scientific research projects into a garden of rare genetic disease companies, a Palo Alto organization planted itself anew with a fertilizing round of nearly $300 million.
BridgeBio Inc. CEO Neil Kumar said that the company had raised $299.2 million to support 18 projects and add three to five new programs over the next two years.
The round was led by exiting investors KKR & Co. LP and Viking Global Investors LP and included existing investors Perceptive Advisors, AIG, Aisling Capital, Cormorant Capital and Hercules Capital. The round also included new investor Sequoia Capital and an undisclosed long-term investor described by BridgeBio as “blue chip.”
BridgeBio is a kind of greenhouse for early-stage drug discovery projects from universities, academic medical centers and drug research groups. It plants each project as a separate BridgeBio subsidiary and keeps the scientific founders on board by offering ownership stakes that it says are larger than what’s typical among other investors in the biotech industry.
That company-building model of housing experimental drugs in separate subsidiaries with access to centralized resources — with each company focusing on rare genetic diseases — was developed by BridgeBio leaders and Andrew Lo, a finance professor at the Massachusetts Institute of Technology’s Sloan School of Management. That differs from a popular biotech scenario in which academic scientists throw a potential drug over the wall to an independent company where it must build a management team and network of investigators and fight for resources.
“The throw-it-over-the wall model doesn’t work for diseases with experts in four or five labs,” said Kumar, a former principal at venture capital firm Third Rock Ventures. “You really need to rely on the people who have been experts for decades in some cases.”
BridgeBio was launched by Kumar, serial biotech executives Hoyoung Huh and Charles Homcy, and University of California at San Francisco professor Frank McCormick in 2015. Within three years the firm had two projects move into expensive late-stage trials so quickly that BridgeBio needed to spin them out. In November, skin cancer drug developer PellePharm locked up a potential $760 million deal with Danish drug maker Leo Pharma A/S, and in June Eidos Therapeutics Inc. completed a $122.2 million initial public offering.
“We took those from preclinical to Phase III (studies) and couldn’t afford to do all of Phase III and still be a diversified engine, so we spun those out,” Kumar said.
Those moves, Kumar said, demonstrated that the 200-employee company’s strategy of creating single-molecule subsidiaries targeting rare genetic diseases could work from an investment standpoint. BridgeBio’s goal when it started, however, was not to give up ownership and control of those projects via partnerships and IPOs, he said, but to build a decentralized organization to feed, nurture and grow those projects long term.
“The game here is to create a generational company focused on genetic medicines,” Kumar said.
With cash in hand, he said, BridgeBio can concentrate more on research and advancing drugs through clinical trials; beyond Eidos and PellePharm’s late-stage clinical trials, BridgeBio has four other programs in Phase II trials and anticipates another three to five projects over the next two years.
There is no shortage of opportunities, both on the investment and fundraising sides of the equation, Kumar said. While there are more than 7,000 genetic diseases, there are fewer than 500 drugs approved for those conditions.
“People are willing to fund hardcore, straightforward, high-integrity science,” he said.
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