ArsenalBio raises $325M in one of the year’s largest biotech funding rounds

Dive Brief:

• Arsenal Biosciences on Wednesday said it has raised $325 million in one of the largest private funding rounds for a biotechnology startup this year, bucking a slump in venture investment into cell and gene therapy developers.
• The Series C round will help the California company develop experimental cancer cell therapies. Among them are a pair of ovarian and kidney cancer treatments currently in early-stage testing, as well as additional research ArsenalBio is advancing via collaborations with Bristol Myers Squibb and Roche.
• ArsenalBio has now secured $700 million in equity funding and partnership dollars since being spun out of the Parker Institute for Cancer Immunotherapy in 2019. It has used some of those funds to build a workforce of about 265 employees across two sites in the San Francisco Bay Area.

Dive Insight:

Young cell and gene therapy therapy makers have had a hard time securing funding of late. Several factors, from manufacturing challenges to poor performance among the companies that have gone public, have combined to keep venture investment in genetic medicine at its lowest levels in years.

ArsenalBio’s Series C round goes against that trend. Data compiled by BioPharma Dive show the funding is the fourth largest among biotech startups this year, trailing only Xaira Therapeutics’ $1 billion haul, Mirador Therapeutics’ $400 million Series A and Formation Bio’s $372 million Series D investment. It’s nearly twice the size of the next largest private investment in a cell therapy maker in 2024, a $175 million Series B funding secured by Capstan Therapeutics in March.

ArsenalBio has a few advantages. One is an experienced leader in Ken Drazan, the former president of Grail who previously oversaw Johnson & Johnson’s Innovation Centers in California. Another is its development focus and clinical progress, which comes at a time when investors have shown a clear preference for safer bets.

While some of its cancer cell therapy peers have changed their plans amid rising interest in autoimmune disease research, ArsenalBio has stuck with oncology. The company is working on the types of solid tumors many cell therapy developers have struggled to treat. So far, it has secured two industry partnerships, brought a pair of programs into human testing and could add a third, for prostate cancer, within the next few years. Drazan hinted another collaboration might be revealed in the coming months as well.

“We’ve always been focused in this area, and that has allowed us to really distinguish ourselves,” he said.

ArsenalBio is making what it refers to as programmable T cell therapies, which Drazan says allows the company to incorporate different features into a single cellular medicine. Those attributes are meant to improve potency and specificity, though that hasn’t yet been proven in testing.

“Early on, that was a tough story to sell,” and ArsenalBio got “lots of ‘no’s’ and lots of criticism,” Drazan said. “But we found ways to build the company and raise capital from others who would be more patient with us.”

One drug candidate, AB-1015, is being tested in people whose ovarian tumors have resisted other treatments. Initial study results could come at the end of this year, according to a federal database. Another, AB-2100, is in an early trial in clear cell renal cell carcinoma. The company dosed its first patient in April.

Milky Way Investments led the Series C round and was joined by a large group of other investors including Arch Venture Partners and the venture arms of Regeneron Pharmaceuticals, Nvidia and Bristol Myers Squibb.

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