Deal focus: Biotech gets more cerebral

Singapore-based neurotherapies developer Cerecin sees a lot of me-too thinking in biotech that is becoming increasingly difficult to sustain. Even across a horizon of disciplines as expansive as cancer, there are only so many tier-one targets investors can pursue, and that lot is getting saturated.

“About five years ago, if you weren’t an oncology company, investors weren’t interested. Technically, they were diversified biotech investors, but really 90% of their deals were oncology. And it made sense because that’s where they were making most of their money. That tempo has slowed,” says Charles Stacey, the company’s president and CEO.

“Oncology is still dominant, but other areas now getting more interest, and the biopharma community is starting to think neurology could be the next oncology for the next 10-20 years.”

Cerecin raised $40 million this week from a syndicate of mostly Korean private equity investors, including Hana Financial Investment, SK Securities, Partners Investment, Arche Investment, K&T Investment, Shinhan Investment, IBK Capital, KB Financial Group, M Capital, and Medici Investment.

Hana will act as the lead manager in a potential listing on the Korean Exchange, a regional leader in biotech. Cerecin has been working with development partners in the country since its foundational days in the early 2000s. A VC unit of Korean steelmaking giant Posco was its first major investor in 2004.

Asia more broadly has always been part of the plan. Founded as Accera in the US, Cerecin opened a Singapore office in 2018 and now runs under a dual-headquarters structure. Asia has since become the core operating base, partially because 60% of the world’s aging population is in the region. Alzheimer’s disease is the main target.

Cerecin sees neurological drugs in general as a seriously underserved market with a global patient population numbering two billion, less than 20% of whom are adequately treated. For about 45% of this group – almost one billion people – there is no useful drug whatsoever.

Optimism for an uptick is supported by more than overcrowding in the cancer space. Real traction in creating useful neurotherapies has come to light in recent years, especially in terms of biomarker techniques. This involves evaluating drug effectiveness by correlating mental capacities with certain quantities of enzymes, hormones, and proteins in the blood.

“If you’re developing a cholesterol drug, you measure blood cholesterol. The brain is much more qualitative, and the endpoints are more subjective,” Stacey says. “You can’t do a cognition blood test. You have to ask if the patient is remembering better, think about different components of memory, how they’re functioning better, and the different components of functioning.”

Cerecin’s flagship development platform, Tricaprilin, was about to launch a global phase-three Alzheimer’s trial in early 2020, when COVID-19 made the project unfeasible. In the meantime, the Series B will support a pilot migraine trial and work on a potential treatment for a kind of epilepsy that causes spasms in children. But the Alzheimer’s program is expected to re-launch next year.

“The Alzheimer’s world is hotter and more exciting now than it has been in the last decade. Patients and doctors have options. Regulators are more open to new ways of thinking about things, and investors are making a return,” Stacey says. “We’re now seeing other companies filing more aggressively and being more proactive. It’s been a challenging space for a long time – but that’s changing.”

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• Topics
• Southeast Asia
• Healthcare
• Technology
• Early-stage
• Singapore
• Hana Financial
• Pharmaceuticals