Kalgene’s Series A marks start of Lumira Capital’s next chapter

This year has been eventful for Lumira Capital. The Toronto life-sciences investor held a first close for Fund IV, completed the fund’s debut deals, tied up investing by prior funds, and took a portfolio star public.

One milestone was met in today’s announcement of the Series A financing of Kalgene Pharmaceuticals, a developer of treatments for Alzheimer’s disease. Lumira led the undisclosed round and was joined by Anges Québec, Anges Québec Capital, Accel-Rx and family offices.

Founded in 2009 by Nathan Yoganathan, Kalgene is advancing research begun at NRC to slow the progress of Alzheimer’s. Its focus is a therapeutic that targets toxic amyloid around the brain’s nerve cells, thought to be a major factor in the growth of a disease that afflicts 50 million people worldwide.

Lumira Partner Jacki Jenuth says Kalgene’s product has “the potential to act more quickly and have an improved safety profile compared to other programs in the clinic today that aim to slow the progression of AD.” The company plans to take its work into the clinic in 2019.

Kalgene is the final deal of Merck Lumira Biosciences Fund, an early-stage vehicle managed by Lumira. Anchored by U.S. pharmaceutical giant Merck, it and the later-stage Lumira Capital II raised a combined $167 million over 2012-2013.

Kalgene was preceded by September’s $7 million Series A financing of Edesa Biotech, a maker of drugs for dermatological and anorectal diseases. The round, also led by Lumira, is the final deal of Fund II.

On to Fund IV

With both funds now fully invested, Lumira is positioned to bring Lumira Capital IV to a final close in 2018 and back a new series of North American biotech financings.

Peter van der Velden, Managing General Partner, and Jacki Jenuth, Partner, Lumira Capital
Peter van der Velden, Managing General Partner, and Jacki Jenuth, Partner, Lumira Capital

Fund IV reportedly raised the lion’s share of its $175 million target in May. Lumira did this by recruiting a bigger and more diversified investor group that builds on a “strong Canadian foundation,” Managing General Partner Peter van der Velden told PE Hub Canada.

The fund secured a lead commitment from Northleaf Venture Catalyst Fund. BC Tech Fund, managed by Kensington Capital Partners, also invested. Other new and returning limited partners were not identified.

Van der Velden says Fund IV blends the strategies of its predecessors, investing in Canadian and U.S. biopharma, medical-device, health-IT and consumer-health companies. It will “play across the spectrum of Series A to Series C,” with most deals being late-stage in nature.

The fund is expected to invest roughly $8 million to $12 million in 15 to 20 companies, van der Velden said. Residual capital will be injected in the portfolio’s “winners,” he added.

A key aspect of Fund IV’s strategy is its emphasis on secondary markets, or markets outside Boston and Silicon Valley, where biotech VC is concentrated. Lumira’s team operates from five North American offices to gain proximity to underserved ecosystems and tap opportunities as they emerge.

Fund IV recently made its first investments in two biopharma companies. It topped up the US$22 million Series C financing of Antiva Biosciences, which focuses on HPV-related diseases, and joined the US$23 million Series A of Engage Therapeutics, which targets epileptic seizures.

Biotech boom

Lumira has been at the centre of robust venture trends in Canada’s life-sciences sectors of late.

Dollar flows set a record last year, with $1.1 billion deployed, according to Thomson Reuters. VC invested this year is tracking ahead of the same point in 2016, with $935 million going to 59 companies, such as Lumira-backed Aurinia Pharmaceuticals, which alone raised $231 million.

“Canada’s market is a much better market this year than it has been for a long time,” van der Velden said.

Van der Velden credits several factors, including an improved ecosystem, more repeat founders, and increased exit options. The latter is reflected in May’s $86 million public sale of Lumira-backed Zymeworks, one of Canada’s first venture-backed IPOs in two years.

Lumira was founded in 2007 as the successor to MDS Capital Corp. Van der Velden, who led MDS in its final years, says he sought to equip the new firm with strong investment capabilities, such as operating skills.

Lumira this year added to these capabilities with the hire of Richard Glickman, Aurinia’s CEO, as a partner. Jenuth, who joined the firm in 2001, was promoted to her current role. Other team members include Managing Directors Gerry Brunk, Daniel Hetu and Beni Rovinski.

Image of human brain courtesy of kirstypargeter/iStock/Getty Images

Photo of Peter van der Velden and Jacki Jenuth courtesy of Lumira Capital