Centessa Pharma to tap investors for $1B to pioneer new R&D model

Centessa Pharmaceuticals Ltd., which is pioneering a new means of pharmaceutical research to accelerate development and productivity, intends to deepen its pool of capital by raising around $1 billion to advance a pipeline of 16 experimental medicines for a range of diseases, from hemophilia to oncology.

The brainchild of Francesco De Rubertis, co-founder of European life sciences specialist Medicxi Ventures, Centessa was formed Feb. 16 from a merger of 10 privately held biotechs — including ApcinteX, Capella Bioscience Limited and Janpix Ltd. — majority-owned by the investment firm, which traditionally takes stakes in companies with a single scientific asset.

Having mulled over the creation of an asset-centric pharmaceutical company for years, De Rubertis decided to strike while the pharmaceutical sector was benefiting from strong capital market interest ignited by the COVID-19 pandemic, creating a "bottom-up" pharma company in just five months.

Now, with around $310 million on the balance sheet, De Rubertis intends to undertake additional fundraising imminently to support Centessa's business model, which is predicated on having access to a bottomless pit of cash in order to advance clinical trials as soon as the data demonstrates efficacy in any one of their assets.

"IPO is one of the routes that we have available and another private mezzanine round is another, but there will need to be more cash coming to the company," De Rubertis said in a recent interview with S&P Global Market Intelligence. "[An] asset-centric pharma company is where the philosophical R&D decision-making is only bottom-up, driven on data — and this means cash in the bank has to be unlimit[ed]."

Centessa attracted a number of large investment funds to its $250 million series A fundraising round in February, led by General Atlantic Service Co. LP and co-led by Janus Henderson Investors and Vida Ventures Advisors LLC. Other high-profile investors in the round include Franklin Resources Inc., T. Rowe Price Associates Inc. and Wellington Management Group LLP.

"What you've got is a pool of capital, very, very well-respected investors, and no doubt very strong assets that show promise, that are de-risked by coming together as a collective," said David Cox, healthcare sales specialist at London-based Panmure Gordon. "I think it's a sensible model."

Globally, the biotech sector raised over £7.2 billion from venture and private sources in the three months ending February 28, three quarters of which went to U.S.-based companies, according to the U.K. Bioindustry Association.

Structure

Parceling together different assets at various stages of development under one roof is not a totally novel concept. Investors point to similar companies like the U.K.'s Syncona Investment Management Ltd., a life sciences investment fund established by the Wellcome Trust in 2012 that has a comparable strategy of creating a variety of biotechs from scratch, based on proof-of-concept scientific research that addresses unmet need, or where it is the majority shareholder.

"They've taken a bunch of their assets that they've been working on within the [venture capital] funds that are probably orphans in both indication as well as in terms of just being able to be standalone companies," said a London-based long-term biotech investor, speaking on condition of anonymity. "I think it's a really fascinating idea."

The admiral and the captains

While Syncona has a narrower therapeutic focus and Centessa is agnostic about which diseases to target, both companies point to the importance of attracting world-leading executives and — even more crucially — retaining the scientific brains behind each company. Centessa's CEO is Saurabh Saha, former global head of translational medicine at Bristol-Myers Squibb Co.; among the founders of its sub-companies is Jim Huntington, professor of molecular hemostasis at Cambridge University, who set up a string of entities from his lab including Z Factor Limited and ApcinteX.

De Rubertis likens the role of Centessa's CEO to that of an admiral, while each individual sub-company CEO is a captain, steering their own ship.

"There was total respect for the ship captains, they really are the people that know how to navigate," De Rubertis said. "It's really good to be the admiral on the coast with the binoculars and say — go left, go right! — but the people that are really navigating the ship, are the ones that know the tide is too strong or too low."

This structure — the incentivization and empowerment of the captains inside Centessa — is a game-changer and the reason productivity in R&D is likely to improve, said De Rubertis, who is also Centessa’s chairman. "It's exactly because the ship captains are the world leaders in those projects; these are not general career scientists."

The ability to shut down research into failing compounds or halt a clinical trial quickly is equally as important to Centessa's success as having ready funding to move successful projects into the next phase of development, said De Rubertis.

"I think that's most almost certainly true," the healthcare investor said. "The way that ... asset allocation is being done by very sophisticated financial investors — but it's still being done by financial investors, versus in Big Pharma where it's not."

Although the fleet is only on its maiden voyage, De Rubertis has ambitions that Centessa can ultimately attain a potential valuation of $50 billion to $70 billion.

However, he does not assume it will all be plain sailing: "There are always compromises because you have to cope with the lay of the land, right?"