A venture capital firm made about $470 million on a buzzy biotech's $8 billion acquisition, and has its eye on these promising areas next
- Eli Lilly & Co.'s about $8 billion acquisition of biotech Loxo Oncology could mean a $470 million payday for venture-capital firm Aisling Capital.
- Aisling Capital was a founding investor in Loxo and most recently held a 6.6% stake.
- Aisling Capital managing partner Steve Elms told Business Insider about the other biotechs and scientific areas the firm is intrigued by.
Pharma giant Eli Lilly & Co.'s Monday acquisition of biotech Loxo Oncology for $8 billion was a big deal, both for Eli Lilly and the wider biopharmaceutical industry.
It also represents a major payday for venture-capital firm Aisling Capital, with expected returns of around $470 million on its roughly 2 million shares, managing partner Steve Elms told Business Insider on Tuesday.
The firm invests in life sciences companies, both public and private, with drugs in fairly advanced stages of research, and has raised about $1.8 billion since it was founded in 2000.
Aisling got in on the ground floor with Loxo, literally - it was a founding investor in the biotech and incubated Loxo in its offices in the early days.
The venture-capital firm is also intrigued by other kinds of "targeted" approaches to cancer, cell therapies, and those that use the immune system to fight cancer, called immuno-oncology.
Among the "interesting areas we're watching really closely" are biotechs developing personalized vaccines to fight cancer, Elms said, though Aisling hasn't yet taken an investment.
Biotechs like Gritstone Oncology and Neon Therapeutics aim to use the immune system to treat cancer, like in immuno-oncology, and to do so are developing medicines that hone in on new targets, protein fragments called neoantigens.
Neon, for example, calls neoantigens "cancer's untapped vulnerability."
Aisling is interested in other immuno-oncology approaches as well, with investments in biotechs Marker Therapeutics and Arcus Biosciences. But the firm has also been "really selective," Elms said.
"With targeted medicine, you know really quickly, and can stop the program right away" if the drug isn't working or has serious side effects, Elms said. Unlike in immuno-oncology, "you don't have to worry about multiple clinical trials with multiple combinations" and wait for them to pan out.
Aisling has history and close ties with Loxo, which develops medicines focused on gene mutations in the cancers, allowing them to treat patients across different types of the disease. Rivals with a similar approach include Blueprint Medicines and Deciphera Pharmaceuticals.
Elms chairs Loxo's board, and Loxo's CEO, Dr. Josh Bilenker, and COO Jake Van Naarden, both came to the start-up from Aisling Capital.
The firm's stake in Loxo was once as high as 18.6%, according to a Reuters report from 2016, though it most recently held an about 6.6% stake.
Its stake was roughly twice the size it is now last summer, when Aisling sold about two million shares at a lower price.
That was purposefully so, Elms said: "One of the important parts of our strategy is making sure to take some money off the table as the price increases, and that's something we've done historically at Aisling Capital."