The Central Coast’s tech chops were in evidence in late October, when two firms netted more than $150 million in equity funding.
Westlake Village biotech startup Arcutis Biotherapeutics raised $94.5 million in capital to send a plaque psoriasis drug through Phase 3 trials, with a technology that was at the center of a multibillion dollar acquisition by Amgen in August. The news followed just days after speech analytics company Invoca, based in Santa Barbara, added $56 million to its war chest.
The funding comes as deals in both the pharma and artificial intelligence sectors are on pace to match record investment in 2018.
Arcutis said it would use the funding to pursue Phase 3 clinical development for its topical plaque psoriasis treatment, ARQ-151. The company completed enrollment in Phase 2a trials for the drug, evaluating it as a potential treatment for atopic dermatitis Oct. 9, and said it expects to see early results from the studies in the first half of 2021.
ARQ-151 is a small molecule PDE4 inhibitor, the same technology found in the $2 billion-per-year drug Otezla, which Amgen acquired from Celgene for $13.4 billion. Also in Arcutis’ pipeline is an anti-inflammatory compound the company purchased in 2018 from Shanghai-based Jiangsu Hengrui Medicine to treat eczema in a deal worth up to $223 million.
New investors made up more than half of the Series C round, which was led by HBM Healthcare Investments and included funding from Vivo Capital, BlackRock, Omega Funds, Pivotal BioVentures and Goldman Sachs.
Returning investors Frazier Healthcare Partners, Bain Capital Life Sciences, Orbimed and RA Capital Management also contributed to the round, the company said, bringing it up to $160 million raised to date.
Arcutis is headed up by CEO and President Frank Watanabe, formerly an executive at biotech giant Amgen and Westlake Village cardiovascular drug discovery firm Kanan Therapeutics. The deal includes the addition of HBM Partners Investment Advisor Alexander Asam to the company’s board of directors.
“We are excited about the shared commitment to developing dermatology products with the potential to positively impact patients’ lives across multiple skin diseases,” Watanabe said.
U.S. pharma and biotech venture capital reached $11.5 billion in the first three quarters of 2019, across 609 deals, according to the PitchBook Venture Monitor third quarter report. Activity continued to concentrate among early-stage deals.
The past two quarters also saw a record number of deals in late-stage AI focused startups. While average deal size has varied, more than 950 deals injected $13.5 billion in venture capital into the sector so far in 2019.
Santa Barbara-based Invoca said it planned to use the capital to double its headcount over the next three years.
Invoca, which uses AI to analyze phone calls and streamline marketing efforts, is among a handful of tri-county speech and data analytics firms, including video analytics and compliance software Theta Lake, which raised $5 million in seed funding in February.
One of the region’s fastest-growing companies, Invoca moved into a new headquarters on State Street in June and has more than 160 employees nationwide.
Returning investor Upfront Ventures led the round alongside H.I.G. Growth Partners. Accel and Morgan Stanley Alternative Investment Partners also participated in the deal, which brings Invoca up to $116 million in capital raised to date.
The company said it had seen 75 percent growth in the first half of 2019 among customers like Dish Network, Dignity Health and U.S. Bank.
Spending on digital advertising is expected to reach $400 billion next year, Invoca CEO Gregg Johnson said in a news release Oct. 17, citing data from eMarketer. That has driven an increase in marketing activity among web and social media channels like Facebook and Google, but brands are still struggling to connect their digital ad strategies to the conversations they’re having directly with customers.
“We’re coming into an era where technology is being used to enable and improve human connections, instead of replacing them,” said Scott Hilleboe, managing director at H.I.G. Invoca tools help marketers “uncover and act on conversational insights in a way that is simple and scalable, similar to what they’ve been doing on the digital side for years.”
• Contact Marissa Nall at [email protected]
