Clal Biotech portfolio co Neon raises $106m

Clal Biotechnology Industries Ltd. announced that US cancer vaccine therapy treatment company Neon Therapeutics, in which it holds a 5% stake, had completed a $106 million financing round at a company value of $125 million, before money. The company announced early this year that it had raised $70 million in the round, and later increased it by $36 million.

Clal Biotechnology's market cap is NIS 501 million. The company's share price has remained largely unchanged in recent months, after climbing 20% over the past year.

Neon is calling its financing round a bridge on the way to an IPO. Judging by the size of the financing round, the company's IPO will be at a company value in the hundreds of millions of dollars.

Clal Biotechnology can also profit indirectly from Neon's success, because Vedantra, of whose shares it holds 70%, recently signed a cooperation agreement with Neon. According to the agreement with Neon, which is developing anti-cancer vaccines, Vedantra's technology will be used to improve the vaccine response. Neon is funding trials of the combined technology.

Clal Biotechnology reported this year that it was planning Nasdaq offerings for four of its portfolio companies by the end of 2018: Israeli companies Gamida Cell and BioCancell in 2017 and Neon and Luc Therapeutics in 2018. No IPOs have been held yet, but all of the companies have raised money and bolstered their staff in preparation for a possible IPO in 2018, and IPOs for all four of them are still planned. It now appears that Neon will be the first of them to realize the plan.

Participants in the Neon financing round included Fidelity Management & Research Company, Wellington Management, Pharmstandard International, Casdin Capital, Hillhouse Capital Group, Nextech Invest, Arrowmark Partners, Partner Fund Management, and Access Industries, controlled by Len Blavatnik, who indirectly controls Clal Biotechnologies, and therefore has investments in two instruments jointly owning 13% of Neon, which gives him the right to appoint a director in the company.

Neon announced that it intends to use the money raised to continue development of its main product, NEO-PV-01, a personalized vaccine therapy for cancer patients currently undergoing a Phase Ib clinical trial (an initial safety and effectiveness trial), and to continue development of additional products currently in the preclinical stage.

Neon's technology is the result of many years of research at the Broad Institute, a drug development institute founded by Harvard University and the Massachusetts Institute of Technology (MIT), and at the Dana Farber Cancer Institute, a leading cancer treatment hospital.