Recent Funding:
Breakout Ventures Closes $114M Fund to Invest in Early-Stage Biotech
California-based VC firm Breakout Ventures raised $114 million for its third fund to invest in approximately 20 early-stage biotech companies, writing first checks of $1 million to $5 million. The firm has already returned most of its first fund and a significant portion of its second fund through exits like Surf Bio’s $300 million sale to Halozyme. Breakout focuses on companies using AI and computational tools for drug discovery, clinical development, and manufacturing. Recent portfolio wins include Noetik, which licensed cancer models to GSK for tens of millions, validating AI infrastructure as a new business model in pharma.
Unnatural Products (SF) Raises $45M Series B to Advance Oral Macrocycle Pipeline Into Clinic
Unnatural Products secured $45 million to move its macrocycle peptide drugs—which aim to match the power of biologics in easier-to-take oral pills—into human trials. The 50-person company has spent a decade building its platform and now has partnerships with BridgeBio, Merck, argenx, and Novartis (which just signed a cardiovascular deal worth up to $100 million in upfront and near-term milestones). The biotech’s lead program targets cardiometabolic diseases and aims to mimic bimagrumab, Lilly’s muscle-sparing obesity shot, as an oral treatment. Investor argenx joined the round as both a partner and shareholder, reflecting growing industry excitement around macrocycles as Merck’s and J&J’s late-stage programs approach commercialization.
Alto Neuroscience (SF) Raises $120M to Fund Phase 3 Trial for Treatment-Resistant Depression Drug
Alto Neuroscience secured $120 million in a private placement led by Commodore Capital to fund development of ALTO-207, a fixed-dose combination of pramipexole and ondansetron for treatment-resistant depression (TRD). The financing will support a planned Phase 3 trial through completion and, if positive, to NDA submission, bringing the company’s total cash to approximately $275 million. Alto plans to start a Phase 2b study of ALTO-207 in the first half of 2026, followed by Phase 3 initiation in early 2027. The company is focused on precision medicine approaches for neuropsychiatric disorders using its biomarker-based patient selection strategy.
Recent Layoffs:
f5 Therapeutics has closed operations after six years, citing the “brutal” early-stage biotech funding environment with multi-year lows for young platforms. The company’s NExMods platform aimed to identify new disease targets using molecular glues—a hot modality that has attracted deals from Pfizer, Novartis, Roche, Gilead, and Lilly in recent years. Despite backing from Viva BioInnovator and an award from Servier, f5 (which employed up to 10 people) couldn’t secure enough capital to advance its programs beyond in vivo studies across oncology, immuno-oncology, fibrosis, inflammation, and neurodegeneration. Founder Gary Choy acknowledged the prolonged bear market and regulatory volatility that have caused dozens of startups to shut down despite strong science.
Vistagen Therapeutics laid off approximately 20% of its workforce (around 11 employees from a base of 56) to preserve cash for its ongoing Phase 3 Palisade-4 trial of fasedienol, a nasal spray for social anxiety disorder. The move follows the December failure of the Palisade-3 trial, where an unexpectedly high placebo response eliminated the drug’s treatment effect despite consistent efficacy across earlier studies. Fasedienol previously sent Vistagen’s stock soaring 1,272% after a successful Phase 3 readout, and the company is banking on Palisade-4 results (expected in the first half of 2026) to revive the program. If successful, fasedienol would be the first approved acute treatment for social anxiety disorder. Vistagen’s cash runway extends into 2027, and the layoffs don’t affect development plans for its four other midstage nasal spray candidates.
M&A, Deals, Partnerships:
Kezar Life Sciences is offloading its preclinical Sec61 protein degradation program to French biotech Enodia Therapeutics for $1 million upfront and up to $127 million in milestone payments plus royalties. The deal includes nearly a decade of research on small molecule inhibitors designed to selectively block disease-relevant protein production, including KZR-540, which targets PD-1 expression. The sale follows a difficult period for Kezar, which implemented “significant” layoffs in October after failing to align with the FDA on a registrational trial for its autoimmune hepatitis drug. Despite selling the program, CEO Chris Kirk said Kezar “continues to have strong conviction” in targeting Sec61.
Other Interesting News:
At least 43 biotech companies extended their existing funding rounds in 2025 rather than launching entirely new fundraises, collectively raising $1.53 billion—a 31% increase from 2024. Extensions allow companies to access capital faster without the lengthy diligence process, additional dilution, or risk of down-round valuations that come with new funding campaigns. Recent examples include obesity biotech Alveus adding top-tier investors like Novo Holdings after initial close, and Poplar Therapeutics extending its $50 million Series A by $45 million to fund Phase 1 trials targeting Xolair’s food allergy market without heavily diluting existing backers before key data. Bankers note this trend helps bridge the gap for companies “overfunded relative to public valuations, but underfunded relative to clinical timelines.”
Capricor Therapeutics (SD) Gets Second Chance as FDA Resumes Review of Duchenne Cell Therapy
Capricor announced the FDA has “lifted” the complete response letter (CRL) that rejected its Duchenne muscular dystrophy cell therapy deramiocel in July 2025 and resumed review, with an approval decision now expected by August 22. The biotech submitted new Phase 3 data showing the treatment improved upper limb function and heart function, which convinced the FDA to restart the review process. The unusual reversal comes as FDA biologics chief Vinay Prasad prepares to depart following multiple controversial rare disease rejections. Capricor had argued the original rejection misinterpreted their efficacy data, claiming the primary endpoint was actually met using appropriate statistical analysis. The company’s stock jumped from $30.63 to $35.60 on the news.
BridgeBio reported detailed Phase 3 Fortify study results showing BBP-418 met primary and secondary endpoints in limb-girdle muscular dystrophy type 2I/R9 (LGMD2I/R9), a rare genetic disorder with no existing treatments. Nearly 60% of treated patients achieved creatine kinase (CK) levels within two times normal range, with 38% reaching completely normal levels, alongside functional improvements that analysts called “disease-modifying.” The FDA recommended BridgeBio pursue traditional full approval rather than accelerated approval, signaling confidence in the data’s strength. The company plans to file for approval and potentially launch by year-end for a market estimated at over $1 billion in the U.S. and EU (7,000 patients), with analysts forecasting $1.1 billion in worldwide sales by 2035. BridgeBio enrolled the trial eight months faster than expected while exceeding enrollment targets by 20%.
Structure Therapeutics (SF) Reports 16.3% Weight Loss with Oral GLP-1, Advances to Phase 3
Structure Therapeutics posted Phase 2 data showing its once-daily oral GLP-1 pill aleniglipron achieved 16.3% placebo-adjusted weight loss (about 39 pounds) at 44 weeks with the 180 mg dose—what analysts called “best-in-class weight loss” for an oral GLP-1. The drug had only one treatment discontinuation due to adverse events and showed no plateau at week 44. Structure plans to start Phase 3 trials in the second half of 2025 without a pharma partner, though CEO Raymond Stevens acknowledged a partnership is “really, really important” to reach the massive obesity market. The company’s stock jumped 7%, pushing its market cap above $4 billion, as it positions to compete with Novo’s oral Wegovy and Lilly’s soon-to-launch orforglipron.
Ultragenyx (SF) Gene Therapy Hits Primary Endpoint in Rare Metabolic Disease Trial
Ultragenyx reported its gene therapy DTX301 reduced blood ammonia levels by 18% compared to placebo at 36 weeks in a Phase 3 trial of 37 patients with ornithine transcarbamylase (OTC) deficiency, a rare genetic disease where ammonia builds up to dangerous levels. The placebo group saw five hyperammonemic crises requiring hospitalization (including one death), while the treatment group had one crisis and no deaths. Treated patients reduced their use of ammonia-controlling drugs by 27% and increased protein intake by 13% while still lowering ammonia levels. The trial’s second primary endpoint—measuring how many patients can stop treatment and dietary restrictions at 64 weeks—will read out in the first half of 2026. Analysts project peak sales around $266 million at a $2 million price point.
CytomX (SF) Reports Colorectal Cancer ADC Data, Stock Jumps 50%
CytomX reported Phase 1 data showing its antibody-drug conjugate Varseta-M achieved response rates of 6% (low dose), 20% (mid dose), and 32% (high dose) in late-stage metastatic colorectal cancer patients. The company plans to meet with the FDA mid-year to determine which dose advances to further trials and will test combinations with Roche’s Avastin. CytomX’s stock surged about 50% following the update. Separately, the company disclosed that Astellas has discontinued the remaining preclinical programs from their 2020 partnership, allowing CytomX to regain those rights.
Astellas Ends $1.6B Partnership with CytomX Therapeutics After Six Years
CytomX Therapeutics saw its 2020 partnership with Astellas come to an end as the Japanese pharma opted not to advance the remaining preclinical T-cell engager assets from their collaboration. The deal had provided CytomX with $80 million upfront and triggered $10 million in milestones across 2024, but the bulk of the potential $1.6 billion in payments will now go unrealized. The termination follows a difficult period for CytomX, which laid off 40% of its workforce in January 2025 to focus on its lead antibody-drug conjugate for colorectal cancer and lost a $300 million BMS checkpoint inhibitor deal in March 2024. The company has $137.1 million in cash expected to last through Q2 2027 and maintains ongoing partnerships with BMS, Amgen, Regeneron, and Moderna.
