Ottawa biotech startup Turnstone Biologics raises $41.4M

An Ottawa biotech startup has received a US$41-million injection of venture capital to further develop its groundbreaking treatments that use the body’s own immune system to battle cancer.

Founded by three Ontario cancer scientists, Turnstone Biologics is a leader in the emerging field of immunotherapy, in which viruses that attack malignant tumours are administered to patients. The new series-B funding round, announced earlier this month, is the largest venture capital deal in Ottawa since Shopify received $100 million in 2013.

The company, which employs 17 people and is headquartered in downtown Ottawa, received a series-A funding round worth $11 million in Canadian funds last October. The latest round is led by new investor OrbiMed with additional participation from new contributor F-Prime Capital Partners and existing investors FACIT and Versant Ventures.

Turnstone CEO Sammy Farah said the new capital should carry the firm through the next two to three years of clinical trials.

“We saw an opportunity for the company to really expand and accelerate the development programs we were working on,” said Mr. Farah, a New York-based biotech industry veteran who joined Turnstone as chief executive late last year. “We are seeing promising results in the first clinical trial, and we are starting to see the type of activity that we had hoped for.”

Mr. Farah said he expects it will be at least five to seven years before the company can bring a new drug to market and begin generating substantial revenues.

“Much of it depends on what kind of results we see in the clinic,” he said. “These therapies take a very long time to develop. We’re moving along as fast as we can.”

The firm’s lead scientists and founders – Dr. John Bell of The Ottawa Hospital, Dr. David Stojdl of the Children’s Hospital of Eastern Ontario and Dr. Brian Lichty of McMaster University – have one clinical trial on the go and plan to launch another at the end of 2016, followed by two more next year. The results of the first trials are expected to be published near the end of 2017.

Venture capital is an increasingly important source of capital for biotech firms, which generally must put products through years of rigorous testing before they are approved for sale to the public. Turnstone’s deal is the second-largest round of venture capital funding in Canada this year for a biotech startup, according to Invest Ottawa.

“Community support has been and will continue to be crucial for our research,” Dr. Bell said in a statement. “However, developing new therapies is extremely costly, so we also need to engage the private sector to take our research to the next level.”

Turnstone’s research focuses a form of immunotherapy called oncolytic viruses – agents that infect human cancer cells, multiply and ultimately destroy tumours. The viruses are also used in a vaccine that can trigger the body’s immune system to identify and attack malignant tumours based on proteins called antigens found in the cancerous cells.

Current tests are targeting what are known as “solid tumour” cancers such as melanoma, lung cancer and colorectal cancer, Mr. Farah said. The second phase of trials will focus on small-cell lung cancer, breast cancer and esophageal cancer, he said.

Ultimately, he said, Turnstone’s drugs will most likely be used in combination with other forms of therapy to treat patients.

“What we and others in this field are driving towards are cures for cancer,” Mr. Farah said. “There’s no question about it – that’s our goal.”

Dr. Stojdl said the latest funding announcement is another step in moving cancer scientists closer to achieving that objective.

“This financing is incredible validation that we’re on the right track,” he said in a statement. “We all want to be part of a scientific narrative that changes lives, and I believe that our immunotherapy approach is it.”