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KKR backs medicine start-up as private equity pushes into sector

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Replay, a US-based biotech company focused on genomic medicine, has attracted the backing of private equity firm KKR and venture capital group OMX Ventures as big investors show increasing interest in start-ups in the sector.

The two firms led a large seed round of $55mn at California-based Replay. Genomic medicine is a field that uses patients’ genomic information to shape their clinical care.

Private equity interest in early stage biotech companies comes despite what is often a decade-long wait for revenue as technologies are developed, but the Covid-19 pandemic has helped raise the sector’s profile. PE firms including EQT, Carlyle and Abingworth have all recently bought or taken stakes in early stage venture capital firms specialising in life sciences.

“We think there is great fundamental life science across the world, especially after Covid. We’d like to use both the financial and human strengths of KKR and invest behind that,” said Kugan Sathiyanandarajah, managing director at KKR and a board member at Replay.

For a private equity firm, investing a huge amount of money so early on in biotech is significant. “We think there’s a very attractive space here, around early stage biotech technologies that can have strong fundamental impact,” Sathiyanandarajah added.

Lachlan MacKinnon, chief executive and co-founder of Replay, said: “It’s definitely a big seed round. Our goal is to build an enduring company that both takes products to market but also remains excellent at biotech technology development.”

Replay owns a series of genomic medicine tools designed to expand the conditions that gene therapies can treat, to include diseases such as muscular dystrophy, and cut the cost of cell therapies, which can be used to target tumours. 

“We’ve got the technology at Replay to essentially rewrite cell genomes and give them the ability to secrete proteins which have anticancer properties, or to enable the cells to get into the tumour,” said executive chair and co-founder Adrian Woolfson. “Genomic medicine has the potential to transform the future of clinical therapeutics.”

The company plans to launch its first clinical trials “within two and a half to three years”, he added.