CG brings back the crossover round, reeling in $105M to fund phase 3 bladder cancer trial

CG Oncology has raised the rarely seen crossover round. Once ubiquitous, the pre-IPO rounds have dried up in the biotech bear market—but CG’s fully enrolled phase 3 bladder cancer clinical trial has persuaded investors to dig out their checkbooks and pump $105 million into the business.

California-based CG is focused on developing cretostimogene grenadenorepvec, an oncolytic adenovirus encoding immunohematopoietic cytokine granulocyte-macrophage colony stimulating factor (GM-CSF). The candidate is designed to infect and replicate in tumor cells, directly killing them while also causing the release of tumor-derived antigens and GM-CSF to stimulate an immune attack. CG is developing the candidate as a treatment for non-muscle invasive bladder cancer (NMIBC).

Foresite Capital and TCGX see promise in the candidate. The funds co-led the crossover round with the support of fellow new investors Avidity Partners, BVF Partners and Janus Henderson Investors, plus GC’s existing investors Acorn Bioventures, Ally Bridge Group, Decheng Capital, Longitude Capital, Malin and RA Capital Management.

The VC funds have come together to help CG get over the finish line. CG has completed enrollment in a phase 3 trial that is testing cretostimogene grenadenorepvec as a monotherapy in patients with high-risk NMIBC that is unresponsive to Bacillus Calmette-Guerin (BCG). The study has a primary completion date in January 2024, per CG is also running a phase 2 Keytruda combination clinical trial.

CG’s use of an oncolytic virus to treat BCG-unresponsive NMIBC puts it in the same ballpark as Ferring, which won approval for an adenovirus vector-based gene therapy in the tumor type late last year. The Ferring product, Adstiladrin, differs in that it encodes interferon alfa-2b. Adstiladrin, the focus of the now-defunct Ferring-Blackstone Life Sciences pact, therefore turns bladder cells into interferon factories.

If CG goes from crossover round to IPO, it will follow a now lonely, but once busy, path to public markets. The number of pre-IPO biotech crossover rounds plummeted by 62% last year as investors fled the field. CG differs from many of the biotechs that took the path during the boom years because it is already on the cusp of delivering pivotal data on its lead candidate.