This transaction highlights DDF’s attractive strategy of investing in novel therapeutics for dementia, a rapidly escalating public health crisis.
BOSTON, MA (US), November 21, 2023 – The Dementia Discovery Fund (DDF), a SV Health Investors (SV) fund specialized in pursuing transformational therapeutic approaches for dementias including Alzheimer's disease, is pleased to announce the acquisition of its portfolio company, Caraway Therapeutics, Inc. by Merck, known as MSD outside the United States and Canada. The companies have entered into a definitive agreement under which Merck will acquire Caraway Therapeutics for a total potential consideration of up to $610 million, including an undisclosed upfront payment as well as contingent milestone payments.
Caraway Therapeutics was founded in 2017 by two SV funds, DDF and SV Fund VI, with co-founders including SV Venture Partner, Tim Harris. The firm was created to pursue innovative approaches for the treatment of neurodegenerative and rare diseases by targeting pathways informed by human genetics, and has since built a pipeline of novel, small-molecule therapeutics for the treatment of these diseases. Specifically, Caraway has advanced drug discovery programs against several lysosomal drug targets for Parkinson’s disease, including TRPML1 and TMEM175.
“We are excited to have been an investor in Caraway from concept to acquisition, with the end goal of addressing the huge unmet medical need in dementias such as Parkinson’s Disease Dementia and Dementia with Lewy bodies,” says Jonathan Behr, Partner at SV, investing out of DDF, and Director of Caraway at the time of the acquisition.
The company was originally incubated and seeded as ‘Rheostat’ by the SV funds. In 2018, the renamed Caraway raised $23 million for its Series A, co-led by MRL Ventures Fund and AbbVie Ventures, with participation from Amgen Ventures, Alexandria Venture Investments and Mayo Clinic, and the SV funds.
“The acquisition by Merck is great recognition of the strong science and therapeutic programs the Caraway team has developed, and we are excited by the capabilities and resources that Merck can bring to bear to develop these important medicines,” says Caraway’s former President and CSO, Magdalene Moran.
“SV is committed to transforming healthcare through diverse investments,” says Tim Harris, “Through the SV funds’ company creation efforts and focus on providing disease-modifying therapeutics to patients, we are very pleased to advance differentiated science toward treating neurodegenerative diseases and generating returns for our investors.”
Under the terms of the agreement, Merck, through a subsidiary, will acquire all outstanding shares of Caraway with earnout milestones associated with the development of certain pipeline candidates. Additional financial details were not disclosed.
Media Contacts
Emma Geraghty (US): +1 443 994 2084
Matthieu Roussellier (UK/Europe) : +44 784 327 9966
pro-dementiadiscoveryfund@prosek.com
About the Dementia Discovery Fund
The Dementia Discovery Fund (DDF), managed by SV Health Investors, is the world's largest family of specialized venture capital funds that invests exclusively in companies developing or enabling novel therapeutics for dementia. Dementias, including Alzheimer's Disease, are arguably the largest unmet medical need, with over 55m patients worldwide. With more than $500m raised for this strategy, and offices in London and Boston, DDF capitalizes on global investment opportunities to fulfill its mandate of delivering measurable impact and generating significant financial returns. Utilizing its network of venture partners, entrepreneurs, leading scientists, and strategic partners, DDF invests in and creates new biotech companies and provides thought leadership in the field. DDF is enabled by its limited partners including major pharmaceutical companies (Biogen, Bristol Myers Squibb, Eli Lilly and Co., GSK, Johnson & Johnson, Otsuka (Astex), Pfizer and Takeda), along with AARP, Aegon, Bill Gates, British Patient Capital, NFL Players Association, Quest Diagnostics, UnitedHealth Group, and the non-profits Alzheimer's Research UK and LifeArc. Learn more at www.ddf.vc.
About SV Health Investors
SV Health Investors is a leading healthcare fund manager committed to investing in tomorrow’s healthcare breakthroughs. The SV family of funds which includes funds dedicated specifically to biotech and dementia, invests across stages, geographic regions, and sectors, with expertise spanning biotechnology, dementia, medical devices, healthcare growth and healthcare technology. With approximately $2.4 billion in assets under management and a truly transatlantic presence with offices in Boston and London, SV has built an extensive network of talented investment professionals and experienced industry veterans. Since its founding in 1993, SV has invested in, created and built more than 200 companies attracting global talent, entrepreneurs and pharma partners. To date, these investments have resulted in the licensing of 24 novel drugs and six new drug classes able to treat indications with unmet medical needs and deliver positive impact to patients. For more information, please see www.svhealthinvestors.com.
About Caraway Therapeutics
Caraway Therapeutics is a biopharmaceutical company pursuing novel approaches for the treatment of genetically defined neurodegenerative and rare diseases. The company is a leader in the cutting-edge science of activating cellular recycling processes to clear toxic materials and defective cellular components by modulating lysosomal function. Caraway is utilizing its unique product engine to develop proprietary insights into lysosomal function and small molecule ion channel modulation and advance a robust pipeline of precision therapeutic candidates with disease-modifying potential for patients. The company is backed by top-tier investors, including SV Health Investors, AbbVie Ventures, MRL Ventures Fund, Amgen Ventures, Dementia Discovery Fund, and Eisai Innovation. Caraway is based in Cambridge, MA. For more information, please visit www.carawaytx.com.
