Temasek-backed Tessa Therapeutics to cease operations after failure to raise funding

TESSA Therapeutics, one of the top-funded biotech startups in Singapore, will soon enter liquidation after failing to find investors to continue funding the development of its cancer treatment cell therapies.

Tessa’s board decided to cease the company’s operations after a market downturn hindered efforts to raise more funding or secure a strategic buyer, the company said in a letter to shareholders, seen by The Business Times (BT).

The closure of one of Singapore’s most promising biotech companies, whose backers include state-linked EDBI and US-based healthcare investor Polaris Partners, raises larger implications for the city-state’s emerging ecosystem.

Biotech companies typically spend years developing their drugs and treatment solutions before generating revenue from commercialising these products. Until then, they depend on external funding to bankroll their operations.

Tessa has raised US$397.8 million in equity funding since it was founded in 2012, data from VentureCap Insights showed. The amount does not include any funding it raised through convertible debt.

However, market conditions have shifted considerably, the company told its shareholders.

“The management team spent countless hours over several discussions with investors in the US, Europe, Middle East and China,” it said in its letter. Hitting promising research and development milestones over the last 12 months failed to sway investors, it added.

“We have witnessed an unprecedented value depreciation in public markets for biopharma as a sector. High interest rates and a sharp decrease in biotech valuations have reduced the risk appetite of investors. Investors now expect far more mature data than what we currently have.”

Just two weeks ago, Tessa announced “promising results” for a study of its off-the-shelf cell therapy platform TT11X, which is used in the treatment of Hodgkin lymphoma. Through TT11X, a single healthy donor’s immune cells are engineered to target cancer cells for multiple patients.

But the study was an early-stage one involving only 18 patients, who were heavily pre-treated. The Phase 1 trial for TT11X had an estimated primary completion date of June 2025, according to a public registry of clinical trials maintained by the United States National Library of Medicine.

Tessa spent S$88.5 million on research and development in 2021, up from S$62.7 million the year before, regulatory filings showed.

Temasek, through its indirect subsidiary TLS Beta, holds a 78 per cent equity stake in the company, according to shareholding data lodged with the Accounting and Corporate Regulatory Authority.

The company has gone through a number of management changes in recent years. Founder and CEO Andrew Khoo helmed the startup from 2012, before stepping down in May 2020. He was succeeded by pharma veteran Jeffrey Buchalter.

Buchalter relinquished the post in November 2021, and Tessa’s chief technology officer John Ng took over the reins as acting CEO. Thomas Willemsen, formerly from Takeda Pharmaceutical and GSK, was appointed CEO last August and is the company’s current chief.

Tessa is in discussions with a third party about separately continuing the operations of its manufacturing facility in Singapore, the letter to shareholders said.

In December 2019, the company announced a new facility totalling 130,000 square feet (sq ft). The site at Depot Road houses an office space and 90,000 sq ft for commercial-scale cell therapy manufacturing, Tessa said at the time.

Tessa’s premises on levels six and seven of the Depot Road building appeared deserted from the outside when BT visited on Friday morning (Jun 30). The reception area was unattended, with a sign directing enquiries to the company’s phone line, which was “currently unavailable” when BT called.

The facility has been on the market for at least a year, three industry sources told BT. Tessa leases the space from CapitaLand Investment, which holds the Depot Road building under CapitaLand Ascendas Real Estate Investment Trust.

Asked if Tessa had terminated its lease on the space it occupies in the building, a spokesperson from CapitaLand Ascendas Reit said: “We have not received any request in relation to Tessa Therapeutics’ lease at our property.”