New Jersey may not have the best reputation, perhaps sullied by inevitable comparisons to MTV’s Jersey Shore or the Sopranos. But what it does have is its critical role—albeit underrated—as a biotech hub.
Competing with South San Francisco and Boston, New Jersey is among the leading global centers for biomedical research, home to some of the largest companies in the space from Johnson & Johnson to Bristol Myers Squibb. The region has also become a magnet for venture-backed startups seeking to revolutionize how we treat diseases.
A few weeks ago, I drove out to Bridgewater, N.J., and visited an unassuming office park where one such company, Cellares, is building sci-fi technology to cure blood cancer.
Bridgewater, as I discovered when I plugged the address into Google Maps to figure out how I would get there, is not close to New York City. This is not the part of New Jersey that is accessible by train, or even a quick Uber through the Holland Tunnel. But as Fabian Gerlinghaus, the cofounder and CEO of Cellares, explained to me, this was the perfect site to set up a cell therapy factory.
For those of us who stopped our science education after high school biology, the concept of cell therapy is difficult to grasp. Put simply, it’s a type of treatment in which patients’ own white blood cells, a part of the immune system, are genetically engineered to recognize and kill cancer cells. “We’re treating patients with a living drug,” Gerlinghaus told me.
While the technology is groundbreaking, the major roadblock is that other drugs can be made in bulk, with one batch able to treat millions of patients. The issue with cell therapy is that it’s customized for individuals because it starts with that patient’s own cells. “This is why these drugs are so good, but this is also why it’s so expensive to make them and so difficult to make them at scale,” Gerlinghaus told me.
An aerospace engineer by training, Gerlinghaus knew he wanted to start his own company since he read, at 22 years old, the biography of Virgin business empire founder Richard Branson. He went into the life sciences industry, becoming chief innovation officer at the gene engineering company Synthego, which grew from a handful of employees in a garage to 250 during his five-year stint. He learned about cell therapy when he attended biotech conferences. “People were shouting from the rooftops, ‘We’ve got cures for cancer, and we’ve got no way of making them at scale!’” Gerlinghaus recalls. He teamed up with his cofounder, Omar Kurdi, and decided to build Cellares.
The company has now raised $355 million in funding, and signed a $380 million deal last year to reserve manufacturing capacity for Bristol Myers Squibb’s cell therapy drugs. But just a few years ago, the idea behind Cellares still seemed like a moonshot. Venture firm Eclipse, which specializes in industrial startups, was one of the first to take a chance on the startup, leading its $18 million Series A in 2019, with participation from 8VC, led by Palantir cofounder Joe Lonsdale.
Eclipse’s Justin Butler joined me on the tour of Cellares’ Bridgewater facility, which is currently being built with the aim of operating at clinical scale in about a year and commercial scale in two years. Butler explained that he views Cellares as the TSMC to Bristol Myers Squibb’s Nvidia. In other words, Bristol Myers Squibb designs the chips (or in this analogy, cell therapy drugs), while Cellares has the hardware to actually manufacture them.
Butler told me that he began to learn about the space after losing his wife to cancer in 2017. “I realized there’s a huge gap between what I call the science of healthcare and the technology of healthcare,” he said.
Cellares’ breakthrough comes from two impossibly complex pieces of hardware, both of which look like they’re straight out of 2001, replete with robotic arms and shining white walls. Together, they automate the manufacturing and quality control process, allowing the crucial drugs to be synthesized at the scale of tens of thousands of doses annually. Gerlinghaus said the entire cell therapy industry produced just 8,000 patient doses in all of 2023.
The guts to invest in a company like Cellares before it built a single functioning machine seems far different than most VCs backing their tenth B2B SaaS startup of the year (no offense to any readers). “It takes courage,” Gerlinghaus said. “Both for society and also for the financial backers.”
While Cellares is based in South San Francisco, it chose New Jersey as the site of its main manufacturing facility for a few reasons: the talent, the proximity to major airports, and to avoid the risk of basing a logistics-intensive business entirely in one location.
So the next time you’re about to make a joke about New Jersey, just remember that the state is playing a crucial role in creating the next generation of medicine. And who wouldn’t want to spend a summer on the Jersey Shore?
Scoop…Haun Ventures, the crypto venture giant that raised $1.5 billion across two funds back near the height of the last blockchain bull market in 2022, is out raising its second round of funds, which are set to total $1 billion. The raise is expected to close in June. I have all the details here.
Leo Schwartz
X: @leomschwartz
Email: leo.schwartz@fortune.com
Submit a deal for the Term Sheet newsletter here.
Nina Ajemian curated the deals section of today’s newsletter. Subscribe here.
VENTURE DEALS
- BuildOps, a Los Angeles-based business platform for commercial contractors, raised $127 million in Series C funding at a $1 billion valuation. Meritech Capital Partners led the round and was joined by BOND Capital, SE Ventures, existing investors Fika Ventures, Next47, StepStone Group, Titanium Ventures, and others.
- Camber, a San Francisco-based scientific research computing platform, raised $4 million in funding from Base10 Partners.
PRIVATE EQUITY
- Forward Consumer Partners acquired SerVaas Laboratories, an Indianapolis-based maker of household cleaning products brand Bar Keepers Friend. Financial terms were not disclosed.
EXITS
- Regent acquired TechCrunch, a San Francisco-based tech news platform, from Yahoo. Financial terms were not disclosed.
OTHER
- Flourish agreed to acquire Sora Finance, a San Francisco-based AI-powered debt optimization platform for financial advisors. Financial terms were not disclosed.
PEOPLE
- Y Combinator, a San Francisco-based venture capital firm and startup accelerator, named Michael Seibel partner emeritus. Previously, he was a partner.
