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Tessa Therapeutics’ closure due to increasing interest rate and unsustainable revenue

Singapore — Tessa Therapeutics’ liquidation is the result of a tight monetary policy amid an interest rate hike, according to former investment banker and high-net-worth private investor Ian Yoong Kah Yin.

He said the biotech startup was a victim of the much tighter liquidity environment as global interest rates have surged from near-zero to 5% in a span of 16 months.

“This is the fastest acceleration in interest rate over the past two decades. Venture cap, sovereign funds and other backers are more cautious in backing ventures that take a long time to fruition.

“Tessa has been in existence for 11 years and is one of Singapore’s most promising biotech companies, but alas, it did not get the additional time and funding to realise its tremendous potential,” Yoong told TOC.

The Temasek-backed clinical-stage cell therapy company, explained in its letter to shareholders that it is set to enter liquidation after unsuccessful attempts to attract further investment or secure a strategic buyer amid a market downturn.

It decided to cease operations after a market downturn hindered efforts to raise additional funding or secure a strategic buyer, according to a letter to shareholders seen by The Business Times (BT).

The high-profile closure leaves a lasting impact on Singapore’s burgeoning biotech industry.

The company, with 282 employees, has raised a total of US$256.1 million in more than five rounds of funding. Together with its successful funding rounds, the company’s estimated revenue is US$43.7 million per year.

It mentioned in its 2023 outlook that it was planning to divest its manufacturing facility.

In June 2022, Tessa Therapeutics announced the close of a US$126 million Series A financing round. Polaris Partners led the financing with participation from existing investors, including Temasek, EDBI, Heliconia Capital, and Heritas Capital.

Earlier, Tessa raised US$50 million from undisclosed investors in 2018 and US$80 million led by Singapore state investor Temasek Holdings, EDBI, Karst Peak Capital, Heliconia Capital Management, Heritas, and other investors in 2017. It is unknown how much Temasek had invested in Tessa.

It acquired Euchloe Bio, a company specialises in the discovery, development, engineering and commercialization of novel, fully-human antibodies, on 23 March 2017.

In 2019, Tessa formed a US$120-million joint venture with China-Singapore Guangzhou Knowledge City (CSGKC) to conduct clinical trials for its cell therapies in China, which target cancers for patients with haematological malignancies and solid tumours.

The company is involved in the development of its cancer treatment cell therapies. Tessa is working on autologous cell therapies in nasopharyngeal cancer and classical Hodgkin lymphoma.

Edit on 5 July: The previous version of the article inaccurately noted  Cytiva as an investor of Tessa Therapeutics. Tessa Therapeutics was conferred S$100,000 for a second prize at the SEA BioChallenge award ceremony on 19 May 2023.

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