Getaway greetings. Pro Rata will be off Monday for Memorial Day, returning Tuesday. Have a great long weekend and a preemptive happy birthday to J, who has never written a word of this newsletter but without whom it would never happen...
Pharma mergers may be reducing the number of new medicines coming to market.
That's the upshot of a new working paper from Yale School of Management professor Song Ma and London Biz School's Colleen Cunningham, who determined that 5% more drugs would become available each year if not for what they refer to as "killer acquisitions."
The troubling bottom line: "Our findings suggest that the Schumpeterian creative destruction process—whereby startups inventions can topple entrenched and less innovative incumbents—may be smaller than previously documented. That is, we see lower rates of innovation not only because incumbents hesitate to innovate, but also because incumbent firms with market power acquire innovators to terminate competition and as a consequence inhibit technological progress."
• Trade wars: One byproduct of the U.S. bailing on the North Korea summit could be less negotiating leverage with China over trade, just around a week before Wilbur Ross heads to Beijing for the next round of face-to-face meetings.
• Cracked screen: Essential, the smartphone startup from Andy Rubin that raised $330 million in VC funding, has put itself up for sale, per Bloomberg.
• Checking in on the world's two most valuable companies:
Rover, a Seattle-based pet-sitting and walking platform, raised $155 million in new funding led by T. Rowe Price at a post-money valuation just south of $1 billion.
🚑 Grail, a Menlo Park, Calif.-based cancer detection company, raised $300 million in new funding. China's Ally Bridge Group led, and was joined by Hillhouse Capital, 6 Dimensions Capital, Blue Pool Capital, China Merchant Securities International, CRF Investment, HuangPu River Capital, ICBC International, Sequoia Capital China and WuXi NextCODE. http://axios.link/kOrN
• Conga, a Broomfield, Colo.-based contract and document automation platform, raised $47 million in new funding co-led by Insight Venture Partners and Salesforce Ventures. http://axios.link/gZAq
• ICEYE, a Helsinki-based provider of synthetic-aperture radar data, raised $34 million in Series B funding led by return backer True Ventures. www.iceeye.fi
• Lumina Networks, a San Jose, Calif.-based open source networking startup, raised $10 million in Series A funding. Verizon Ventures led, and was joined by AT&T and Rahi Systems. www.luminanetworks.com
🚑 Ultromics, a UK-based developer of AI technology for diagnosing heart disease, raised £10 million in Series A funding led by Oxford Sciences Innovation. http://axios.link/qPk9
• Lending Express, an “AI-powered” marketplace for business loans, raised $2.7 million led by Entrée Capital. http://axios.link/tnBz
🚑 Canopy Biosciences, a St. Louis-based developer of biotech research tools, raised $2.4 million from Kingdom Capital and BioGenerator. http://axios.link/PTX4
• Apollo and KKR are among those circling the power solutions unit of Johnson Controls (NYSE: JCI), which could fetch upwards of $12 billion, per Bloomberg. http://axios.link/3sc9
• Charlesbank Capital Partners and Partners Group have hired Jefferies to find a buyer for Varsity Brands, the Memphis-based maker of yearbooks and class rings, per Reuters. http://axios.link/9LjE
• Charlesbank Capital Partners and Partners Group completed their purchase of Hearthside Food Solutions, a Downers Grove, Ill.-based contract manufacturer, from Vestar Capital Partners and Goldman Sachs Merchant Banking.
• Clearlake Capital Group is in talks to sell a stake in its management company to Dyal Capital Partners and Goldman Sachs’ Petershill unit, per multiple reports. http://axios.link/tPHU
• Partners Group has agreed to buy German metering company Techem for €4.6 billion. http://axios.link/ExKe
🚑 Kezar Life Sciences, a San Francisco-based developer of drugs to treat autoimmune diseases, filed for an $81 million IPO. It plans to trade on the Nasdaq (KZR) with Jefferies as lead underwriter. The pre-revenue company raised around $78 million from firms Cormorant Asset Management and Morningside Ventures (15.5% pre-IPO stake), Cormorant (9.9%), Cowen Healthcare (7.6%), EcoR1 Capital (5.5%) and Omega Funds (5.2%). www.kezarlifesciences.com
🚑 Magenta Therapeutics, a Cambridge, Mass.-based developer of bone marrow transplant therapeutics, filed for a $100 million IPO. It plans to trade on the Nasdaq (MGTA) with J.P. Morgan as lead underwriter. The pre-revenue company raised around $150 million from firms like Third Rock (28.91% pre-IPO stake), Atlas Venture (17.48%), GV (12.05%) and Casdin Capital (5.9%). www.magentatx.com
• Multilaser Industrial, a Brazilian electronics maker, filed for an IPO. http://axios.link/UoMl
🚑 Xeris Pharma, a Chicago-based developer of injectable hypoglycemia treatments, filed for a $75 million IPO. It plans to trade on the Nasdaq (XERS ) with Jefferies as lead underwriter. The pre-revenue company raised $145 million from firms like Palmetto Partners (13.88% pre-IPO stake), Deerfield Management (12.32%), Redmile Group (12.3%) and Mérieux (6.18%). www.xerispharma.com
• ATON raised its takeover offer for listed South African builder Murray & Roberts by 14% to $426 million, after M&R began merger talks with local rival Aveng. http://axios.link/GbyR
• Telia, a Swedish telco, is in talks to buy Bonnier’s broadcast business for upwards of $1.4 billion. http://axios.link/VYwi
• Ardian is targeting $12 billion for what would be the largest-ever private equity secondaries fund, per PE International. http://axios.link/Pi58
• DCM is raising up to $750 million for its ninth VC fund, per an SEC filing.
🚑 Pivotal China, an affiliate of Nan Fung Life Sciences, raised $150 million for an incubation and early-stage life sciences fund. http://axios.link/1M9q
• Sinovation Ventures of China raised $391 million for an AI-focused fund. http://axios.link/t5Iq
⛽ Jonathan Cox and Michael Johnson stepped down as energy bankers with Morgan Stanley, in order to join J.P. Morgan as global co-head of oil and gas I-banking and a vice chairman of I-banking, respectively, per Bloomberg. http://axios.link/neST
⛽ Robert Mancini is “retiring” as a managing director and co-head of Carlyle Power Partners, which he joined in 2012 from Goldman Sachs. www.carlyle.com