All About Watertown's VC Funding

We’re three weeks into 2026 and Watertown’s biotech scene has already had three fundraising rounds and we’ve also seen one of our things to watch in 2026 list . But first, lets take a look back at how well Watertown firms did fundraising last year. As always, if you find these news letters informative, consider supporting our work.

Watertown’s 2025 VC Funding returned from historic 2024 high back to 2022-23 average.

MassBio, the state’s industry trade organization, released its 2025 Biopharma Funding Report and overall VC funding for the industry in Massachusetts fell by about $1 Billion from $7.89 billion in 2024 to $6.85 billion in 2025. For Watertown, the report says $1,082 million was raised, just off the all-time high of $1,137 million raised in 2024, lead by a $621 million raise by Watertown-based Treeline Biosciences, which was the single highest funding round in 2025. This put Watertown 3rd in the Commonwealth in terms of VC funds raised, behind only Cambridge and Boston.

However, closer review of the reports’ underlying data shows that this number is likely inflated due to double counted funding rounds by data provider Pitchbook. As mentioned, the 2025 data provided by Pitchbook lists Treeline Bio as having raised $621 million in 2025. But Treeline’s SEC filings only report $200 million raised in 2025, which is supported by company press releases. Looking at their website, it appears that Pitchbook combined the 2025 raise with $421 million raised in a previous round in 2024, which Pitchbook had previously reported in data provided for the 2024 MassBio Biopharma report. Similarly, the 2025 report includes a $115 million raise by Watertown based Triveni Bio, which the company had previously announced in 2024.

Correcting for these double counts, Watertown only raised $546 million in VC funding in 2025, which would drop the city to 4th in the state, behind Waltham, Cambridge, and Boston, but still more than double that of 5th place Newton. This is a still a remarkable feat, given how much larger our neighbors are, and the maturity of their life science ecosystems.

Nocion Therapeutics, Diagonal Therapeutics and Foghorn Therapeutics raise a collective $196 million in funding.

Nocion Therapeutics raised $21 million as part of their Series B extension bringing their total Series B to $93 million. The funding extends the firm’s cash runway through 2027 and the mid 2026 release of their Clinical trial Phase 2B results for their lead compound taplucainium for the treatment of adults with chronic cough. The firm is developing ion channel blockers targeted at sensory neurons responsible for pain, itch, cough, and inflammation.

Diagonal Therapeutics (headquartered at Arsenal Yards) raised $125 million in Series B funding to support their lead asset DIAG723 (a clustering antibody targeting ALK1) as they initiate a phase 1 Clinical Trial for patients with Hereditary Hemorrhagic Telangiectasia (HHT) this year. HHT is a rare genetic disorder that leads to abnormal blood vessels susceptible to rupture, leading to anemia hemorrhaging, stroke, heart failure and dealth. DIAG723 received an orphan drug designation from the FDA last summer, which is designed to support the development of treatments for diseases affecting less than 200,000 people annually.

Together, these two private companies raised $146 million, which is 25% of Watertown’s 2025 total less than a month into 2026. For comparison, Watertown firms raised only $22 million through June of 2025.

Finally, publicly traded Foghorn Therapeutics, headquartered at 99 Coolidge, raised $50 million in equity financing, extending their cash runway through the first half of 2028. The firm’s lead asset is FHD-909, a SMARCA4 inhibitor developed in collaboration with Lilly to target SMARCA4 mutant cancers, with a Phase 1 Clinical Trial under enrollment for the treatment of non-small cell lung cancer.

Lyra Therapeutics lays off entire team, looking to sell its main asset.

In our last News RoundUp, we published a list of things were keeping our eyes on in 2026, and one ofthem was whether or not Lyra Therapeutics could complete a confirmatory Phase 3 Trial for their lead product LYR-210 before they ran out of cash. Last week the company announced that they would be pausing development of LYR-210 and laying of their remaining 28 employees while they sought a strategic alternative for LYR-210. This an unfortunate end for one of Watertown’s older biotechs, which was initially spun out of Arsenal Medical back in 2011. The Boston Business Journal has more details in their write up of the company.

Quick Updates

Arrivals

• StudioDx (313 Pleasant St)

• Iclucia Therapeutics (155 Arlington St)

People

• Disc Medicine appointed Lisa Amaya Price, MBA as their Chief Human Resources Officer

That’s it for this week!