UPDATED: VC Frazier Healthcare nails $377M fund with eye on biotech startups
Amid renewed optimism in biotech venture capital, Seattle stalwart Frazier Healthcare has pulled down a $377 million fund, surpassing its goal as it scouts for the next wave of emerging drug developers.
For its 7th fund, Frazier overshot its target of $300 million, drawing commitments from foundations, pension plans and endowments. The $377 million haul is still far smaller than the $600 million Frazier closed in back in 2007, but General Partner Jamie Topper and his team have already proven they can weather a protracted venture drought that's only recently begun letting up.
Frazier has reeled in more than $2 billion across its 7 funds, racking up some high-dollar exits throughout its 22 years of investment. The firm got in early on IPO success stories like Vivus ($VVUS), Clovis Oncology ($CLVS) and ViroPharma ($VPHM), and the firm has notched some high-dollar sales, watching as Eli Lilly ($LLY) snapped up Alnara Pharmaceuticals for $180 million in 2010 and Gilead Sciences ($GILD) bought Calistoga Pharmaceuticals for up to $600 million the next year.
With its latest fund, Frazier is taking a wide-angle approach to the biotech world, Topper told FierceBiotech. The longtime partner is fairly agnostic when it comes therapeutic areas, focusing instead on whether companies are chasing a true unmet need and are three to 5 years away from a value inflection point. And Frazier isn't afraid to take a risk on a preclincal outfit, given the right circumstance.
"We draw the distinction as follows: We see a lot of unbelievable science, but if a company comes to us and still needs to do a lot of validation work, it's probably too early for us," he said. "We want our venture dollars to go to drug development operations, not just science projects."
There's no question the biotech venture funding world has contracted over the past few years, Topper said, and the still-shaky climate means fewer dollars are up for grabs. However, from Frazier's perspective, that makes for less capital pursuing a good amount of opportunities, Topper said, creating a buyer's market.
"This is a really, really attractive time to be investing in healthcare," he said. "We're very bullish."
The world of biotech VC is nowhere near its pre-downturn heyday, but a boisterous second quarter has injected both money and mirth into the industry. Venture firms poured $1.3 billion into biotechs in Q2, according to the National Venture Capital Association and PricewaterhouseCoopers, a 41% jump over the first quarter. Perhaps most important, roughly one-third of the second quarter's 103 deals were for first-time fundraisers, a jarring turnaround from Q1 when early-stage investment hit an 18-year low.
Of course, one quarter doesn't spell an industry-wide turnaround, but Frazier isn't alone in its belief that the time is now to stock up its war chest. VC giant OrbiMed revealed in August that it's putting together a $300 million fund with sites set on Asian biotechs, and venture mainstay Third Rock closed $516 million for its latest fund this year, joining Atlas Venture and its $265 million raise.
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Editor's note: This story has been updated to include comments from Frazier Healthcare General Partner Jamie Topper.