Rough biotech market won't stop 5AM Ventures' new $750M life science funds

It’s a good time to be 5AM Ventures—and, evidently, a biotech looking for funding. The firm just closed two life science funds totaling $750 million even as the biotech sector as a whole struggles to gain its feet in a tumultuous market.

Despite an industrywide drop in biotech financing and the market challenges, Andrew Schwab, managing partner at 5AM Ventures, says there's still plenty of opportunity to put capital to work.

“Our firm has been around for 20 years. We’ve been in troughs before—whether it’s the global financial crisis or early days of COVID—we’ve been through times where the biotech index is down,” Schwab told Fierce Biotech. “Every time, there’s a rebound in a year or two. While past results don’t predict future ones, we’re hoping it will rebound soon and are thrilled to be investing still.”

The firm has closed a $450 million early-stage venture capital fund that will expand efforts to discover, incubate and invest in breakthrough life science companies, Schwab said. About a third of the $450 million will go to Incubator 4:59, 5AM’s internal program that partners early on with scientists and entrepreneurs to develop proof-of-concept data for series A financing. Another third of the capital will go to 5AM-created companies, while other funds are syndicated for new company creation, he said.  

The $450 million is 5AM’s seventh venture fund, though, at the moment, the firm isn’t disclosing what specific companies it will be investing in. During the prior sixth venture round, the firm invested in Artiva Biotherapeutics, a private developer of off-the-shelf natural-killer-cell-based therapies; a $45 million round for Camp4 Therapeutics, an RNA therapy biotech that recently added leaders from Translate Bio and Biogen to its team; and gene therapy biotech Ensoma that nabbed Emile Nuwaysir, Ph.D., to lead the company.

Schwab said those companies exemplify what the firm looks for when investing, adding that 5AM primarily gravitates toward therapeutics companies tied to oncology, neuroscience, rare diseases and immunology. On the tech side, 5AM prefers investing in companies centered around genomics and cardio genomics, with a special interest in the intersection of digital and life sciences and informatic companies.

The second part of the equation—the $300 million later-stage fund—will be split evenly between both 5AM portfolio companies and non-5AM companies in the private and public markets. 5AM will invest in promising non-5AM companies at stages following series A funding rounds. This is 5AM’s second opportunities fund, with the first one closing out at $150 million, said Schwab.

5AM currently supports 101 portfolio companies, including clinical-stage biopharmaceutical company Cidara, materials research company Halio, biotech NodThera, medical device company Semprus, and biopharmaceutical company Pear Therapeutics. The firm invests across multiple areas with the expectation that the funding will generate sizable returns within three to five years. 

When asked why 5AM has been able to continue investing amid a plummeting market, he said, “There are a number of specialist firms in this area, and I think most firms have been able to still raise some capital—but we’re one of the leading ones.”  

Amid a surge of recent biotech layoffs, 5AM added two industry veterans to its team—a direct reflection of the firm’s continued evolution. New venture partner Elliott Levy, M.D., previously served as Amgen’s senior vice president of global development, and before that was senior vice president and head of specialty development for Bristol Myers Squibb.

Paula Soteropoulos, founding CEO of Akcea Therapeutics, will serve as a strategic adviser. She previously served as senior vice president and general manager of cardiometabolic, rare diseases and strategic alliances at Moderna, and held several different leadership roles at Sanofi Genzyme.

As the industry nervously watches the clock and awaits market correction, recent successes at 5AM-backed companies—such as Pear ringing in $4.2 million of annual revenue in 2022, above its predicted value—suggest investments in biotechs aren’t going anywhere anytime soon.