Athyrium debuts a $1.2B fund to bet on biopharmas

Athyrium's Jeremy Lack

Athyrium Capital Management has raised a $1.2 billion healthcare fund, cash earmarked for investments in commercial-stage healthcare companies.

Working with investment manager Neuberger Berman, the New York-headquartered company rallied more than 40 institutions to close the fund, its second since debuting in 2008. The plan is to scout for biopharma and med tech companies that either have marketed products or are on the verge of commercialization, providing structured capital in the form of term loans, warrants or royalty debt.

With its first fund, closed in 2013, Athyrium backed Ironwood Pharmaceuticals ($IRWD), Horizon Pharma ($HZNP), Zealand Pharma ($ZLND) and Retrophin ($RTRX), among others. And the firm has already started doling out its latest purse, providing more royalty debt to Zealand as it works with Sanofi ($SNY) on a diabetes treatment and providing secured term notes to Cipher Pharmaceuticals.

From here on out, Athyrium is looking to make individual investments of between $25 million and $150 million in public and private companies throughout North America, Europe and Asia, not discriminating between biopharma, med tech, healthcare services and IT.

"Our aim is to team up with high-quality management teams to help fund their companies' growth," Athyrium's Jeremy Lack said in a statement. "Our custom-tailored financings are often used for acquisitions, growth acceleration and other forms of expansion."

Athyrium makes its bets further upstream than most biopharma investors, but the firm has similarly benefited from the virtuous cycle that has helped line the pockets of the industry's financiers. The still-thriving IPO market for life sciences companies has created an ever-present liquidity option for upstarts, while cheap debt and flowing cash have made larger drugmakers as acquisitive as ever. That environment presents investors ample opportunity to return profits to their limited partners and put together new funds, injecting more money into a system that is, at least for now, humming.

- read the statement (PDF)

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