Forbion to step up CNS investment activity after closing €183M fund

Naarden, the Netherlands

Forbion Capital Partners is set to step up its investment in central nervous system (CNS) biotechs. The European VC shop is committing to the strategy after observing a shift in the economics of CNS drug development, which it thinks makes biotechs in the field a more attractive target for its newly-closed €183 million ($207 million) FCF III fund.

Naarden, the Netherlands-based Forbion has traditionally eschewed CNS in favor of cardiovascular and oncology plays, a strategy that has led to successful exits such as the sales of cancer vaccine firm BioVex and cholesterol upstart Dezima Pharma to Amgen ($AMGN) for fees that could total more than $2 billion. Cardiovascular and cancer drug developers are still on Forbion’s radar as it sets about deploying FCF III into eight biotechs--the fund has already backed seven companies since it held its first, €92 million close in 2014--but the VC firm is now also open to investing in CNS players.

This represents a tweaking of the strategy at Forbion. “It's a relatively new area for us,” Forbion Managing Partner Sander Slootweg told FierceBiotech. Forbion has long held an interest in CNS, but has been deterred from opening its checkbook by the issues that have blighted the sector. “It was very difficult to see how the preclinical results would translate into clinical results. And then the clinical trials are relatively cumbersome, with a lack of biomarkers and readouts that take a long time if you consider disease deterioration,” Slootweg said.

Weighing up these factors, Forbion decided that, while promising clinical assets would likely have no difficulty finding buyers, it was beyond the means of venture-backed biotechs to advance programs to the point at which they had the data to support an exit. Now, Slootweg says it is “within the reach of a venture-backed company budget to get to meaningful endpoints,” an evolution in the economics of CNS drug development that has encouraged Forbion to switch from being an interested observer to an active participant.

In choosing its targets, Forbion is looking to sidestep potential money pits in favor of companies that have a relatively-clear throughline from preclinical data to clinical proof of concept. “There are some more acute diseases of the central nervous system that one could think to address with things like gene therapies or large molecules with certain tags that allow them to cross the blood-brain barrier,” Slootweg said. As in the past, Forbion will put around two-thirds of its fund into European biotech, medical device and diagnostic companies, with the remainder going to North American companies.

The strategy has served Forbion well in the past, giving it a track record that, when paired to shifts in the wider market, made it easier to raise money this time around. Forbion closed its previous fund in 2010, a choppy time for VC shops of all stripes. “In 2010, when institutional investors looked back 10 years in time and compared the performance of their various asset classes, venture wasn’t looking too good,” Slootweg said. “Now, if people look back five, six, seven years and compare the performance of these different assets classes, venture actually looks pretty good.”

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