Private equity giant Blackstone buys Clarus in biopharma push

Blackstone, which has $440 billion in assets, can dial up the amount Clarus puts into projects. (Blackstone)

Blackstone has struck a deal to buy Clarus. The takeover will move private equity giant Blackstone deeper into biopharma, where it plans to use its financial might to fund R&D programs that have outgrown the means of traditional venture capital firms. 

Clarus has made a name for itself in life sciences over the past decade by putting up big bucks to get late-phase programs over the finish line. That strategy was in evidence last month when Clarus led Galera Therapeutics’ $150 million series C round. However, while Clarus’ $910 million late-phase fund equips it to make such big investments, it is still too small to get it a piece of all the action.

“We meet with pharmaceutical companies and tell them we can invest $100 million,” Nicholas Galakatos, Ph.D., managing director at Clarus, told the Wall Street Journal. “It is clear from these discussions that if we could scale that, it would make the proposition a lot more compelling for them.”

That is where Blackstone comes in. Blackstone, which has $440 billion in assets, has the resources to dial up the amount Clarus can put into projects, enabling it to take its late-phase strategy to the next level.

Blackstone’s willingness to bankroll these activities rests on an assumption that, for all the money swilling around biopharma, there is a gap in the funding chain. As Blackstone sees it, once a company outgrows VC funds, options dwindle. At this stage, companies need serious money to run late-phase trials and typically either go public or seek a partner to shoulder some of the financial burden.

Some projects at Big Pharma fall into the same funding hole. These companies have more late-phase programs than they can handle internally, leading them to try to offload or co-develop assets. While companies including Roivant, Boston Pharmaceuticals and Mereo BioPharma are building pipelines around these assets, Blackstone is betting there is room for a new player with deeper pockets.