The rather dismal venture capital scene in biotech was lit up this morning with Sofinnova Ventures' announcement that it has rounded up $440 million for a new life science fund. The venture group, one of the most active in biotech, plans to place its bets largely on developers with programs in the clinic with a special focus on Big Pharma spinouts in the U.S. and Europe.
That $440 million is "almost exclusively for drug plays," Mike Powell, a partner at Sofinnova, tells FierceBiotech. "No medtech or bioinformatics or anything; we focus on therapeutics."
"We do like ophthalmology," says Powell, adding oncology and select neuro areas as key therapeutic focuses. Difficulties on the regulatory side of developing type 2 diabetes drugs have caused them to shy away from that area.
That $440 million--which was 10% higher than the fund's original hard cap--will be divvied up among some 20 different venture plays, with $20 million or so on average put into each of its biotech companies. Sofinnova has done some seed investments with up to $25 million invested in a single round. "We do tend toward more team and partnership approaches to deals," says Powell. "We do a minimum of three investors total, but we have done four- and occasionally five-handed investments right out the gate."
"In the past IPOs were our main exit strategy," he adds. "At one point we computed our IPO ratio at 40% taken public. That's high. It's not that high today. Like most VCs we're focused on partnering and M&A. I'm extremely bullish about that."
And while venture groups have been protesting that the lack of IPOs and tough U.S. regulators are contributing to the high level of angst on display these days in venture circles, Sofinnova is staying upbeat about the future of biotech.
"Pharma is going through an awakening right now," says Powell. With drug development productivity low, some are realizing that they would do a lot better taking half their R&D budget "and just buying stuff." Take the top 20 pharma companies spending four or five billion dollars a year. "That's $80 billion to $100 billion that could go into purchasing my companies and other VC's companies. And that's a lot of buying power."
- here's the press release
- here's the story from Bloomberg