Merck, Amgen and Baxalta back a $315M biotech fund from venBio

Merck CEO Frazier

Amgen, Merck and Baxalta are all betting on venBio Partners’ venture team, joining a list of limited partners which together ponied up $315 million for their second fund devoted to biotech.

The big companies are trusting in Corey Goodman and Robert Adelman to continue to come up with winners in the field, after seeing some successful exits like the Aragon/Seragon and Labrys Biologics buyouts. And like other life sciences funds enjoying the biotech surge of the past 4 years, venBio blew past its initial goal, exceeding its $250 million target.

Goodman, a former Pfizer exec and ex-Stanford professor for neurobiology, has been a big player in the Bay Area biotech scene in recent years. At venBio he’s been backing companies in the hunt for best-in-class therapies with a plan to shepherd them through proof-of-concept studies. And he’s played co-founder to such companies as Second Genome, focused on the microbiome.

This second fund is almost twice as large as the first life sciences effort at venBio, and the added financial clout will likely put the venture group into somewhat larger deals than it could afford in the past. The new fund has already invested in four companies, and Goodman tells me that he expects to invest in about 12 to 15 companies with the second fund. 

Merck is new to venBio’s list of big backers, says Goodman, replacing PPD, which was bought out. The life sciences spinout Baxalta (being acquired by Shire) is taking Baxter’s place and Amgen is coming back for the second round of deals.

“Clearly their main motivation is not financial returns,” says Goodman about his big investors. “They like the financial returns, but they are also looking for strategic returns. They have their own venture groups. As an independent, we see different opportunities. We see the world through a bit of a different perspective.”

It doesn’t hurt that venBio’s backers are also buyers. The main strategic thrust at venBio is shepherding a company through to a key PoC catalyst, helping provide the kind of cash to run good trials that can provide solid proof-of-concept data that could inspire a buyout.

“IPOs come and go,” adds Goodman, who says any VC that relies on the occasional IPO window to open up makes them too dependent on a highly variable exit strategy. “IPO windows really don't matter to us.”

The West Coast team at the venBio fund also added Dr. Aaron Royston as principal and Jaume Pons as venture partner. Pons currently helms venBio’s I/O company Alexo, while Royston had been a senior associate at Vivo Capital and before that a biotech consultant at Bain. In addition to the San Francisco team, the group also includes Behzad Aghazadeh, a managing partner in New York, where venBio has a hedge fund.

- here's the release