Dollars: $85.74 million
Based: Cambridge, MA
Just 5 or 6 years ago, before the financial crisis hit, Clarus Ventures still had an appetite for the big rounds venture groups would put together to fund biotechs going after expensive disease targets. But that's turned out to be an unacquired taste.
"We invest across the spectrum," says managing director Kurt Wheeler, "early, mid- and late-stage in biopharma. Eighty percent of our fund is in there, with 20% in medical tech and diagnostics. We'll look for the best values at every stage and adjust. Some members of our firm like early stage, some like later stage, and depending on the attractiveness of the sector, that's where we go. Right now, midstage is the favorite," with any companies looking to fund expensive trials down the road "out of favor."
Orphan diseases are a big focus right now, which fits into a popular VC niche for new opportunities that can be funded all the way through to an approval with the right syndicate. "They have to be best-in-class opportunities, but there are very few of those," says Wheeler. Med tech and diagnostics also offer a chance to fund to profitability, giving the group a chance to look for an exit through an IPO or M&A deal. Late-stage deals look better for Clarus in med tech and diagnostics. And eye diseases can be appealing targets as well.
"We like ophthalmology; the trials are short and fundable," says Wheeler. "We will always look for a specialty opportunities to fund."
Clarus has two offices anchoring key U.S. biotech hubs, one in Cambridge, MA, and the other in San Francisco. It's been investing from its second fund--a $700 million pot assembled in 2008--which followed an earlier $500 million fund.
The 10 partners at Clarus all have had operating experience in the industry, says Wheeler, who once ran a medical device company. And they like to do four or 5 new deals a year. That approach has left them with a portfolio of 32 biotechs, including some well-known names like Pearl Therapeutics, Catabasis Pharmaceuticals, Achillion ($ACHN) and Zogenix ($ZGNX).
Clarus and Abingworth have been happy to see their startup SFJ Pharmaceuticals grab late-stage drugs in partnerships with Big Pharma interested in a low-risk approach to developing assets for Asian markets. The model has proved so appealing that the VCs came together a few months ago to create Avillion Pharmaceuticals, which will strike the same kind of deals on Phase III studies for assets intended for European and U.S. approval, provided the studies can be completed with a budget of $50 million to $100 million.
Clarus has had some recent cashouts. There was the SARcode Bioscience buyout a few days ago, in which Shire ($SHPG) nabbed the late-stage ophthalmology company for $160 million cash upfront. Shire also bought out FerroKin, another portfolio company concentrating on rare diseases, for $350 million.
It's also, inevitably, experienced the sour taste of failure with the shutdown of Biolex, a biotech that found itself with the wrong kind of hep C product looking to fund one of those big studies that are out of favor now. The company threw in the towel last year after burning through $190 million.
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