Dollars: $109.39 million
Based: Princeton, NJ; San Diego
Few venture groups active in the life sciences have the depth of experience at this game as Domain Associates. Launched 28 years ago, the venture group has consistently looked to catch a new wave in technology to build companies. And its portfolio--a lengthy list that has included more than 250 outfits--has included some of the best and biggest in biotech.
"The theme in everything we start out to do is try and build a company likely to have lasting and long-term standalone value," says Jim Blair, a partner who was present at the creation of the venture group. Those companies include some legendary biotech companies like Amgen ($AMGN) and Amylin ($AMLN), which was bought out by Bristol-Myers Squibb ($BMY) for $5.3 billion. There's also been BiPar (a cancer drug developer acquired by Sanofi $SNY), NuVasive (a medical device company), and public companies like Onyx ($ONXX) and Orexigen ($OREX). But the long-term strategy has been adapted to reflect a new interest in companies that can offer new products which promise to cut the cost of healthcare.
In Fund Six, 70% of the group's cash went to biopharma, says Blair, "which was probably more than we should have done." That became especially obvious as biopharma companies started to run into a big exit problem as IPOs dried up. So Domain evolved. Biopharma is now down to about 40% of the mix, and the diagnostics category, once a marginal category, has swelled to 30% of new investments.
"Clinical diagnostics, in our mind, will be revolutionary in the next 10 years," says Blair, whose interest has also been piqued by the commercial prospects of new companies capitalizing on the rapidly falling cost of gene sequencing.
The mantra at Domain is get in early and stay the distance. But the venture group will also step in at a B round. And despite its deep roots in the U.S. industry, or perhaps because of them, Domain is finding it easier and easier to step across international boundaries in search of new opportunities.
"This has become a global business," says Blair. An encounter with Russian financial interests a few years ago blossomed into a major new initiative in which RusNano agreed to invest alongside Domain companies, building new companies that could offer new products to be developed for the Russian market. And just weeks ago Domain aligned itself with a Chinese group to launch a whole new wave of biotech companies in China.
Domain hasn't lost its interest in early biology, a field that still captured about $50 million of the latest $500 million fund--no small sum. It's also going after mid- and late-stage opportunities. And Domain has an eye for some nontraditional approaches to profitmaking in the VC world, like when it bought up some of Orexigen's shares at a knock-down price.
Domain Eight came together at the tail end of 2009, with the money first going out to start companies in early 2010. Domain's game plan is to invest each fund for three-and-a-half to four years, putting them back in the market to raise a new fund to launch in the second half of this year. If the new fund was expected last year, he adds, that would have been somewhat daunting. This year, though, is shaping up better for the venture industry.
"The environment as we perceive it is loosening up a little bit," says Blair. "We haven't spoken to the limited partners on their plans and intentions, but we think that our fund is off to a good start. And I'm happy about that. I'd be shocked if the support level weren't at an extremely high level."
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-- John Carroll (email | Twitter)