5AM Ventures has $250M and an eye out for early-stage biotechs

5AM Ventures Managing Partner Andy Schwab

Menlo Park, CA's 5AM Ventures has pieced together a fourth fund, roping in $250 million with its eye on a new generation of promising drug developers.

The VC's latest raise follows a $159.2 million fund closed in 2009, and, in keeping with its innovation-seeking identity, 5AM is again targeting early-stage life sciences companies, looking to fund the discovery and development of novel therapeutics across the industry.

Heading back to the well with limited partners, VCs are only as good as their latest numbers, 5AM Managing Partner Andy Schwab told FierceBiotech, and thanks to 5 high-profile exits over the past year, his firm had a fairly easy time building up its war chest this time around. Now, as one of the few outfits doing early-stage investments, 5AM is on the hunt for startups and spinouts.

"We think it's a buyer's market," Schwab said. "We see about 500 deals a year and end up doing maybe 5. The key for us is trying to pick the right ones."

So far, that hasn't been much of a problem. 5AM's active portfolio includes high-profile innovators like Ambrx, Cleave Biosciences and Igenica. Among the VC's recent exits are Pearl Therapeutics, snagged by AstraZeneca ($AZN) for up to $1.15 billion this year, and Relypsa ($RLYP), which raised about $75 million in an IPO last month. The firm has about $685 million under management.

With its latest fund, 5AM is looking to back about 15 companies seeking Series A financing, Schwab said, taking a broad-based approach that doesn't discriminate based on therapeutic area or treatment modality.

"We're not afraid of some of the harder areas, like neuroscience, metabolic disease--spaces others often shy away from," he said. "We're interested in investing in all areas across life sciences."

Meanwhile, despite a prolonged drought in venture financing, some of the world's biggest biotech backers are propping up new funds to line the pockets of drug developers. 5AM joins Frazier Healthcare, which closed a $377 million purse in October, and VC giant OrbiMed, which launched a $735 million fund last month. Big-namers NovaQuest, Third Rock and Atlas have also debuted funds this year, totaling more than $1 billion.

With all that pent-up cash comes renewed hope in a fundraising turnaround, and while 2013 has been largely tepid for cash-starved biotechs, the fourth quarter has thus far been bountiful for drug developers, especially early-stage outfits like Moderna Therapeutics and Editas Medicine.

- read the announcement

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