Sofinnova Partners launches a €300M biotech startup fund with a transatlantic focus

Sofinnova's Antoine Papiernik

PARIS--Sofinnova Partners has reloaded its cash reserves and started to build the next wave of 15 to 20 biotechs for its portfolio. The venture group has wrapped a €300 million ($324 million) transatlantic biotech fund, easily blazing past its €250 million goal and far surpassing any of the earlier 7 funds that preceded it. Sofinnova Capital VIII brings the total amount under its management to €1.5 billion.

Sofinnova Partners is a major early-stage venture player in Europe, backing a range of startups that are looking to break new ground in drug development. Its 12 VCs, including managing partners Antoine Papiernik and Rafaèle Tordjman, have backed gene therapy companies like Lysogene, the MS-focused MedDay Pharmaceuticals and the Dutch RNA biotech ProQR Therapeutics.

About two-thirds of this new money will be invested in European biotechs, says the VC group, with the rest earmarked for biotechs based outside of Europe, but primarily in the U.S. Sofinnova Partners has long-standing syndication ties with its venture "cousins" in California, Sofinnova Ventures. And its partners are veteran investors with many more personal ties to a broad range of U.S. and European VCs.

Sofinnova's Rafaèle Tordjman

Its base in the heart of Paris gives Sofinnova Partners a unique perspective, with some advantages and some special challenges to overcome. European biotechs don't have the same deep well of investment cash that has been dug in the U.S. The regional industry also doesn't have the same long ranks of serial biotech entrepreneurs to turn to. ("We have to manufacture them," says Papiernik with a smile.) But the VC also often gets a first look at some of the most exciting new technologies circulating in Europe.

"We fish in a place with not so many boats," Papiernik tells me. Papiernik and Tordjman like to quietly seed some companies before coming up with a sizable public round. They also expect to see about half of their seeds go on to jump into the startup phase, but recognize that there's also a heavy washout rate.

Being an early-stage, European biotech venture group presents plenty of unique hurdles, notes Papiernik, who likes to chuckle about the way some investors have reacted to that kind of description in the past. But in addition to keeping the VC's loyal institutional clients, he notes that this new fund brings in new investors who like the potential upside now in biotech.

Sofinnova has tracked 10 exits in the past three years, which makes fundraising easier for now. A full slate of venture groups has been raising new funds during the three-year bull biotech market, such as Sofinnova Ventures' $500 million fund unveiled last year. But Papiernik also expects to see fewer biotech IPOs and more M&A deals now that the market has cooled, at least in the short run.

In European venture circles, just like the U.S., old relationships and successful past efforts are the coin of the relationship-building realm.

One of the serial entrepreneurs with close ties to Sofinnova is Paris-based scientist Bernard Gilly, who's been building a small cluster of biotechs. Gilly founded Fovea, a Sofinnova portfolio company which was bought out by Sanofi ($SNY) in 2009, and gained Sofinnova's investment in Pixium Vision, which Gilly co-founded with a syndicate that includes London-based Abingworth, which invested in Gilly's gene therapy company, GenSight.

As a result of these kinds of ties, Sofinnova has been an attractive syndicate partner for U.S. VC's like New Enterprise Associates, which has been developing a global strategy of its own. And Sofinnova Partners now has another three years of biotech-building ahead to see if they can successfully extend their track record.

- here's the release