Versant wraps up an overstuffed $305M fund with eyes on Canada

Biotech backer Versant Ventures has put together a $305 million new purse, cash that will bankroll a new generation of drug developers with a particular focus on Canada's startup scene.

The new fund, which drew major support from Canadian financiers, well exceeded Versant's $250 million goal, the firm said, making for its first raise since closing a $500 million fourth fund in 2008. With the money, Versant plans to do some traditional venture investment, looking at companies in all stages of life, while at the same time scaling up its affinity for so-called build-to-buy financings, in which it partners with a larger drugmaker to seed a startup that may be acquired down the line.

Illustrating that latter approach, Versant today unveiled Northern Biologics, a Toronto-headquartered upstart in which the firm invested $10 million. The company grew out of Canadian incubator Blueline Bioscience and already has an agreement in place with Celgene ($CELG) through which the Big Biotech has the right to collaborate on Northern Biologics' antibodies for cancer and fibrosis.

"We are witnessing significant changes in the way innovative products are developed and financed," Versant Managing Director Brad Bolzon said in a statement. "Versant's investment strategy in Canada will involve more collaborative models that unite entrepreneurs, investors and industry partners to advance important therapies. As one of our first investments from the new fund, Northern Biologics exemplifies this approach."

Same goes for Inception Sciences, a Canadian drug discovery incubator backed by Versant. Bayer, which contributed $25 million to the firm's new fund, signed an exclusive option to acquire an unnamed Inception incubatee that is working on early research in the area of retinal eye diseases.

Versant has long been a pioneer among build-to-buy investors, striking deals with Roche ($RHHBY), Eli Lilly ($LLY) and others to launch startups born on the acquisition track. The firm's portfolio includes gene therapy developer AAVLife, rare disease outfit Audentes Therapeutics and oncology biotech Quanticel Pharmaceuticals. Among its big exits are Amira Pharmaceuticals, bought by Bristol-Myers Squibb ($BMY) for $475 million; Five Prime Therapeutics ($FPRX), which went public in a $62 million IPO; and Okairos, snapped up by GlaxoSmithKline ($GSK) for $324 million. 

- here's Versant's announcement
- read more on Northern Biologics