ARCH Defies Biotech Market Slowdown with New $3B Fund

Chicago-based ARCH Venture Partners has closed on its twelfth venture fund, ARCH Venture Fund XII, with $2.975 billion it can now invest in early-stage biotechnology companies. 

This follows the company's January 2021 announcement of ARCH Venture Fund XI, which was worth nearly $2 billion. It also follows last week’s PwC report, which noted that more than 60 biotech companies have announced layoffs so far this year, with some going out of business, and a general slowing of initial public offerings (IPOs). In 2021, 104 biotech companies launched IPOs, bringing in almost $15 billion, but to date this year there have been only 14 IPOs in the sector, raising less than $2 billion altogether.

ARCH Co-founder and Managing Director Robert Nelsen seemed to dismiss this, saying, “All the fundamental innovations in biotechnology are accelerating, with huge promise for new preventive, disease-modifying, and even curative treatments. Science doesn’t care what markets are doing, and science moves forward. With over 35 years of venture experience, ARCH has been creating and consolidating companies for the long term. We would like to thank our limited partners for supporting our twelfth fund.”

Although very broad, the fund expects to invest in companies focused on infectious disease, mental health, immunology, oncology, neurology, age-related diseases, manufacturing, clinical trials, genomic and biological tools, data sciences and “ways to reimagine diagnostics and therapies.” In other words, pretty much whatever catches their attention.

“Our approach has always been to pair great science with remarkable, proven teams to build disruptive companies,” ARCH Managing Director Kristina Burow stated. “We believe in this model now more than ever. The science happening today is simply stunning and provides a broad base of innovation and discovery to bring forward.”

Certainly, ARCH’s track record is impressive. Its investments include Juno Therapeutics, Alnylam Pharmaceuticals, Codiak, Illumina, GRAIL, Agios, bluebird bio, deCODE genetics and numerous others.

One of the firm’s more recent investments was in late April when it participated in a $76 million Series A funding round for Pheast Therapeutics. The round was led by ARCH and Catalio Capital Management, with participation from Alexandria Venture Investments and Risk and Reward (R2). Spun out of the laboratory of Dr. Irv Weissman, M.D. at Stanford University, the preclinical company is focused on immuno-oncology. Weissman, with Dr. Ravi Majeti, M.D., Ph.D., were co-founders of Forty Seven, which was acquired by Gilead Sciences in 2020. They are best known for discovering the role of CD24, what is dubbed a “don’t eat me” signal and target for immunotherapy in solid tumors.

Also in April, ARCH led a Series B round to raise $130 million for Be Biopharma. It was joined by Bristol Myers Squibb and other new investors, as well as existing investors including Atlas Venture, RA Capital Management, Alta Partners, Longwood Fund and Takeda Ventures. Steve Gillis, Ph.D., managing director of ARCH, joined the company’s board of directors, as did Robert Nelsen.

At the time, Gillis noted, “Be Bio’s leadership has an exemplary record of developing and commercializing products in the cell and gene therapy field and I am encouraged by their progress since launch. I am pleased to join the board and support the company in its efforts to develop a transformative B cell platform. The untapped potential of B cell medicines is exciting, as is Be Bio’s highly modular platform that could rapidly unlock a pipeline of product candidates across a variety of serious diseases.”