venBio Closes $394 Million Life Sciences VC Fund

seed funding

Venture capital investment firm venBio Partners LLC recently closed a $394 million life sciences venture capital fund in an oversubscribed fundraise, emphasizing the strength of this sector. The venBio Global Strategic Fund III (venBio Fund III) is the firm’s third life sciences venture capital fund. It brings its total assets under management to nearly $1 billion.

The capital was raised from existing and new investors, including a broad range of institutional investors comprised of pharmaceutical companies, corporate pensions, financial institutions, endowments and foundations, family offices and funds-of-funds.  

The continued commitment of current and new investors “is a very encouraging signal,” Aaron Royston, M.D., managing partner, told BioSpace. “The market is choppy right now, with near-term uncertainty.” The ability to close the fund on time and oversubscribed “shows the strength of the sector and indicates the fundamentals of biotech are likely to remain strong for the next 5 to 10 years.”

Biotech investors, in fact, have money ready to put toward innovative companies. Around the same time venBio closed its fund, Flagship Pioneering closed its $1.1 billion fund. Dubbed Flagship Labs, it focuses on innovative medicines, artificial intelligence and what it calls health security.

Also in early April, ARCH Venture Partners closed two new funds, ARCH Venture Fund X and ARCH Venture Fund X Overage, which added a total of $1.46 billion in available funding for transformative, early-stage biotech companies. Individual investments will range from $50,000 to hundreds of millions of dollars.

These three new funds, launched in the midst of a global pandemic that has stock markets around the world whipsawing, only underscore the strength of the industry and the commitment of investors to support innovation. As the NASDAQ IPO Weekly Recap noted last week, “The industry shows no sign of slowing.”

“We are grateful for the tremendous support we have received from our current investors during this fundraise,” Robert Adelman, M.D., managing partner at venBio, said when announcing the closing of its third and newest fund. “We appreciate their ongoing commitment and welcome the broad range of new top-tier investors who have joined them.”

The innovation generated by biotech firms is critical to bringing more efficacious drugs to patients.

“Major pharmaceutical companies and patients need innovation,” Royston said. “There are a lot of unmet medical needs. Pharmas have robust balance sheets and will be acquirers of innovations.”

Consequently, companies developing impactful innovations will be rewarded.

The venBio Fund III fund focuses on unmet medical needs in a broad range of therapies and modalities, as well as stages of development, looking from early- to late-stage platforms. Academic startups and spinouts are included. In the nine years since venBio’s inception, the company has shown interest in oncology, inflammation, rare diseases and autoimmune diseases.

The commonality throughout its portfolio is that each company in which it invests has biologically validated targets and can generate data and meaningful value creation within three to five years.

“We look for streamlined investments with a path for value creation,” Dr. Royston said. “Most of the companies in our portfolio are not large platforms with high burn rates. Instead, they’re trying to get to the value-infection point.”

The COVID-19 pandemic amplified hurdles for growing companies, he admitted, but those challenges affect businesses across the board. As such, they are not a significant factor in venBio’s investment decisions.

That’s partially because venBio takes an active interest in its portfolio companies and is continuing with the same strategy and team for this fund. That means it considers potential acquisition partners at the beginning and positions companies, as they grow, to meet pharma’s stated needs. The venBio team considers intellectual property considerations as well as the details of clinical trials and their designs and regulatory concerns as part of its strategy to help its portfolio companies attain maximum effects.

“It is important to ensure ample bandwidth for each company in our portfolio,” Royston said. “In addition to generating strong financial returns, we’re proud of the impact our portfolio companies have made on patients. We’ve actively helped build three companies that have developed approved drugs that are on the market today.”

When it comes to exit strategies, venBio is fluid.

“Our strategy is not geared to IPO markets being available. Our diligence efforts are to invest in companies with high strategic interest to pharmaceutical companies,” Royston said.

Its investor base, in fact, includes pharmaceutical companies. Companies in venBio’s first fund often were acquired, while many its second fund found IPO exits.

With its significant reserves, “Our investing pace hasn’t changed,” Royston said. “We continue to look for compelling opportunities and are deploying capital.”

That interest includes companies that may not be planning a near-term clinical trial.

“We remain committed to our founding strategy at venBio, namely to turn great science into impactful medicine,” Goodman said.

Back to news