ST. LOUIS, Feb. 6, 2012 /PRNewswire/ -- RiverVest Venture Partners today announced that it successfully sold four life science companies for more than $1 billion, generated upfront returns of up to five times the initial investment, and beat industry benchmarks.
“RiverVest has really separated itself from the pack,” says Boston-based investor John F. Brooke, who manages the Vectis Healthcare & Life Sciences Fund, which is an investor in RiverVest Venture Partners Fund II, L.P.
RiverVest, which focuses exclusively on life science innovations, founded two of the four companies within the last four years, bucking recent trends for early-stage life science companies to take an average of five to eight years from initial investment to sale. RiverVest participated with several other leading venture capital firms in these investments.
“At RiverVest we strive to build early-stage life science companies to sell within three to five years, including companies we found,” says Jay W. Schmelter, RiverVest managing director and co-founder. “Our strategy is to focus on a few high potential investments, take an active role, sometimes as interim management, and leverage our research, clinical, operational and investment expertise to make them attractive for strategic buyers.”
In its payout last month, RiverVest Venture Fund II delivered a return on investors’ capital exceeding the most recent benchmarks reported by Cambridge Associates, LLC, a leading investment advisory firm. When compared with other healthcare venture capital funds started in 2006, RiverVest Venture Fund II’s Distributions to Paid-In Capital (D/PI), a common industry metric, is 63%, while the industry median was 15% and maximum was 55% as of Sept. 30, 2011[i]. That means that the RiverVest Fund II has returned more capital to investors than any fund in Cambridge Associates’ Sept. report.
“Many people say the life science venture model is broken,” says Mark G. Heesen, president of the National Venture Capital Association. “RiverVest has just given us a powerful example of why it’s not.”
The four innovative companies RiverVest sold in 2011 and for which investors received payouts in 2012 are:
Minneapolis-based Lutonix, founded by RiverVest in 2007, has developed drug-coated balloons for the treatment of peripheral arterial disease. It was sold to C.R. Bard, Inc. for a purchase price of approximately $225 million, with an additional $100 million to be paid upon FDA approval. For investors of RiverVest’s Fund II, which included Lutonix, this translated into a 4.7x return on the Fund’s $5.6 million investment. If approved by the FDA, the return will bump up to about 8.0x return.
Also founded by RiverVest in 2007, and part of RiverVest’s Fund II portfolio, biopharmaceutical company Excaliard Pharmaceuticals, Inc. focuses on developing novel drugs for the treatment of skin fibrosis, or scarring. It was purchased by Pfizer Inc. for an undisclosed amount.
RiverVest’s Fund II invested three years ago in Mpex Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company developing a new cystic fibrosis drug. It was purchased by Aptalis Pharma, a privately held, specialty global pharmaceutical company, for an undisclosed amount.
Founded by Schmelter, and included in RiverVest’s Fund I, Salient Surgical Technologies, Inc. is a leader in the advanced energy category for haemostatic sealing of soft tissue and bone in a variety of surgical procedures. It was sold to Medtronic, Inc. for $525 million, delivering a return of 3.3x.
About RiverVest Venture Partners®
RiverVest Venture Partners is a venture capital firm focused on identifying and shaping early-stage life science companies throughout the U.S. to create significant shareholder value. With hands-on, high-level expertise and financial resources, RiverVest supports entrepreneurs by helping them achieve near-term objectives that position their companies for exit.
Since its inception in September 2000, RiverVest has raised two investment funds, with total committed capital of $164 million, and supported more than 25 innovative life science companies. For more information, please visit http://www.rivervest.com.
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[i] http://www.cambridgeassociates.com/pdf/Venture%20Capital%20Index.pdf, pp. 24-28 (Cambridge Associates’ most recent Venture Capital Index, Sept. 30, 2011)
SOURCE RiverVest Venture Partners
