OrbiMed has closed its largest venture capital healthcare fund to date as two partners predict a resurgence in biotech investment next year. The robust reception biotech initial public offerings have received this year is fueling this trend, according to Jonathan Silverstein, a general partner and co-head of global private equity at the firm.
The $735 million OrbiMed Private Investments V fund will invest across all stages and sectors of the healthcare industry, according to a company statement. The focus will be on biopharma, medical device and diagnostics companies located in North America and Europe. It plans to invest $10 million to $50 million in about 30 portfolio companies.
To give some perspective on the size of this fund, Essex Woodland raised a $900 million fund in 2009 and MPM Capital raised a $949 million fund in 2002. OrbiMed’s previous venture capital fund raised $570 million.
When Investment Rhymes with Canada
Canada has a proud history of achievement in the areas of science and technology, and the field of biomanufacturing and life sciences is no exception.
Looking back 5 to 6 years, healthcare venture capital funds raised $7.8 billion, but last year they only raised $2.5 billion.
Silverstein and Carl Gordon, a partner and co-head of global private equity, told MedCity News they anticipate plenty of investment opportunities in startup life science companies, among other stages. “This is the exact time in the market that you want to deploy capital because investors have the opportunity to fund strong companies and take meaningful ownership positions with less competition,” Silverstein said.
Gordon added: “What is emerging for us as an area of interest are structured deals where we work with pharmaceutical companies to finance” early-stage companies.
Among its early-stage investments are Receptos, a biopharmaceutical company with lead therapeutics targeting inflammatory bowel disease, and relapsing multiple sclerosis, which filed an IPO earlier this year. It’s also invested in MacroGenics (Nasdaq: MGNX), which went public last month and Acceleron Pharma (Nasdaq: XLRN).
Investors will draw confidence from the strong performance of public biopharmaceutical companies and turn their attention to smaller biotechs.
“We will see a lot more funds being raised in the next six to nine months,” Silverstein noted. “We go through these waves and right now we are rebounding.”
The firm has also dabbled in health IT and there are signs of that changing. Health IT investments include Treato, a website that encourages users to post feedback on prescription drug side effects, and electronic medical record provider Practice Fusion.
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