news about $500M Life Science Fund Closes

$500M Life Science Fund Closes

2005/12/06

Newly formed Clarus Ventures plans to invest in mid- to late-stage companies.

Clarus Ventures, a venture capital firm formed just five months ago, said Tuesday it closed its first fund with $500 million.

Investor interest in the fund was so high the firm garnered enough capital commitments to close the fund in less than three months and could have almost doubled its size, said founding partner Robert Liptak. The fund will be run by a group of venture capitalists who are all leaving MPM Capital to found Clarus.

??We wanted to stay disciplined to our strategy and not take in a lot of money and be forced to build a huge portfolio, so we stuck to the hard cap,?? he said, referring to a cap of $475 million in investor money the firm established for the fund. The other $25 million in capital came from the general partners, he said.

Cambridge, Massachusetts-based Clarus plans to invest anywhere from $15 million to $50 million per company, with a preferred investment size of about $20 million to $30 million. The firm will start putting its cash to work early next year. Before then, its six founders, who all still serve as general partners at MPM Capital, will wrap up work on the final few investments in a $900-million MPM fund that closed in 2002 and is expected to be fully invested by year-end.

Clarus investments will be doled out over three years, allowing each partner to handle just one deal per year, said Mr. Liptak. ??That??s the purpose for the pace and size of funds: we want the partners to be spending a lot of time on their investments.??

Setting the Tone

Also, investing larger amounts in later-stage companies will allow Clarus to be the lead investor and set the tone for future rounds of financing, he said.

At the earliest, Clarus would invest about 18 months before a drug or device enters clinical trials, and it expects to finance its companies through Phase 1 and 2 clinical trials, and possibly Phase 3, said Mr. Liptak. ??The public markets and potential acquirers want to see more of the clinical risk vetted, which means you need to finance your companies for longer.?? In addition to Mr. Liptak, who worked mainly in investment management, Clarus?? founders include former Genentech executives Dennis Henner and Nicholas Simon; Nicholas Galakatos, a former executive with Millennium Pharmaceuticals; Michael Steinmetz, a former Hoffmann-LaRoche executive; and Kurt Wheeler, who was founder and CEO of InControl, a medical device company later sold to Guidant. The fund will target biopharmaceutical and specialty pharmaceutical companies. As a secondary focus, it will invest in companies specializing in biotechnology platforms or medical devices and in private investments in public equity. About 90 percent of investments will be in U.S. companies, with the remainder in Europe.

Clarus Ventures will invest its first fund primarily in U.S.-based biopharmaceutical and specialty pharma companies with products in development at value inflection points in their lifecycle. Secondary areas of focus will be companies specializing in biotechnology platforms or medical devices, European life sciences companies, and private investments in public entities (PIPEs). The firm will provide both capital and operational resources necessary for the firm's portfolio companies to succeed. The fund will invest up to $50 million per company, with a preferred investment size of $20-30 million per company. Clarus expects to begin pursuing investment opportunities in early 2006.

"Each member of the Clarus team has a track record of consistently building companies that are emerging leaders in their sectors. The Clarus partnership has the breadth and depth required to create significant value by investing at any stage of a life science company's growth," commented Nicholas Galakatos, Ph.D., a Clarus Ventures Managing Director. The Clarus founding team consists of Nicholas Galakatos, Dennis Henner, Robert Liptak, Nicholas Simon, Michael Steinmetz and Kurt Wheeler. It is an established group of investment professionals with deep and complementary backgrounds within the life sciences industry. The team uniquely balances broad investing expertise with leadership experience in major biotechnology and pharmaceutical companies.

The firm's value proposition is enhanced by its exceptional relationships with thought leaders and key decision makers in the life sciences field. These relationships allow the Clarus Ventures team to identify, evaluate and prioritize unique investment opportunities, as well as to recruit outstanding management for its portfolio companies.

About Clarus Ventures

Founded by a team of accomplished investment professionals with extensive and complementary industry backgrounds, Clarus Ventures is a life sciences venture capital firm with a team that has a unique and long history of success in creating value. Deep relationships with thought leaders and decision makers allow this team to identify unique investment opportunities and shepherd them to maturity. Clarus augments its core expertise of investing in biopharmaceuticals, specialty pharma and medical technology with the deep and diverse experience of the team in research and development, commercialization, business development and operations management at a global level. Clarus has offices in Cambridge, MA, and South San Francisco, CA.

Editors Notes:

• Nicholas Galakatos, Ph.D., has over 21 years of direct industry and investment experience within the healthcare sector. Dr. Galakatos has been a General Partner in a healthcare venture capital firm since 2000. From 1997-2000, Dr. Galakatos was Vice President of New Business at Millennium Pharmaceuticals where he co-founded Millennium, Predictive Medicine, and TransForm Pharmaceuticals. Prior to Millennium Dr. Galakatos was an associate at Venrock Associates focusing on early stage biotechnology investments. Prior to Venrock, Dr. Galakatos was Head of Molecular Biology Research at Novartis (formerly Ciba). Recent representative investments include: Affymax (spinout from GSK), Critical Therapeutics, Syrrx, Inc. (acquired by Takeda), and TransForm Pharmaceuticals, Inc. (acquired by Johnson & Johnson).
• Dennis Henner, Ph.D., has over 24 years of direct industry and investment experience within the healthcare sector. Dr. Henner has been a General Partner in a healthcare venture capital firm since 2001. From 1996 to 2001, Dr. Henner was an executive at Genentech where he held various positions including Senior Vice President of Research and a member of Genentech's executive committee. Recent representative investments include: Kalabios, Rinat and Tercica.
• Dennis Henner, Ph.D., has over 24 years of direct industry and investment experience within the healthcare sector. Dr. Henner has been a General Partner in a healthcare venture capital firm since 2001. From 1996 to 2001, Dr. Henner was an executive at Genentech where he held various positions including Senior Vice President of Research and a member of Genentech's executive committee. Recent representative investments include: Kalabios, Rinat and Tercica.
• Robert Liptak has over 19 years of experience in investment management, focusing primarily on establishing and managing various investment management businesses. Mr. Liptak has been a General Partner in a healthcare venture capital firm since 2001. From 1995-2001, Mr. Liptak was a Partner with the Geometry Group, a diversified asset management firm and prior to that was a manager in the Capital Market's Group of Price Waterhouse.
• Nicholas Simon has over 26 years of direct industry and investment experience within the healthcare sector. Mr. Simon has been a General Partner in a healthcare venture capital firm since 2002. From 1993- 2000, Mr. Simon was an executive at Genentech where he held several positions including Vice President of Business and Corporate Development. Recent representative investments include: Barrier Therapeutics, CoTherix, Inc., and Rigel Pharmaceuticals.
• Michael Steinmetz, Ph.D. has over 23 years of direct industry and investment experience within the healthcare sector. Dr. Steinmetz has been a General Partner in a healthcare venture capital firm since 1997. From 1986-1997, Dr. Steinmetz was an executive at Hoffmann-LaRoche where he held various positions including Vice President of Preclinical Research and Development and Global Head of Biotechnology. Recent representative investments include: GPC Biotech, Biovitrum (spinout from Pharmacia), BioXell (spinout from Hoffmann-La Roche), and Arena Pharmaceuticals.
• Kurt C. Wheeler has over 28 years of direct industry and investment experience within the healthcare sector. Mr. Wheeler has been a General Partner in a healthcare venture capital firm since 1999. Mr. Wheeler was founder and CEO of InControl, a publicly traded medical device company, which he sold to Guidant. Prior to founding InControl, he was a principal with the Mayfield Fund focusing on healthcare investing. Recent representative investments include: Eyetech Pharmaceuticals, IntraTherapeutics (acquired by Sulzer Medica), CryoCor and Hemosense.

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