Ebb & Flow
Although six of MPM Capital's eight original general partners will be leaving to form their own firm - Clarus Ventures - the breakup is not a vote against MPM's mega-fund model. Indeed, MPM's Nicholas Galakatos, who will be a managing director at Clarus, told Ebb & Flow that the new firm will employ many of the strategies of MPM's $900 million MPM BioVentures III.
"The fund will continue the strategy that most of us were involved in designing in BioVentures III," he said. "The centerpiece will be a focus on products as the key value driver. We'll want to lead investments and do so with significant capital," investing $20-$30 million per company.
The goal, said Galakatos, will be to allow companies to show clinical proof of concept on lead compounds while also having enough of a war chest to develop a pipeline.
"One compound can carry the vast weight of value early on. But ultimately, to build significant value you need a portfolio and pipeline," he said. "All of us who have been in the industry would attest that betting on one compound is a high risk road to take. At the end of the day, the value is in the portfolio, not a single product."
Overall, Galakatos expects platform-based product companies will continue to require at least $100 million of private money before they're ready for an IPO. "The model works if you can pick the companies correctly based on the promise of their products," he said. "You need to