Ebb & Flow

While many biotech companies are running short of cash and valuations are depressed by the confluence of crises gripping the capital markets, three experienced investor groups have managed to persuade their backers that the time to invest is now.

Last week, Novo A/Sand Abingworth Management signaled their confidence in growth equity opportunities by announcing they would be putting more money to work in 2009, while private equity group Celtic Pharma Holdings Advisorsannounced the first closing of Celtic Pharma Holdings II at $100 million.

de Novo Capital

Novo A/S, which has been active in biotech venture financing since 2000, unveiled plans to establish a financing vehicle called Growth Equity in the first few months of next year that will commit more than $100 million a year. The goal is to take advantage of depressed valuations among maturing cash-thirsty biotech companies.

"Growth Equity will invest in companies that are further down the road than those we have backed with our venture capital activities. They will be either in late stage clinical, at the start of the commercialization phase, or could be consolidators where we combine assets with stronger management teams," Ulrik Spork, managing partner at Growth Equity, told Ebb & Flow.

"We have been thinking about this for some time, but our decision to do this has been accelerated by the current market conditions," he added. "There are clearly some opportunities out there and there is likely to be less capital available to these companies. Therefore we can get into these companies and build value and long term strategies that would be an alternative to chasing an IPO, which won't provide liquidity at attractive valuations."

Spork is looking to

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