Ebb & Flow

Based on its track record of exits from its BioDiscovery 1 and 2 funds during the last eight years, Edmond de Rothschild Investment Partners has raised a new E150 million ($233.8 million) fund in less than four months. Its five IPOs and six trade sales from the first two funds - including last week's acquisition of U3 Pharma by Daiichi Sankyo (Tokyo:4568; Osaka:4568) - underpinned support for BioDiscovery 3, which was to be unveiled this week.

"We began the fundraising on Feb. 4, and we have benefited from the strong support of investors from our original funds. Many of them have returned, increasing significantly the amounts they have allocated to our funds, with one of them investing five times more than what they had put in BioDiscovery 2," EdRIP partner Olivier Litzka told Ebb & Flow.

BioDiscovery 2, which closed in December 2005 at E80 million ($124.7 million), took about 18 months to raise.

According to partner Gilles Nobecourt, at the end of 1Q, the valuation of the BioDiscovery 2 companies suggested an IRR of about 23%. "We are making about 4.1x return from our BioDiscovery 2 investment in U3 Pharma, which, because it was made less than two years ago, gives an IRR of about 120%," he added.

Through BioDiscovery 3, EdRIP expects to lead or co-lead investments in 15-20 life science companies across all stages of development. The majority of investments will be in drug development companies, plus medical technology and molecular diagnostic plays. The average investment will be about E8 million ($12.5 million) with a maximum of E15 million ($23.4 million) per company.

The majority of existing investors participated, including Amgen (NASDAQ: AMGN), La Caisse des Dépôts et Consignations and La Compagnie Financière Edmond de Rothschild. New investors include health insurance companies, public pension funds and social institutions and institutional investors.

The closing brings EdRIP's total funds under active management for life sciences to E300 million ($467.8 million). EdRIP also has opened a greenshoe of up to E15 million ($23.4 million) for international investors.

Taking the money

With commercialization probably six years away, U3 Pharma's investors decided to sell the cancer company to Daiichi Sankyo (Tokyo:4568; Osaka:4568) for E150

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