Sixteen years after pioneering direct secondary transactions for healthcare investments, Omega Funds founder Otello Stampacchia thinks industry still has a lot to learn about these deals. In a conversation with BioCentury, Stampacchia lays out how the biotech secondaries landscape is evolving, and why management teams stand to benefit from a proactive approach to the transactions.
Originally founded in 2004 with secondaries as a core part of its strategy, Omega Funds now views the deals as one of many instruments at its disposal.
The transactions involve a buyer acquiring part or all of a shareholder’s interest in a private company, rather than buying them directly from the company.
However, few secondary deals are publicly disclosed. Stampacchia says the biotech sector still broadly lacks experience with these transactions and has a limited baseline understanding of the dials that can be turned and trade-offs that must be made.
Direct secondary transactions made up close to 80% of Omega’s first four funds, and now comprise about 15-20% its deal flow, without a fixed allocation.
These days, Omega sees between two and three “new sizeable opportunities every couple of months,” and has four to five deals on