12:00 AM
Nov 19, 2001
 |  BioCentury  |  Finance

Ebb & Flow

Biotech companies looking to go public this year have found investors reluctant to shell out cash. But venture funds have remained able to raise new money, implying that companies unable to go public will continue to find venture funds available. Indeed, at least two more VCs are expected to announce significant closings by year end.

The latest closing came last week, as TVM Techno Venture Management closed its TVM V Life Science Fund at E336 million ($301 million). While TVM raised E86 million above its scaled back E250 million expectations, this was below the firm's E400 million goal set in August (see BioCentury, Aug. 20).

Investors' pocketbooks were not quite as open as in the past two years, according to Helmut Schühsler, managing partner. "The going was tough, and many potential investors showed interest, but current market conditions have made things difficult," he told Ebb & Flow.

"The main problem for U.S. investors is related to the fall in the public equity markets. Many of them now hold private equity investments way above their percentage allocation in terms of asset base, which stops them making new commitments," noted Schühsler. "The effects of the public market valuations have rippeled through the entire industry and are not just related to biotech and not just the U.S."

But Schühsler also noted that U.S. investors in particular have felt like sticking close to home since Sept. 11. "We raised 5% of the fund in the U.S., 70% came from Germany and Switzerland, 10% from the Netherlands, and 15% from Singapore," he said. There were British investors in the fund as well.

The majority of the fund will be invested in early stage plays with a focus on the creation and growth of transatlantic businesses. Late stage deals will be considered on a selective basis. The fund will concentrate on drug discovery platform technologies, integrated drug discovery, drug delivery and development companies.

Since its first closing in May, TVM LSV has invested in infectious disease play Axxima; functional genomics company DeveloGen; and peptide drug discovery company Jerini, all in Germany. U.S. investments include assay developer Genicon; immunotherapy company Merix; antiviral play Novirio; and personalized cancer testing company Precision Therapeutics.

Epicurean ventures

Philippe Pouletty, who has spearheaded efforts by the lobbying group France Biotech to make France a more attractive place for investors and entrepreneurs, has decided to start an investment fund to take advantage of the fruits of his own labor.

"My three partners and I decided to start Truffle Ventures to invest in startups that are spinoffs from large companies in pharma and biotech. More and more these larger companies have to rationalize their business. Often this refocusing involves the need to cut loose R&D programs in which significant investments have already been made," Pouletty told Ebb & Flow.

Truffle will be financed with a combination of money from FCPI (fonds communs de placement dans l'innovation), an instrument that encourages individuals to invest in high tech startups through special tax breaks, and FCPR (fonds communs de placements a risque), an instrument used by institutional funds that invests in France (see "France: Growth Through Acquisition", BioCentury, Oct. 22).

Pouletty said that Truffle already has raised about E80 million ($71.6 million) from a circle that includes institutions...

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