12:00 AM
Jun 15, 2015
 |  BioCentury  |  Finance

Products, hold the platform

Why Clarus is sticking with products, steering clear of platforms

While many VCs are pumping record-breaking amounts of capital into big idea platform companies and urging them to fully explore their technologies, Clarus Ventures is sticking with its more measured approach.

In addition to keeping a tight focus on products via traditional venture investments in its newly closed third fund, the firm plans to deploy about half of the money in risk-sharing projects with pharma to develop late-stage assets.

"Having come through times that were much leaner, I think we still appreciate the value of focus," said Clarus' Scott Requadt. "More often than not, at least from Clarus' perspective, we like to see a company focus on a select number of areas. We associate that with cash efficiencies and tranched financings to achieve certain milestones."

Clarus hasn't had any trouble convincing LPs to buy into its approach, as the $500 million Clarus Lifesciences III fund exceeded its initial target of $375 million.

A decade in the books

Clarus was formed in 2005 by six of MPM Capital's eight original GPs. Even then, the focus was products. At the time of the split, Clarus' Nick Galakatos told BioCentury, "The centerpiece will be a focus on products as the key value driver."

A year later, Clarus closed its first fund at $500 million. Clarus Lifesciences I had six exits via M&A, and an additional five companies went public. The biggest win was respiratory disease company Pearl Therapeutics Inc., which was acquired by AstraZeneca plc for $560 million up front in 2013. Pearl shareholders also are eligible for up to $590 million in milestones.

The second fund, Clarus Lifesciences II, closed at $700 million in 2008. That fund has seen four companies get acquired and five go public. In both funds, Requadt said Clarus still holds some of the companies that went public, but declined...

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