The Dutch life sciences venture capital firm Forbion has bagged €185M in the first closing of a fund aimed at investing in late-stage European biotech companies, which often struggle to raise capital.
The main mission of Forbion’s fund — named the Growth Opportunities Fund — is to invest in European life sciences companies raising their last financing before a merger and acquisition exit or initial public offering, Dirk Kersten, General Partner at Forbion, told me.
Returning investors to the new fund include the European Investment Fund, global giant Pantheon, and the German technology-geared growth group KfW Capital. New investors include Eli Lilly, the global biopharmaceutical Horizon Therapeutics, the Belgian Growth Fund and UK-based New Waves Investments.
Forbion jump-started this round’s fundraising in February 2020 and expects to complete it before the end of 2020. The aim is to raise €250M and create a portfolio of 8-12 investments in European growth-stage life sciences companies. Each investment will be up to €30M, and the first will be made within the next two months.
Forbion’s Growth Opportunities Fund will follow three main strategies when making investments. The first will be to supply private capital for advanced clinical drug development programs; the second involves keeping pre-IPO biotech companies funded before their public listing; and the third will be to invest in under-valued public biotech companies.
“No other funds raised this year have targeted the same European late-stage private, pre-IPO or early public financing opportunities,” Kersten said. “In that sense, this fund is unique in its focus.”
In a public statement, Sander Slootweg, Managing Partner and co-founder of Forbion, said the market for late-stage, private European life sciences investments is already large at €2B a year and exploding. However, the market segment remains underserved. Biotech capital markets in Europe are smaller than their US counterparts, and there is often insufficient funding for companies and assets at late-stage development. Therefore, the Forbion Growth Opportunities Fund’s aim is to sustain these advanced drug development programs with crucial funding.
After a surge in European biotech equity funding in 2018, 2019 proved even more lucrative, especially for private biotech companies. In 2020, the outlook for investments in late-stage biotechs will likely be mixed thanks to the Covid-19 pandemic.
“Late-stage companies typically have ongoing clinical trials, so Covid-19 could possibly impact patient enrollment and therefore impact timelines for clinical development,” Kersten told me. “There are, however, differences between disease areas, and obviously this fund will look to invest first in companies active in disease areas that are least affected.”
“On a positive note, the Covid-19 pandemic confirms the need for more and better drugs treating patients worldwide. Late-stage biotech investments enable late-stage development and regulatory approval for next-generation drugs.”
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