DUBLIN – Vesalius Biocapital Partners Sàrl has responded to Boston's gravitational pull by putting in place a plan to establish a presence in the world's foremost biotech hub as it raises €150 million (US$166.7 million) for its third fund, Vesalius Biocapital III (VBC III). The Luxembourg-based fund disclosed a first closing of €65 this week and is on track to complete the fundraising process during the third quarter of next year.

About half of the new fund will be focused on therapeutics. It will, like its predecessors, pursue a broad strategy in health care investing, covering med tech, diagnostics and e-health, in addition to drug development. It's a trait that's common to many European venture capital funds and allows them to hedge against some of the risks attached to drug development. The latter sector has delivered Vesalius's most spectacular returns, however. Its standout exit was the recent sale of women's health care drug developer Ogeda SA to Astellas Pharma Inc. for up to €800 million, €500 million of which came up front. (See BioWorld Today, April 4, 2017.)

With VBC III, Vesalius aims to double the size of its two previous funds, VBC I and VBC II, which raised €76 million and €78 million, respectively. "We're still in VC, but we will go to later-stage deals. You need more money – a bigger ticket," Stéphane Verdood, managing partner and founder of Luxembourg-based Vesalius, told BioWorld Today. "Our purpose is not to go for more deals, but to bring more money to the table when we step into a transaction."

The move reflects a desire on the part of its backers to trim investment horizons from seven to eight years back to five. Its first closing of VBC III featured a lot of repeat business. "Most of the investors that came into this round were also in Fund I or II or Funds I and II," Verdood said. They include high net worth individuals, family offices and corporate investors.

Going large is also connected with going to America. Vesalius aims to bring suitable portfolio firms to the U.S. market, both to tap into investment opportunities and into U.S. clinical expertise for clinical trials. "Once you step into a phase II trial, you need to consider having a U.S. arm to get the FDA involved at an early stage," Verdood said.

One European prospect, currently in due diligence, is focused exclusively on the U.S., Vesalius managing partner Marc Lohrmann told BioWorld Today. "They are negotiating with U.S. payers – they are more or less neglecting the European market, because of structures and reimbursement," he said.

The U.S. move will also enable Vesalius to bring North American med-tech and device firms to Europe, where, because of the permissive regulatory environment, it can be easier to gain a first product approval. It has already done that, Lohrmann said, with Markham, Ontario-based Exact Imaging Inc., which is developing a micro-ultrasound system for guiding biopsy procedures.

Even though Vesalius is not changing its investment focus, the world in which it operates is in constant flux. "Diagnostics is shifting from the biological and more to the IT space," Verdood said. The adoption of robotic technology in surgery is a trend "we cannot miss." Immuno-oncology, meanwhile, remains early stage and is "to be approached prudently," Verdood said. "If you look at the risk-reward ratio, it's still not an easy decision," he added. Most European projects in the area are still preclinical.

The exit market is better than it was in 2016, he said. The uncertainties attached to Brexit and the U.S. presidential election may not have disappeared, but they have been digested. But getting a deal done remains tough. "Your company has to possess rock-solid assets for sure," Verdood said.

Vesalius currently has three prospects in due diligence and expects to close its first deal from the new fund this year.

Also this week, Milan, Italy-based Aurora-TT announced plans to raise a €50 million tech transfer fund to back early stage biotech innovation in Italy. Paris-based Advent France Biotechnology took in €64.75 million in a first close of a new seed fund. Earlier this year, Dublin-based Seroba Life Sciences raised €100 million in a first close of its third fund. (See BioWorld Today, April 21 2017, and Feb. 6, 2017.)