BEIJING – During the market downturn caused by COVID-19 disruptions, biotech and med-tech companies continue to attract investors at a time when medical solutions are needed more than ever. Qiming Venture Partners said that it has established a new $1.1 billion fund to target early stage health care and technology investments, the latest good news sector for biopharma and med-tech startups.

Known as the Qiming Venture Partners Fund VII, this $1.1 billion fund draws most of its capital from endowments, foundations, family offices and private pensions. This seventh China-focused, U.S.-dollar fund will be focused on biopharma, med tech, diagnostics, health care services, information technology, artificial intelligence, enterprise services, consumer internet and e-commerce.

The firm did not respond to BioWorld’s request to talk about its target companies and details of the fund. Back in 2018, Qiming’s founding partner Duane Kuang, who co-led the current fund, cited “this phenomenal run on health care, from devices to targeted diagnostics. Lately, we’ve spent quite a bit of energy on biotech, on the more innovative drug discovery part of health care investment.” He said health care is one area that the firm will continue to be “extremely excited” about and concentrate more manpower upon.

Stuart Witchell, managing director of Berkeley Research Group (Hong Kong) Ltd., said he was not surprised to see a strong interest in Chinese health care companies from investors at this point.

“The increasing popularity of Chinese med-tech companies, including those offering remote consultation facilities in response to COVID-19, has made investment into this sector particularly attractive,” he told BioWorld.

“This is definitely one of the growth sectors in the next few years post-COVID-19,” he added. “These companies are also likely to enjoy preferential treatment from the Chinese government, too, as it is aware of the shortage in China's public health capacity exposed by COVID-19.”

Qiming is a well-known name in China’s biopharma and med-tech arena. The venture capital firm has invested in companies such as China and U.S.-based biopharma Zai Lab Ltd., vaccine developer Cansino Biologics Inc. and transcatheter heart valve developer Venus Medtech (Hangzhou) Inc. to help them grow into leading industry players that have been able to go public.

Zai Lab’s current stock price (NASDAQ:ZLAB) has risen 115% since its initial start of trading in 2017, while the stock prices of Cansino (HK:6185) and Venus (HK:2500) have added 290% and 36%, respectively, since their listings on the HKEX.

In particular, Cansino is one of the very few vaccine companies that has a product candidate already in human trials for COVID-19. The company said last week its Ad5-nCoV recombinant novel coronavirus vaccine is soon to enter phase II, making it the first biotech in the world to advance a COVID-19 vaccine into phase II testing. Qiming first invested in the vaccine maker in a $30 million early round in 2015, long before the biotech went public.

“As the world combats the COVID-19 pandemic, we are proud that many of our portfolio companies play a critical role in providing products and services both to front-line medical care as well as to the back-end support,” Qiming said.

Founded in 2006, Qiming is now managing nine U.S.-dollar funds and five Chinese RMB funds with $5.3 billion assets under management. In 2018, Qiming announced its sixth U.S.-dollar fund, holding $935 million, and its fifth RMB fund, holding around $334 million. It has backed more than 350 fast-growing and innovative companies in China and abroad.

Qiming said it was able to close the fund at its target amount and on its initial timetable amid challenges caused by the COVID-19 pandemic and geopolitical uncertainties. It also mentioned the historical overallocation to the venture capital asset class by many limited partners.

That implies investors’ appetite for health care companies has not cooled down in these turbulent times. Venture capital activity has remained somewhat robust.

Qiming is the latest venture capital firm to announce mega funds for biotech startups this month. Life sciences investor Arch Venture Partners has raised $1.46 billion in funds to support early stage biotech companies. Deerfield Management has closed an $840 million venture capital fund to invest in science startups, while Boston-based biotech incubator Flagship Pioneering has raised $1.1 billion to focus on new medicines, artificial intelligence and health security. Venbio has also secured $394 million in capital commitments for its third life sciences fund.

In China, financing activity for biotech and med-tech firms has also kept up its momentum.

Over the past few weeks, CAR T-focused Nanjing Legend Biotech raised $150 million in a pre-IPO round, Shanghai biotech CRO Genechem secured $56 million in a series C round, CDMO Shanghai Zhenge Biotech pocketed $51 million in a series A round, and med-tech firm Guangzhou Targene Biotech bagged $14 million in a series A round.

“Private sector investment is required to pick up the slack in China’s health care sector,” said Witchell. “Private sector competition will be one of the key drivers of innovation in China’s health care sector.”

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