There’s just something exciting about investing in a med-tech start-up.
Just ask Third Rock Ventures (Boston), which likes to talk about supporting companies that are developing products which turn out to be “engines” for growth.
The newly-formed-investment group on Friday said it has closed on its first fund of $378 million, to be used to support neophyte med-tech and life science companies and support its own internal development efforts.
The group, which is comprised of former executives of Millennium Pharmaceuticals (Cambridge, Massachusetts), has expressed a goal of building companies from the ground up, and has said it will invest in 12 to 15 companies throughout the next four years, both medical device and biotech firms.
Whether it is setting up shop, negotiating deals or focusing on the hiring, the firm said it will function as the “start-up team” to help pursue the developmental needs of these early-stage ventures.
It says that its target is quite a departure from other venture firms, which tend more often to target companies with a stronger track record based on raw research and clinical data and, on average, may already have up to $100 million in equity.
“Third Rock Ventures likes to get in early on the ground floor,” a spokeswoman for the company told Medical Device Daily. “They will function as the CEOs until someone else can be found.”
Nearly 75% of the companies Third Rock will build are likely to be based on products that the partners develop internally — the others being companies working on the R&D for new devices and drugs.
“They’re going to be working with hospitals; and working with tech transfers to find potential companies to invest in,” a company spokeswoman said.
The firm has said it wants to be in a place where it can easily pour $30 million, into a single company.
Third Rock Ventures’ partners are: Mark Levin, founder and former CEO of Millennium, and Kevin Starr, a board member of several biotech companies and former COO/CFO of Millennium; Robert Tepper, MD, a biotech entrepreneur and previous head of R&D and CSO of Millennium; Lou Tartaglia, PhD, a leader in the field of obesity and author of more than 50 scientific publications; Nick Leschly, a business development and marketing biotech executive; and Anne-Mari Paster, previously CFO of MPM Capital.
In other financing activity:
Tyco International (Pembroke, Bermuda) reported that its board has authorized a new program to purchase up to $1 billion of the company’s common stock. The company expects to repurchase shares from time to time based on market conditions.
The company also said that its board has approved an increase in the company’s quarterly dividend to 15 cents a share for 1Q08. The new quarterly dividend is a 36% increase above the quarterly dividend of about 11 cents that the company previously indicated it expected to pay, following the separation of Tyco into three public companies; (MDD, July 6, 2007).
The 15-cent dividend for the first quarter will be payable on Nov. 1, 2007, to shareholders on Oct. 1, 2007.
Covidien (Mansfield, Massachusetts), formerly known as Tyco Healthcare (Mansfield, Massachusetts), and Tyco Electronics (Berwyn, Pennsylvania) officially were spun off from the conglomerate nearly two months ago. The companies are now three separate entities.
Ed Breen, CEO and chairman of Tyco International, said, “The increase in our quarterly dividend and the initiation of a new share repurchase program reflect the strength of our cash flow and our confidence in Tyco’s future. With the separation behind us, this is the appropriate time for us to make these moves.”
But the transition period could involve the potential for Tyco International and its former component companies to fight litigation by the trustee of its bonds, the Bank of New York and a group of bondholders who are saying the company is breaking the terms and conditions of the debt by not offering to buy back the debt at what they argue is full value.
These are the claims of a lawsuit filed against the company in the U.S. District Court of the Southern District of New York (MDD, June 18, 2007).
Earlier this year, the company reported that it had inked a $3 billion agreement to settle the majority of the class action suits over the company’s stock values as the company attempted to right itself in the wake of mismanagement during the watch of CEO Dennis Kozlowski (MDD, May 16, 2007).
Kozlowoski and ex-chief Mark Swartz were convicted in 2005 of defrauding Tyco of more than $150 million by theft and stock manipulation (MDD, June 25, 2005).