Schroder Ventures Life Sciences is looking for companies with good management and a great idea.
And if you're a small biotech company in the U.S. or Europe, possessing such qualities could mean millions of dollars.
With offices in Boston, San Francisco and London, Schroder is a global investment group that just closed its International Life Sciences Fund III (ILSF III) with financial commitments of $402 million for investment in biotechnology and pharmaceuticals, medical devices and instruments, and health care information technology and health care services.
Schroder is looking to spend about $200 million on biotech in $5 million to $20 million investments over the next three to five years. About 60 percent of the biotech spending will be invested in the U.S., leaving the remaining 40 percent for Europe, Nick Coleman, Schroder's finance director in London, told BioWorld Today.
The firm doesn't expect to invest more than 15 percent in public companies. "And, it is more likely that the public companies will be in the U.S. because that market is more developed," Coleman said.
ILSF III, complete with 18 new investors, is Schroder's largest investment fund since its inception in 1993. The first fund was $125 million and the second was $310 million, bringing the total to about $850 million in a decade of economical ups and downs.
So where will the money go?
"In biotech, right now it is very attractive to look at later-stage companies that might be public, but are probably private, that have lower valuations because the markets have been compressed for two or three years, even though it is coming back now," John Garvey, managing partner and CEO of Schroder in Boston, told BioWorld Today. "We look for companies that have products generally in Phase I or II clinical studies. We like things that address acute or terminal conditions vs. chronic because they are quicker to get approved and quicker to get to market and easier to finance through the clinic."
He added that Schroder also looks for profitable service companies it can expand and interesting device products.
The company's track record in selecting quality investments is validated by its ability to raise money in these somewhat turbulent times, both economically and politically.
Coleman chalks up the success to active health care markets. "It's relatively a positive story that we are telling in terms of why it's a good time to invest in biotech and the others - medical devices and health care services."
Not only that, Coleman said Schroder is one of the few teams that has a true trans-Atlantic presence.
Companies that have benefited from Schroder's funds in the past are GelTex Pharmaceuticals Inc., a division of Genzyme General, of Cambridge, Mass.; LaserVision Inc., now called TLC Vision, of Toronto; LeukoSite Inc., now a part of Millennium Pharmaceuticals Inc., of Cambridge, Mass.; and Shire Pharmaceuticals Group plc, of Andover, UK.
Companies already reaping the benefits of ILSF III include GlycoFi Inc., of Lebanon, N.H.; Gyros AB, of Uppsala, Sweden; and Therascope AG, of Heidelberg, Germany.