OrbiMed, one of the biggest global financers of private and public biopharmas, has brought in $4.3 billion to shower on new healthcare and life sciences startups in the coming years.
The latest haul, announced Tuesday, is the cumulative amount raised between three different funds: Private Investments, Asia Partners and Royalty & Credit Opportunities. Carter Neild, a managing partner at the firm, said that the Asia Partners fundraise was relatively similar to the amount raised in March 2021 when the last fund closed. But the other two grew “30%, 35%, or more,” he said. The net $4.3 billion sum is 23% larger than the $3.5 billion closed in March 2021 across three predecessor funds.
“What we always try to be careful on is that the fund size we’re selecting matches the opportunity set,” said Neild. “And the opportunity set has been growing based on things like increasing innovation [and] increasing demand for non-equity funding.”
More than 90% of the capital in this fund came from investors that had previously participated in an OrbiMed fund. The majority came from pensions and sovereign wealth funds, though the firm didn’t specify which. OrbiMed specifically sought out recruiting leading medical and research institutions in the U.S. “because of the potential for strategic dialogue,” Neild explained.
When a firm’s fund size is measured in billions, the reality is that the world is its oyster with respect to what bets are on the table. Carl Gordon, Ph.D., who heads up the global private equity team, said OrbiMed will try to both “invest in areas that are working now and also try to invest in areas that might represent more of the future.”
One area of particular interest is small-molecule drug discovery, exemplified, he said, by the KRAS inhibitors developed by the likes of Mirati and Amgen. It’s a notable highlight from one of the industry’s top investors given how much concern has been levied on future small-molecule development following the passing of the Inflation Reduction Act. The U.S. law makes small molecules available for price negotiations four years earlier than biologics.
“I think that’s one area we’re actually interested in, just small-molecule drug discovery,” said Gordon. “Because many more proteins are druggable.” And, in light of the hubbub conjured at this year’s European Society for Medical Oncology Congress, Gordon teased that antibody-drug conjugates (ADCs) are of interest as well. One company, which remains in stealth, is working on aiming ADCs at completely novel targets.
With non-dilutive financings harder to come by, OrbiMed’s royalty and credit business has been ascending. General Partner Matt Rizzo said OrbiMed works with companies at or near approval of a new drug to provide somewhere between $100 million and $400 million to help prop up a commercial team or support a commercial launch. OrbiMed can be repaid just like any other loan or through a share of revenue, the latter of which Rizzo says is particularly enticing in the current high-interest rate environment.
“When there’s been a downturn of IPOs and public market activity, that’s actually resulted in a pretty significant uptick in our sector for healthcare structured royalty and credit,” he said.