With a new $987 million fund, Frazier Life Sciences is ready to form another four or five new biotechs over the next 12 months and bankroll early-stage investing in other nascent drug development startups.
The biotech’s 11th fund reeled in $187 million more than the original goal and comes in $370 million larger than its 10th fund, disclosed in January 2020. About 30% to 40% of the fund will go toward creating new companies, General Partner Daniel Estes, Ph.D., told Fierce Biotech. He has been with the investment shop for 12 years.
“The vast majority of the fund is taken by investors who have been with us for multiple funds, so the discussion was very easy,” Estes said. “We’re doing what we’ve been doing for a long time. Our historic track record, I think, is very strong.”
With public markets that are a “little bit choppy,” now is the time to “retrench and put together some great companies,” he added.
Those new companies could take the form of Big Pharma spinoffs, mid-size biotechs or wholly new startups with a vast network of entrepreneurs-in-residence, venture partners and senior advisors, Estes said.
Public biotech spinouts are “really interesting right now,” the general partner said, noting the firm would “love to” do more deals similar to its involvemet in Crinectics’s spinout of radiopharmaceuticals unit Radionetics and its creation of SanReno Therapeutics, a joint venture with Chinook Therapeutics. Since Frazier also has a fund dedicated toward public companies, the firm is able to more easily ink connections and cherry pick assets to spin out, he said.
“It’s actually not that hard to form a company. It’s really hard to form a good company, but the mechanics to actually put one together is not that much,” Estes said. A “vast majority” of capital commitments in the VC shop’s latest fund comes from investors who have taken part in multiple Frazier funds, he added.
Given its 30-year history in biotech, Frazier will follow its traditional investing thesis, Estes said. This means about 40% of the fund will go toward oncology, while 20% to 30% will land in “hot areas” and the remainder toward “optimistic” pockets of drug development, like dermatology, ophthalmology and women’s health, he added.
Again, expect to see the fund’s investments follow a pattern in drug modalities. About 50% small molecule, 20% to 30% moncoloncal antibodies or recombinant biologics and the remainder in cell and gene therapy and other areas, Estes said.
“We’re not moving away from small molecules; there’s still so many opportunities for small molecules,” Estes said. dustry.
And while most of the fund will go toward U.S. companies, Estes said he’s seeing increased desire to bring in therapeutics from China.
“Obviously J&J has the same thesis, and the Legend product is an amazing product, and we’re seeing increasingly high quality assets from China that could form the basis for new [companies] in the U.S.,” Estes said. Singapore is appealing, too, he noted. Estes sits on the board of Singapore-based and Amgen-partnered Hummingbird Biosciences.