Biotechnology, New Capital

Biotech crossover investor Foresite is lining up a $650M stake for the big gambles to come

Foresite CEO Jim Tananbaum

Biotech investor Foresite Capital is lining up a new fund, and this time it’s going big.

In a new SEC filing posted Thursday, Foresite alerted the industry that it is lining up a $650 million successor to the $450 million Fund III that got started two years ago.

Foresite is a very familiar if fairly low-key player in the biotech world; a crossover investor that has kept friendly ties in place with syndicates that often include cagey players like RA Capital, which enjoys nothing as much as looking for some fast returns — say a year out — through go-go markets.

But that’s a tricky game to play, especially in a market like this, where investor interest in a high-risk field like biotech can wane for years before the window flies open with a boom.

“We like larger rounds and deep pockets around the table with us,” Foresite chief Jim Tananbaum told Xconomy’s Alex Lash after Fund III debuted. “Windows close at unpredictable times, and it can be a long, cold winter.”

Foresite, though, has also seen the good times roll, backing some current and former high flyers like Editas $EDIT, Juno $JUNO and Loxo $LOXO.

That makes Foresite all the more attractive to companies trying to position themselves for an IPO. Their willingness to gamble on a biotech amounts to a tacit endorsement of a drug developer’s public market prospects. And everybody loves a winner.

This week has now seen three investors lining up $1.6 billion in biotech investments for everything from late-stage stakes and crossover money to high-risk and very long-term translational work. That all bodes well for keeping the biotech industry in a forward-thinking mode.


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