Jamie Top­per Fra­zier Health­care Part­ners

The mon­ey in biotech keeps get­ting big­ger.

Af­ter Fra­zier Health­care Part­ners closed its first ded­i­cat­ed biotech fund with $262 mil­lion al­most ex­act­ly two years ago, man­ag­ing gen­er­al part­ner Jamie Top­per and his crew of VC spe­cial­ists went af­ter some 16 to 18 new biotech in­vest­ments, hew­ing to the start­up rounds that are their sweet spot — and which ac­counts for the bulk of the cash.

Now, they’re get­ting start­ed on their next pure-play fund with $419 mil­lion, giv­ing them sub­stan­tial­ly more mon­ey to bet on about the same num­ber of biotechs as be­fore.

“It’s our po­si­tion that the small­er funds tend to do bet­ter and I think his­tor­i­cal­ly that is true,” Top­per tells me. He thinks $400 mil­lion or so will do nice­ly at stay­ing man­age­able. But they al­so want to stack up well against the com­pe­ti­tion, and these days that calls for tak­ing a big­ger share of the eq­ui­ty in the port­fo­lio com­pa­nies they’re back­ing.

In Top­per’s view there are three key trends that dri­ve their in­vest­ment strat­e­gy.

1. Reg­u­la­to­ry is­sues are big, and while biotech re­mains one of the most heav­i­ly reg­u­lat­ed in­dus­tries in the world, the en­vi­ron­ment now — es­pe­cial­ly for on­col­o­gy and an­tibi­otics — is “in one of the most fa­vor­able spots it’s ever been in.”
2. Phar­ma has just as big an ap­petite as ever for tru­ly nov­el meds, so the fo­cus re­mains on those com­pa­nies look­ing to break new ground and get in­to the hands of the com­mer­cial groups that need them the most.
3. Drug pric­ing pres­sures con­tin­ue to grow, which is just an­oth­er rea­son to stick with the game chang­ers out there, where pay­ers are go­ing to be less like­ly to ex­pe­ri­ence stick­er shock.

It’s no sur­prise, then, to find Fra­zier part­ners lean­ing to­ward new drugs for can­cer and rare dis­eases, which fig­ure promi­nent­ly at the front of the food chain in biotech. They’re ac­tive in GI dis­eases and the liv­er, look­ing to score on the bets be­ing made on new NASH drugs. And when they can find the right ex­pe­ri­enced play­ers in CNS — as they did with the crew at Nau­rex spin-out Aptinyx — they’ll tread in that high-risk are­na as well.

Dan Estes

For Fra­zier, a good re­la­tion­ship can be the key to a hap­py in­vest­ment. And they’re able to reach out from of­fices in the Bay Area, Boston and San Diego to make that hap­pen with some of the most ex­pe­ri­enced play­ers in drug de­vel­op­ment.

“Half of what we do as a health­care VC is tal­ent re­cruit­ment,” he says. “Tal­ent is key.”

It’s al­so key in the VC. Dan Estes has been pro­mot­ed to full part­ner at Fra­zier to shoul­der a big­ger part of the load this time, and Top­per says he’ll make a cou­ple of new hires to broad­en the ded­i­cat­ed biotech group a lit­tle more.

Af­ter rais­ing more than $3 bil­lion in ven­ture mon­ey over the years, Fra­zier’s VCs have the lux­u­ry of work­ing with many of the re­peat en­tre­pre­neurs in the pack who have al­ready made mon­ey for the group. And they’re not too con­cerned about lo­ca­tion — they’ve gone to the Mid­west and Eu­rope when the com­pa­ny is right.

If it all lines up, Fra­zier will come to you.

In a bewildering twist to the long-suffering market for antibiotics — there has actually been a bidding war for an antibiotic company: Tetraphase.

It all started back in March, when the maker of Xerava (an FDA approved therapy for complicated intra-abdominal infections) said it had received an offer from AcelRx for an all-stock deal valued at $14.4 million.

The offer was well-timed. Xerava was approved in 2018, four years after Tetraphase posted its first batch of pivotal trial data, and sales were nowhere near where they needed to be in order for the company to keep its head above water.

Money has never been an issue for Everest Medicines. With an essentially open tab from their founders at C-Bridge Capital, the biotech has gone two and a half years racking up drug after drug, bringing in top exec after top exec, and issuing clinical update after update.

But now other investors want in — and they’re betting big.

Everest is closing its Series C at $310 million. The first $50 million comes from the Jiashan National Economic and Technological Development Zone; the remaining C-2 tranche was led by Janchor Partners, with RA Capital Management and Hillhouse Capital as co-leaders. Decheng Capital, GT Fund, Janus Henderson Investors, Rock Springs Capital, Octagon Investments all joined.

It’s been precisely one year and one day since Neil Woodford froze his once-vaunted fund, and while a global pandemic has recently shielded him from the torrent of headlines, the fallout continues.

Today, the California-based patent licensing firm Acacia Research acquired the fund’s shares for 19 healthcare and biotech companies for $284 million.  Those companies include shares for public and private companies and count some of Woodford’s most prominent bio-bets, such as Theravance Biopharma, Oxford Nanopore and Mereo Biopharma, according to Sky News, which first reported the sale. It won’t include shares for BenevelontAI, the machine learning biotech once valued at $2 billion.

Lonza chairman Albert Baehny took his time headhunting a new CEO for the company, making it absolutely clear he wanted a Big Pharma or biotech CEO with a good long track record in the business for the top spot. In the end, he went with the gold standard, turning to Roche’s ranks to recruit Pierre-Alain Ruffieux for the job.

Ruffieux, a member of the pharma leadership team at Roche, spent close to 5 years at the company. But like a small army of manufacturing execs, he gained much of his experience at the other Big Pharma in Basel, remaining at Novartis for 12 years before expanding his horizons.

Another Big Pharma is entering the Covid-19 antibody hunt.

AbbVie has announced a collaboration with the Netherlands’ Utrecht University and Erasmus Medical Center and the Chinese-Dutch biotech Harbour Biomed to develop a neutralizing antibody that can treat Covid-19. The antibody, called 47D11, was discovered by AbbVie’s three partners, and AbbVie will support early preclinical work, while preparing for later preclinical and clinical development. Researchers described the antibody in Nature Communications last month.

There haven’t been a lot of big venture rounds for biotech companies looking to run a Phase II study in Alzheimer’s.

The field has been a disaster over the past decade. Amyloid didn’t pan out as a target — going down in a litany of Phase III failures — and is now making its last stand at Biogen. Tau is a comer, but when you look around and all you see is destruction, the idea of backing a startup trying to find complex cocktails to swing the course of this devilishly complicated memory-wasting disease would daunt the pluckiest investors.