MPM Capital has put the finishing touches to its 7th venture fund — BV2018 — now tidily totting up to about $408 million as the venture crew that runs this prolific biotech dealmaker gets squared away for the next wave of investments. Adding it up with their oncology-only funds, and the partners are working with more than a billion dollars.
Guided by some close expert connections in the field, MPM has been keen on the oncology R&D boom. Luke Evnin, who co-founded MPM in the late ‘90s, estimates that about 70% of MPM’s last fund went to finance programs for experimental cancer drugs. In this next fund, he expects the total for cancer to drop from that mark, but remain the dominant field, taking more than half its investment capital.
The last 5 years has seen immuno-oncology reach a peak, Evnin tells me. During the next 3 or 4 years they’ll be focused on one of the key mantras in biotech R&D: drugging the undruggable. That could lead them to degraders, synthetic lethality or protein-protein interactions, among other fields. But wherever the biology of a drug target is well known, you may well find MPM backing the hunt for a drug that can do the job.
MPM has had some recent IPOs from the portfolio — Harpoon’s recent $76 million offering for one — and Evnin is of the opinion the IPO window will remain open for business in 2019, though not quite as busy as last year. This next round of offerings will likely be limited to more mature companies, he says, with the kind of deep-pocketed insiders that can offer considerable assistance.
Like a lot of new funds, MPM has a plan to back some 15 to 20 startups with their new money, which is already being directed into the first round of investments. But they have their own particular Goldilocks approach that will likely guide much of that. MPM wants to jump into launch rounds that are neither too small to get anything done, nor too weighted toward mega-sized packages that draw heat — from some sides — as too big for a startup’s own good.
“Twenty million dollars runs out. You can’t get enough done,” says Evnin. But a syndicate that brings in $50 million, looking to a non-dilutive deal to follow up and then move on to a crossover and potential IPO after that, that sort of business strategy works well in this industry.
The capital base for biotech right now is in solid shape, says Evnin. And so is the talent pool all the VCs can draw from for their startups. That’s all encouraging as they look to the next 5 years and what’s ahead for the industry.
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