Perceptive's third credit fund has $1.1B in 'incremental capital' for growing biotech and healthcare companies
Two years after wrapping its second Credit Opportunities Fund with $675 million, longtime VC Perceptive Advisors hit the hard cap on its third — raising $1.1 billion to pump into biotech and healthcare.
The firm initially set out to raise $750 million, according to Sam Chawla, portfolio manager of Perceptive’s Credit Opportunity Funds (PCOF). With the larger raise, Chawla expects Perceptive to make 20 investments, including 9 that have already been given out to companies like C4 Therapeutics and Pear Therapeutics.
“We had like a two-month slower period” amid the pandemic, Chawla said. “But then it picked up pretty fast for us … A lot of the companies in the sector are resilient … I think a lot of folks who were following us saw that.”
The firm closed its first PCOF in 2016 with $323 million, and its second in 2018 with $675 million. It made 17 investments under the second fund, and plans on spreading the third to a mix of commercial and developing stage biotechs, as well as companies specializing in medical devices, clinical diagnostics and healthcare IT. Upon closing PCOF III, Perceptive now manages about $2.1 billion dedicated to private credit.
Perceptive was founded in 1999. It has made 91 direct investments over the last year, and touts recent private investments in Solid Biosciences and Acerta Pharma. According to the company’s website, the bulk of its investments are in publicly-traded companies small and large. The PCOFs are designed to provide debt as less dilutive growth capital or in place of a crossover financing.
“What are we looking for?” Chawla said. “We look for differentiation in clinical data as well as companies that are bringing solutions to market that may be better or faster or cheaper to deliver better care.”
Chawla said Perceptive’s most notable investment in the last year was in ArcherDx, a Boulder, CO-based biotech working on molecular detection products for oncology. Last May, Perceptive led a $60 million round for the company, which was later acquired by Invitae in a $1.4 billion deal.
“It was a very successful investment for us,” Chawla said. “Our strategy centers on providing incremental capital that is less costly than equity capital during a company’s lifecycle” to help it grow, he added later.
Experimenting with new models, Perceptive birthed its first in-house startup in August: the Chinese biotech LianBio, which has three clinical oncology and cardiorenal candidates in the pipeline. For $26.5 million in near-term payments and $505 million in potential milestones, BridgeBio offered up two targeted oncology drug candidates and gave Lian preferential future access to more than 20 of its programs.
“We look at ourselves as funding the growth segments of healthcare and life sciences. These are small and … mid-cap companies that are growing, bringing novel technologies to market, innovating and kind of heavy consumers of capital,” Chawla said. Once those companies scale-up, he added, “they quickly turn profitable in this industry.”