Orbimed Advisors LLC closed a new fund of more than $735 million for investment in biopharmaceutical, medical device and diagnostics companies in North America and Europe.
Investments from the fund will be made in amounts ranging from about $10 million to $50 million. According to Orbimed, the high rate of new FDA approvals, a very active initial public offering (IPO) window and increasing innovation in the field contributed to the formation of the fund.
Orbimed Partner Carl Gordon said the largest portion of the fund will go to biopharmaceutical companies. The next largest portion will be devoted to medical device companies, and diagnostics would make up a minority of the investments of the fund, which is named Orbimed Private Investments V, LP.
“The reason for the hierarchy of investment interests has to do roughly with the fraction of opportunities. There are more opportunities on the biopharma side,” Gordon told BioWorld Today.
“We view ourselves as stage-agnostic,” said Jonathan Silverstein, a partner with the New York-based investment firm. Silverstein explained that decisions about the stage of companies invested in by the fund would depend on the markets. For example, if there’s a strong public market, with private companies being funded by generalist mutual funds, and commensurate high prices, “we’re not going to compete there. We would probably go a little bit early. We’ll be a bit contrarian.
“The fund will be investing across a three- or four-year period,” Silverstein explained. “We’ll probably see some bull and bear markets. Depending on the best value, that’s where we’ll invest our capital.”
According to Gordon and Silverstein, Orbimed Private Investments V will be attracted to the orphan drug space. Orbimed has made numerous investments in the orphan space in the past. For example, it invested in Enobia Pharma Corp., which sold to Alexion Pharmaceuticals Inc., for $1 billion in January 2012. (See BioWorld Today, Jan. 3, 2012.)
Enobia’s lead product, now owned by Alexion, received breakthrough therapy designation from the FDA earlier this year, for treatment of hypophosphatasia, an ultra-rare disorder that causes damage to organs and bones.
Alexion shelled out $610 million up front, and agreed to an additional $470 million in sales and regulatory milestones to acquire the company.
Oncology is another area of interest for Orbimed.
Gordon said the fund will also seek opportunities to do structured deals with large pharmaceutical companies and large device companies, to help them fund their pipelines.
“Most pharmas right now don’t have cash problems, they’ve got earnings problems,” Silverstein explained. “They’re very interested in having third parties take control of assets in the pipeline and having a buyback right.”
Silverstein said Orbimed has done two such deals before. One with Pfizer Inc. and another with Eli Lilly and Co.
The General Partner of Orbimed committed $36 million out of the $735 million total. Silverstein said that General Partner is comprised of seven individuals, and that the $36 million represents investments from the entire Orbimed team.
Gordon said that Orbimed has raised a new fund every three to four years for some time. “We’ve delivered strong returns to limited partner investors.”
The Orbimed team confirmed that it would be looking for the earliest of early stage opportunities, including “pure start-ups” such as Audentes Inc., which recently closed a Series A financing round for $30 million. That financing was led by Orbimed, with participation by 5 AM Ventures and Versant Ventures.
Audentes is using the funds to advance its gene therapy programs in X-linked myotubular myopathy and Pompe disease, and to evaluate additional candidate programs. “We’re interested in everything from there to commercial stage companies,” Gordon said.