Dive Insight:

Venture capitalists interested in biotech have been able to raise money with unprecedented ease over the past several years. Polaris Partners, 5AM Ventures, Third Rock Ventures, Versant and venBio are just some of the firms to have secured hundreds of millions — if not billions — of dollars in fresh funding since 2018.

The money has come, in part, because investors see clear paths to returns. The two main ways venture firms cash out on their portfolio companies are through buyouts and initial public offerings, both of which recently hit historic highs. In 2019, biopharma mergers and acquisitions totaled almost $360 billion, according to EY. And in 2020, there were more than 70 biotech IPOs of $50 million or more, according to data compiled by BioPharma Dive.

Since its founding in 2011, venBio has watched a number of its portfolio companies make these so-called exits. Aragon Pharmaceuticals and Seragon Pharmaceuticals were each acquired by big pharma firms, as was Labrys Biologics, a migraine drug developer bought by Teva for $200 million. Labrys’ leading asset was has since been approved, and is sold under the brand name Ajovy.

Several venBio-backed companies have also gone public, including Aurinia Pharmaceuticals, Apellis Pharmaceuticals and Turning Point Therapeutics.

“When we make an investment, we have a high degree of confidence that it’s attractive to strategic pharma or public investors,” Royston said. “So I think understanding the end game early on is something that [our investors] appreciate.”

With its latest fund, venBio plans to bankroll 12 to 15 drugmakers, with an average investment of around $30 million to $70 million per company, according to Royston.

That number of investments is about the same as venBio’s last fund, which closed in April 2020 after bringing in close to $400 million.

“Even though the fund size has increased, the number of investments will not. And I think that’s very indicative of both financing size these days, as well as a very sort of receptive public markets,” Royston said. “We want to make sure, given the bandwidth we put into these companies, that in the successful companies we’re able to maintain ownership over time.”

As for targets, the firm is fairly agnostic. Royston said his team is looking to strike a balance between companies focused on a single drug program and those working on “platform” technologies that can, in theory, give rise to multiple medicines.

VenBio has also been willing to invest in a variety of therapeutic areas. Though cancer drug companies do make up about a third of the firm’s portfolio, it’s also backed startups researching liver illness, autoimmune diseases, as well as cell and gene therapy developers like Artiva Biotherapeutics and Precision Biosciences.