Hot Life Science Investor Mandate 2: Canadian VC Eyes Nine Allocations over Six Months

9 Oct

A venture capital firm based in Canada currently manages four funds that specialize in biotechnology with a total of more than CAD $300m under management. The firm is currently investing from its fourth fund, which raised around CAD $50m. The fund will be making about 9 allocations in the next six months, all in the form of an initial investment of CAD $500,000 for preliminary research with a possible follow-up investment of a further CAD $2.5m if these initial experiments are successful.

The fourth fund in-licenses early-stage assets and funds the preclinical development of these assets. The fund’s investments are focused on asset-holders based in Canada, but allocations can be provided to asset-holders in the USA, provided that development of the asset will take place in Canada. The fund most often exits investments by out-licensing the asset after preclinical development is complete, but sometimes bundles assets to form a start-up company and then seeks syndicated financing for these new companies.

The fund invests only in therapeutic assets at a very early stage of development, before preclinical development has begun, and invests to hold licenses, with the original asset owner retaining ownership of the asset.

Their investments are not indication-specific, but as the fund requires that preclinical research can create strong out-licensing potential, allocations tend not to be made to psychiatric drug assets. They are interested in orphan indications and currently have orphan drug assets in development.

The firm primarily invests in promising assets produced by academic researchers, but also invests in assets shelved by biotech and pharma companies. Within academia, they allocate to a wide variety of researchers who wish to set an asset on the path to market, a process that a conventional academic grant generally cannot cover, requires that preclinical development follow a strict timeline and financial plan, therefore their primary requirement in an asset owner is comfort with this type of stricture and with losing some control over the asset’s development path. The fund most often works with younger researchers (under 7 years in academia) who are adaptable to the process, but they have also worked with veteran academics who are willing to depart from the conventional academic pace in order to bring a drug towards market.

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