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Executive Summary

HEALTHCARE VENTURES II HAS $95 MIL. FOR FUNDING UP TO EIGHT health care product companies. Operated by HealthCare Investment Corporation of Edison, New Jersey, the fund recently announced the closing of $81.4 mil. in limited partnership interests. Since that closing at the beginning of the year, the fund has raised another $14 mil. HealthCare Ventures II is a followup to a predecessor fund which raised and distributed $60.3 mil., with investments in 10 start-up firms. The general partners of Ventures II are Walter Steinberg (previously VP of J&J Development Corp.), James Cavanaugh (a former president of SK&F Labs and a top White House aide in the Ford Administration), James Burns (previously a Group VP at Becton Dickinson in charge of biotech and emerging products), and Harold Werner (also from J&J Development). Cavanaugh is serving as president of the corporation that runs the two venture funds. With about $160 mil. combined, Ventures I and II claim to represent the largest venture capital pool devoted exclusively to health care investments. Ventures II is designed to organize start-up and early stage biotech health care companies. The target for initial funding is$2.5 mil. to $4 mil. per investment. The fund management expects to initiate the corporate development in about three-quarters of the firms that it will back. Ventures II "will provide the technical depth, industry experience and management capability necessary to develop high value companies that can generate superior rates of return," a prospectus for the fund declares. Ventures II intends to focus on nine market areas: diabetes management; transplant medicine; substance abuse treatment; non-destructive sterilization of blood and blood substitutes; anti-sense drugs; cardiovascular drugs; neuroscience drugs; and anti-viral drugs. Among its investment criteria are target markets of more than $200 mil. worldwide, annual revenue potential of $30 mil. to $100 mil., protectable products, and "a potential for liquidity in three to five years at a valuation in excess of $100 mil."

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