Advent's Life Science Fund Attracts UK Government Backing

Advent Venture Partners Raises £70 million for new life sciences fund in Europe.

Advent Venture Partners LLP announced the final close of a £70 million ($120 million) venture capital fund, Advent Life Sciences, on Nov. 24.

Advent has a long history of investing in combined technology and life science funds, but this is the first fund it has set up which focuses just on the life sciences. The fund will invest in early- and mid-stage life science companies, including start-ups and companies with products approaching or in early clinical trials, predominantly in the UK and Europe, but also in the U.S.

The fund includes a £15 million investment from the UK government's Future Technologies Fund (FTF), its first in the life sciences sector. The FTF was set up to reverse the drought in financing available to UK biotech and technology companies, and is a "fund-of-funds" that is investing in venture funds with a UK focus.

This is the FTF's third investment - earlier this year it invested in Acton Capital Partners' telecoms fund, the Heureka Growth Fund, and in DFJ Esprit's technology fund, DFJ Esprit III Fund. It is managed by the European Investment Fund, a provider of risk capital to small companies across Europe, which is in turn owned by the European Investment Bank.

The close comes amid a three-to-four year nuclear winter for venture fund raising in Europe. The U.S. venture world is also facing a contracting environment, though SV Life Sciences managed to close a $523 million venture fund in June and Orbimed Advisers' Caduceus IV raised $550 million in a fund that closed in March (Also see "Sidestepping the "Washout," SV Life Sciences Closes $523 Million Fund" - Pink Sheet, 29 Jun, 2010.).

Advent was able to complete its fundraising successfully because of its timing and the fund's strategy, claims Shahzad Malik, one of Advent Life Sciences' two general partners.

"We are increasingly finding that our LPs want to do their own sector allocations rather than leaving it to their general partners, so the timing is right for a sector-specific fund," Malik explained in an interview. The Advent team has also matured and returned invested capital from previous investments. "Not many biotech venture funds over the past few years have come remotely close to that," he added.

Recent examples of companies in which Advent has undertaken a single round of investment and achieved exit within four years include RespiVert Ltd., which was acquired by Centocor Ortho Biotech, Inc. (Johnson & Johnson), and Thiakis Ltd., which was acquired by Wyeth (now Pfizer, Inc.) in 2008.

Advent's strategy is to target areas of innovation where it believes the pharmaceutical industry is weak, and to create or invest in companies that address those weaknesses and become acquisition targets, Malik continued. "We don't put too much capital in, we don't rely on IPOs, and we set out to hold stakes in companies for around five years rather than seven to nine years," he added. Thus Advent is in effect promising its LPs a quicker-than-average return.

Not relying on IPO exits seems sensible despite some action on the public listing front. Danish biotech Zealand Pharma AS boldy approached the markets on Nov.3 seeking €104 million ($138 million), but despite a maturing pipeline and the smell of revenues from a Phase III GLP-1 analog program partnered with Sanofi-Aventis, the company raised only one third of what it set out to fetch ('Zealand Pharma Will Test European IPO Market,' 'The Pink Sheet' DAILY, Nov. 3, 2010).

Advent Venture Partners expects only to back companies that have "a first- or best-in-class approach, which weeds out most of the proposed opportunities that come our way," Malik said. Advent also looks upon Europe as a favorable place to invest, even though other VCs, including Atlas Ventures, have recently decided to close their European offices. "Many European assets are more mature than those elsewhere, because academics and startup companies have been left alone to progress them further," Malik noted.

So in other words, the financing drought and the lack of seed- and early-stage funding opportunities could have left many of the best ideas without backers, forced to mature within academic organizations or to rely on grants or angel investors.

At the time the FTF was set up, it was stipulated that the UK government's funding would go into UK life science companies ('UK Innovation Investment Fund: Are The Right Managers On The Job?' 'The Pink Sheet' DAILY, Dec. 10, 2009). Advent has always invested in the UK, Malik said, and will "more than satisfy" the FTF requirements.

Advent is based in London and is one of the leading European providers of venture capital for the life sciences sector. It participated in the first venture round, or led the formation of, companies like Avila Therapeutics, Biocartis SA, Cellnovo Ltd., RespiVert, Thiakis, Algeta ASA and Amsterdam Molecular Therapeutics BV.

-John Davis ([email protected])