Venture capitalists who have put money into life sciences have lately been rewarded with a flood of new IPOs hitting the market.
Among those who have led the most VC-backed IPOs is Alta Partners, which has had seven of its portfolio companies go public since last fall. The most recent IPO in its portfolio was Cutera Inc. (Nasdaq: CUTR), which launched a $50 million IPO last week.
Plus, three more Alta-backed life science companies sit on the launching pad, ready to price their new issues.
Last week, in a continuation of the life sciences investment trend that sprung up late last year, Alta let it be known that it will remain a serious life sciences investor.
The San Francisco-based firm announced that it closed on two life science funds: Alta BioPharma Partners (ABP) III and Alta California Partners (ACP) IV with $475 in combined commitments.
ACP IV had its final close this past January and raised $180 million. Alta BioPharma Partners III raised $295 million.
Probitas Partners acted as a placement agent for the funds.
The firm’s ACP funds focus on investing in early-stage pre-clinical life sciences. Past Alta funds have invested between $2 million and $8 million in each portfolio company, taking a 20% stake. The firm often leads deals and takes board seats.
The BioPharma funds specialize in investing in later-stage private companies as well as public companies that provide biopharmaceutical products. The BioPharma funds have invested in approximately 33 later-stage deals combined.
ABP III has invested in four deals so far. ACP IV has closed one deal and has term sheets out on another three.
Deals that Alta Partners have closed recently include NeurogesX, a San Carlos, Calif.-based pharmaceutical company that develops treatments for neuropathic pain, which raised a $35 million Series C.
New limited partners for both funds include Adams Street Partners, Auda Ventures, Commonfund Capital, Dow Employees’ Pension Plan via Diamond Capital Management, Flag Capital Management and the Ontario Municipal Employees’ Retirement System.
Returning LPs include California Public Employees’ Retirement System (CalPERS), clients of Shott Capital Management, Teachers’ Merchant Bank and TIAA-CREF. Hamilton Lane, a previosu LP, did not return.
CalPERS had to reduce its investment due to regulations mandating it own no more than 15% of any one fund, says director Guy Nohra. CalPERS has gone over the 15% mark with past Alta funds. But Nohra says that the CalPERS reduction allowed the venture firm to go after and win over other desirable limited partners, particularly funds-of-funds and corporate and government pension funds.
Alta GPs invested at or above industry standard levels in each fund.
Nohra says that the fee and carry structure remain unchanged from its last ABP and ACP funds. “We’ve been very consistent through good and bad times,” he says. “We didn’t’ take advantage with high fees during good times and we’re very happy we didn’t get pushed during the bad times.” While the firm has not made any public announcements regarding personnel changes, Alta did promote junior investment managers to coincide with raising its two new funds.