Investors Living for Life Science Funds, Raising $400M

Life Science and health care companies should have no problem finding investment dollars in 2004.

Burrill & Co. and a handful of other firms have kicked off the New Year by announcing the close of new funds directed at life sciences and health care.

The funds expect to collectively raise more than $400 million when all is said and done.

Burrill closed its Burrill Life Sciences Capital Fund with $211 million.

The San Francisco-based life sciences merchant bank now has $513 million under management in its five venture funds. Its LPs include institutional and pension funds and corporate investors.

The new fund will invest in a full gamut of life sciences, including biotech, therapeutics, diagnostics, pharmaceuticals, medical technologies and other related fields, such as wellness and agbio. Burrill will make investments of between $5 million and $15 million in each company and anticipates a portfolio of up to 40 companies.

The fund has already invested in several companies, including Alexza Molecular Delivery Corp., an early stage specialty pharma company founded by Dr. Alejandro Zaffaroni, who also founded ALZA Corp.; Immunicon Corp., a developer of human diagnostic products, which filed for an IPO last month; and Catalyst Biosciences, a company formed around research licensed from University of California at San Francisco and Princeton University to develop protein therapeutics.

In addition to Burrill and Ovum Ventures (see story, page 1), which is aiming to raise $60 million for medical device investments, others are also closing their life science funds.

Montreux Equity Partners, a Menlo Park, Calif.-based firm focused on health care and life sciences, last week closed a new fund, MEP III, at about $83 million. The fund will co-invest alongside MEP II and together comprise a $160 million fund.

Montreux will continue to invest in life science companies that are developing human pharmaceuticals, medical devices and diagnostic companies.

Also, Eli Lilly & Co. has formed its third venture fund under the management of its Lilly Ventures investment arm.

The latest effort is the $50 million Lilly MedTech Venture Fund, which will invest in companies that develop emerging and innovative technologies in the medical technology industry.

The interest in life sciences comes as 2003 ended with anumber of venture-backed biotech companies launching IPOs. Although the bulk of them have not performed well on the aftermarket, interest remains high in the biotech IPO stcok as many companies sit on deck, waiting to debut thier isssue on the public market.

Other firms are also going after the life science markets, a trend that sprung up late last year as several funds either closed or were near their target. Leading the charge has been New Enterprise Associates, which closed a $1 billion fund for health care and life sciences.

Also, OrbiMed Advisors last fall closed Caduceus Private Investments, a $300 million vehicle for late-stage biotech companies; Three Arch Partners raised $450 million for deals in biopharmaceuticals and health care; Abingworth Management raised $350 million for early-stage therapeutics and medical devices; and Sprout Healthcare Ventures is currently fund-raising for a life sciences fund of up to $400 million.

Email Alastair Goldfisher