Quaker Bio sows oats with second fund

Quaker BioVentures is raising capital for its second life sciences fund and is interviewing investors to join its team, says Managing Partner Brenda Gavin.

The firm started fund-raising about mid-June. An official target size and date to close was not yet declared, but the firm raised $280 million for Quaker BioVentures Fund I.

The firm has already received $25 million in commitments from the Pennsylvania State Employees Retirement System. Limited partners from fund I include big public companies, such as Aqua America, Cephalon, Merck & Co., Synthes and Wyeth. Quaker also previously raised capital from pension funds and endowments, such as Ben Franklin Technology Partners of Southeastern Pennsylvania, Drexel University, Thomas Jefferson University and the New Jersey Economic Development Authority.

The current Quaker staff includes three managing partners (Gavin, P. Sherrill Neff and Ira Lubert); three partners (Richard Kollender, Matthew Rieke and Geeta Vemuri) and one analyst.

About 11 of the firm’s 16 investments from its previous fund were Pennsylvania-based startups. But the new fund will also expand the firm’s geographic focus beyond the mid-Atlantic, because the Philadelphia-based firm will start mining the University of Alabama at Birmingham for deals. Quaker also expects to invest in startups in Florida and Atlanta. Don’t expect the partners to tackle China, India or any overseas market any time soon. “It’s not a good use of our time to be on airplanes,” Gavin says.

The firm, founded in 2001, doesn’t have much of a track record for exited companies. In late June, Quaker had one company in IPO registration, Amicus Therapeutics, which filed to raise about $86 million for development of its small-molecule treatments of genetic diseases. The company raised more than $88 million from Quaker, Canaan Partners, CHL Medical Partners, Frazier & Co., New Enterprise Associates (NEA), Palo Alto Investors, Prospect Venture Partners and Radius Ventures. The company reported a loss $7.6 million during the first quarter of 2006 and still has yet to record sales, according to its prospectus.

In exit news, YM BioSciences (AMEX: YMI) bought EXIMIAS Pharmaceutical Corp., a Quaker portfolio company, in April for $28 million. The startup, which develops cancer treatments, raised nearly $94 million from Quaker, NEA, Birchmere Ventures, CDP Capital-Technology Ventures, Cross Atlantic Capital Partners, Easton Capital Investment Group, Emerging Technology Partners, OrbiMed Advisors, Pacific Rim Ventures and Vivo Ventures. —Alexander Haislip