Thomas, McNerney raises $375M for life sciences

Health care investor Thomas, McNerney & Partners closed its second fund with $375 million in commitments in September. Like the firm’s inaugural fund of $216 million raised in 2002, the new fund will invest in biotech, pharmaceutical and medical device companies.

The firm expects to invest more than $5 million and up to $40 million over the life of each of its portfolio companies. It invests in startups as well as companies seeking capital for commercialization, asset acquisitions, restructuring and consolidation. With offices in San Francisco, Minneapolis and Stamford, Conn., Thomas, McNerney invests from the West Coast to the East Coast and in between.

Firm co-founder and Partner Pete McNerney declined to name limited partners in the new fund, but said that many investors from the firm’s first fund “substantially increased their commitment” to the new one.

Most of the firm’s portfolio companies are still private, but it did experience two liquidity events recently. In July, OsteoBiologics Inc. was purchased by Smith & Nephew for about $75 million. OsteoBiologics, based in San Antonio, Texas, makes surgical equipment for use in cartilage repair. It had raised about $35 million since 1994 from Thomas, McNerney, PTV Sciences and The Vertical Group, among others.

Before the sale of OsteoBiologics, portfolio company Coley Pharmaceutical Group Inc. (Nasdaq: COLY) launched an IPO in late 2005, raising $96 million. The Wellesley Hills, Mass.-based developer of immune response effectors, had raised about $140 million from Thomas, McNerney, Venrock Associates and others.

In addition to McNerney, the firm’s investment team consists of Partners James Thomas, Karen Boezi, Alex Zisson and Pratik Shah and Associates Kathleen Tune and Christine Siu. —Alastair Goldfisher