Early-stage biotech investing is a difficult game, as evidenced by the well-documented dwindling of VC firms over the past few years left to take the plunge. But Lightstone Ventures started up two years ago to throw its hat into the ring nonetheless, and now it’s got some dollars to put to work.
Lightstone has closed its first fund, Lightstone Ventures LP, at $172 million. The firm says its fund is the largest first-time U.S. life sciences VC fund that’s been raised in more than two years. The firm has offices in Palo Alto, CA, Boston, and Boulder, CO.
Lightstone will use the cash to invest in early-stage biotechs and medical device makers, and is announcing three investments to start. One is Catabasis, the Cambridge-based startup developing triglyceride-lowering and anti-inflammatory drugs based on a technology that can combine two compounds with the help of a proprietary linker. Lightstone was listed as one of the new investors in Catabasis’s $32.4 million Series B round in November.
Lightstone is also investing in Dublin-based FIRE1, a startup recently launched by the medtech incubator The Foundry that is developing therapeutic devices. The VC firm jumped into FIRE1’s Series A round in January along with Covidien and New Enterprise Associates. Lightstone’s third investment is in Redwood City, CA-based EarLens, another medtech startup that’s developing a hearing device that uses light to transmit sound.
Lightstone was formed by members of the life science teams at Advanced Technology Ventures and Morgenthaler Ventures. General partners Mike Carusi, Chris Christoffersen, Jean George, and Hank Plain all spent more than a decade working together at the two firms. Some of their previous investments include recent biotech IPOs like Acceleron Pharma (NASDAQ: XLRN), Five Prime Therapeutics (NASDAQ: FPRX), and OncoMed Pharmaceuticals (NASDAQ: OMED). They also invested in Plexxicon, which Daiichi Sankyo bought for $805 million up front in 2011, and Ardian, which Medtronic scooped up for $800 million in 2010.
Meanwhile, despite the shrinkage of biotech venture capital, the survivors have thrived in raising funds of late. Third Rock Ventures ($516 million), Atlas Venture ($265 million), Frazier Healthcare ($377 million), OrbiMed Advisors ($735 million), and 5AM Ventures ($250 million) each closed new funds over the past year. The bubbling IPO market over the past year has helped, though the window for such offerings has been closing of late.
“We see tremendous opportunity in our focus areas thanks to a reinvigorated biotech and device IPO market, improvements at the FDA, greater clarity with the Affordable Care Act, and interest from the large corporate players to invest in and acquire innovative venture-backed companies,” Carusi said in a statement.