Third Rock Ventures, Firm With Hunger for Audacious Biotech Ideas, Sets up SF Shop
Boston’s Third Rock Ventures, the relatively young firm with an appetite for investing in some of the most disruptive ideas in biotech, is opening up a new office in San Francisco’s Mission Bay district. Third Rock principal Jake Bauer is moving to San Francisco, and will be joined by another partner at the firm. The news was first reported this morning by Scott Kirsner on the Boston Globe website.
Venture firms open new offices in San Francisco all the time, so that’s hardly news, but Third Rock is a little bit of a different case. This firm was founded in 2007 by a group of high-profile former executives at Cambridge, MA-based Millennium Pharmaceuticals, including former CEO Mark Levin. A year before the economic downturn caused many VCs to turn cautious and try to prop up existing portfolio companies, the firm was sitting pretty with a maiden fund of $378 million that it could invest in some of the best ideas emerging at Boston’s academic institutions.
Ever since, Third Rock has been placing a series of bets on Boston biotech companies that could only be called some of the most audacious and potentially groundbreaking ideas in the industry today. The portfolio includes Agios Pharmaceuticals, the company seeking to essentially starve cancer cells to death through blocking cell metabolism; Constellation Pharmaceuticals, an early leader in drugs that alter epigenetic targets; Eleven Biotherapeutics, a new protein drug developer; Genetix Pharma, a developer of new gene therapies; and Zafgen, the company with a novel approach for treating severe obesity.
One of the keys to Third Rock’s strategy, as partner Kevin Starr explained to me in this in-depth feature in September 2008, is that the firm’s partners don’t just attend one board meeting a month—they tend to get intimately involved in running the operations of the startups in their earliest days. Partly because of that close involvement, Starr emphasized to me in that interview that Third Rock wanted all of its investments to be in Boston so that the partners wouldn’t have to waste time on flying around the country to meet all their companies.
Starr didn’t immediately respond to an e-mailed request for comment today about the firm’s planned expansion to the Bay Area, but I’ll update this space if I hear more from him.
That philosophy appears to have changed over time as Third Rock has had some more success. The firm has already invested in a couple of Bay Area companies, San Francisco-based Ablexis (which I profiled in these pages recently), and Afferent Pharma. Ablexis CEO Larry Green, when asked about dealing with Third Rock, noted that he’s known Levin for years, going back to when Levin was a co-founder of Fremont, CA-based Abgenix. Third Rock partner Bob Tepper also has strong Bay Area roots, as a co-founder of Cell Genesys, and later Abgenix. Levin’s time in the Bay Area also goes way back, to when he co-founded the Mayfield Fund’s life sciences investing efforts, and was founding CEO of Tularik and Cell Genesys.
Now that Third Rock has expanded beyond its roots in Boston to the world’s other major hub of biotech, San Francisco, it will be interesting to see if the kinds of technologies it backs are any different. While a lot of VC firms are licking their wounds from bad bets of the past and trying to find ways to play it safe, Third Rock hasn’t shown any interest in retrenching. While others have sought to repurpose old assets from Big Pharma, Third Rock has spent time talking to Big Pharma about what kinds of technologies emerging in academia could be truly disruptive over the next two decades. The firm has apparently made enough promising bets that it is now out seeking to raise a second fund, potentially worth as much as $400 million, according to an April regulatory filing. Now that Xconomy is also in the Bay Area, I will be watching closely to see if these guys continue to get their fingers on some of the big ideas, with classic boom or bust potential, coming out of the Bay Area.