Foresite Capital is launching its third fund in as many years. It has closed the $450 million Foresite Capital Fund III, bringing the healthcare-focused firm’s assets to more than $1 billion, the company said in a statement today.
With its new fund, Foresite, which has offices in San Francisco and New York, aims to invest in the same type of companies it has previously: late-stage biotechs and medical device makers that are developing novel products in fields ranging from immunology to genomics. These types of companies continue to be ripe for investment because of recent scientific advances and better regulatory conditions, says Christine Aylward, a managing director at Foresite.
“Real, working products are catching up with advances in technology,” Aylward says. “We are very excited about what we’re seeing on the horizon from a deal perspective, and our existing portfolio.”
Regulatory changes at the FDA, such as fast-track and breakthrough designations, have made both private and public healthcare markets attractive, Aylward says. And with its prior two funds, Foresite has found success in both.
The firm was founded and headed by biotech veteran and Theravance (NASDAQ: THRX) co-founder Jim Tananbaum in 2011. Last year, it announced the $300 million Foresite Capital Fund II, and immediately put some of the money to work. It invested $57 million as part of a $200 million equity financing round for Hayward, CA- and Boston-based Intarcia Therapeutics and then put $18 million into Universal American (NYSE: UAM), which provides health benefits to people with Medicare.
Intarcia is developing a device for diabetes called ITCA 650, an implantable pump that is in Phase 3 studies and is designed to control blood sugar by secreting the diabetes drug exenatide. The company is also one of Foresite’s largest positions and an example of Foresite’s strategy to invest in the same company through its multiple funds—“leaning into companies that have enduring value,” Aylward says.
Intarcia is still private, and raised a $225 million round of financing from an undisclosed group of investors, who received convertible notes and potential royalties on the device.
In 2013, Foresite raised $100 million for Foresite Capital Fund I, from which it invested in companies including Epizyme (NASDAQ: EPZM), Ambit Biosciences (NASDAQ: AMBI), and Karyopharm (NASDAQ: KPTI).
Foresite has remained active since. The firm invested in Protagonist Therapeutics’ $40 million Series C round earlier this month. The company is developing therapeutics targeting irritable bowel disease, and is using peptides that it hopes can be swallowed like pills instead of injected. The funding is paying for a Phase 1 trial.
A few months after raising $80 million in a Series B financing from Foresite and other investors, Aimmune Therapeutics announced at the start of July it is hoping to raise as much as $115 million in an initial public offering. The Brisbane, CA-based company, which changed its name to Aimmune from Allergen Research Corp. in May, tries to desensitize patients who are allergic to products like peanuts by exposing them to the allergens with a pharmaceutical-grade therapy.
10X Genomics, a Pleasanton, CA-based company with a genetic sequencing technology, is another recent investment that Foresite believes has great promise, Aylward says. The firm led the $55 million Series B round for 10X in December, and participated in the Series A in November 2013.
Foresite has also made investments through numerous special purpose vehicles, the company said. It typically invests anywhere from $10 million to $100 million in each deal, Aylward says.