Sofinnova heads for a healthy year of exits

Two successful exits – one of which achieved a 6.6x multiple – and two more in the pipeline should help the French venture firm push its latest fundraising effort over the finish line.

Sofinnova Partners, the Paris-headquartered venture capital firm, is heading for a record year in 2009 having agreed its second major exit.

The sale of Fovea Pharmaceuticals – worth up to €370 million if earnings milestones are met – to healthcare conglomerate Sanofi-aventis will, according to market sources, net Sofinnova 6.6 times its investment in the business. The deal represents one of the largest ever sales of a private biotech company in France.

Fovea was formed in 2005 and develops drugs for the treatment of ocular diseases. Sofinnova was one of the original seed investors in the business, participating in its creation, and at the time of the sale is its largest shareholder.

The Fovea sale follows a historic exit for Sofinnova earlier in the year. In February it sold medical device company CoreValve to trade giant Medtronic for $700 million plus additional milestone payments in the largest exit of Sofinnova’s 35-year history.

The firm is expecting to seal two more significant exits before the end of the year, said managing partner Antoine Papiernik in an interview, with term sheets signed for one exit in the IT sector. 

“All the pressure we put on our pipeline and all the pressure we put on ourselves is now bearing fruits,” he concluded, noting that LPs had in the past been impatient as the firm waited for the right moment to strike exit deals. “LPs were getting impatient, and rightly so, that [the VC industry as a whole] was just playing at science without returning the cash.”

Papiernik also noted that the Fovea sale had come about without the business being shopped by bankers.  Sanofi-aventis had identified it as a good strategic fit and approached Sofinnova, which meant it could command a high price tag. “Nothing is more expensive than that which is not for sale,” he said.

These realisations will only aid Sofinnova’s fundraising efforts. The firm is currently raising its sixth fund, for which it is targeting €300 million. Market sources say the firm has corralled €250 million and is likely to finally close the fund by the end of 2009.

Readers of PEO and sister publication Private Equity International voted Sofinnova the European Venture Capital Firm of the Year 2008.