Sofinnova Ventures raises $440m for life sciences

The Silicon Valley firm increased the hard-cap on its eighth fund after racing toward its target by the first close earlier this year.

Sofinnova Ventures has closed its eighth fund on $440 million that will exclusively focus on life science companies.

The firm launched the fund around March and by July had raced toward its target, collecting $250 million. Sofinnova got permission from its limited partners to expand the fund’s hard-cap beyond the original $400 million, according to Jim Healy, a Sofinnova general partner.

“We blew through the target early and came in heavily over-subscribed,” Healy told Private Equity International in a recent interview. A large portion of existing investors re-committed to Fund VIII, and the firm added a few “blue chip LPs” to the mix, according to Jennifer James, vice president of marketing and investor relations with Sofinnova.

Fund VIII, unlike prior funds, will only invest in later stage healthcare companies, with a specific focus on clinical stage drug development and spin-outs. The fund will focus on investments in the US and Europe.

We blew through the target early and came in heavily over-subscribed.

Jim Healy

In general, the firm buys products out of large pharmaceutical companies, spins them out into independent companies and works to guide them through the regulatory trial process.

“It’s all about trying to mitigate the clinical and regulatory risk associated with developing drugs,” Healy said. “[The strategy] has allowed us to generate excellent returns for our investors.” The firm has a “strong technical team” that has been able to “navigate the clinical and regulatory landscape to benefit our investors”, Healy said. On average, the firm holds companies for about three years and then tries to exit through trade sales or initial public offerings.

The healthcare landscape in the US presents some great opportunities for investors.

“Macro-demographics bode well for healthcare,” Healy said. The aging population, the increasing incidence and prevalence of diseases associated with aging, combine for “large market opportunities”.

The firm’s most recent four IPOs and exits have produced a total return multiple of about 5x, Healy said. The transactions include Anthera, which went public on the Nasdaq last year at $7.33 per share and was trading at $5.79 per share by 14 October, and Belgium drug-maker Movetis, which was acquired by British drug-maker Shire for €428 million last year.

Sofinnova Ventures has a sister firm, Sofinnova Partners, which is based in France.