The ‘Looking for Some (More) of This?’ series is focused upon the tracking of newly formed venture funds who are financing biomedical innovation.

Whilst many continue to pound the drum echoing the sentiment that limited partners remain sidelined, here is additional demonstration of continued new capital formation in the life science sector, courtesy of OrbiMed, who last month introduced the new $550M Caduceus Fund IV; exceeding the original close target by $50M! [Additional new fund closes have been previously covered by Life Science Deal Flow HERE].

The Fund intends to invest 60% in biotechnology, 30% in medical devices and 10% in diagnostics, backing some 25 to 30 companies while deploying the capital over a three to five year period with total investments ranging from $10 to $50M.

“OrbiMed is going to continue to bridge novelty and commercial reality, overall we are trying to find companies that are innovative, but also of strategic value to the industry.”
Carl Gordon – Founding Managing Partner

The infinite loop model in venture is one in which success begets success and thus a string of successful exits for OrbiMed such as CoGenesys selling to Teva for $400M, Cerexa selling to Forest Labs for $480 and Peninsula Pharma selling to J&J for $245M, certainly made fundraising for Caduceus IV that much ‘easier’. In addition to the M&A activity portfolio holdings who floated public offerings included Abgenix, Given Imaging, and LifeCell. Therefore OrbiMed was able to rely upon participation from existing limited partners to the tune of $440M or 80% and the remaining $110M or 20% came from new investors (according to OrbiMed). LP’s in Caduceus IV include fund-of-funds, university endowments, foundations, corporate and municipal pensions, and global sovereign funds.

“We’re willing to make a bunch of small bets [on early-stage companies], over-fund our winners and kill our losers early.”
Jonathan Silverstein – General Partner

Interestingly the fund is agnostic to investment stage with expectations of 20% being allocated to early-stage, 60% to mid-stage and get this 20%, or over $100M, to finance PIPES, a trend in funds that appears to be on the rise.