Exits hat-trick proves healthy appetite for life sciences

Francinia Protti-Alvarez
04 February 2010

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Last December's flotation of Life Sciences Partners (LSP)- and Sofinnova Partners-backed pecialty pharmaceutical company Movetis showed that patience pays in life sciences businesses: the company raised almost €100m it targeted for its flotation on Euronext Brussels, making it the largest IPO in the life sciences sector on this bourse.

"What this means is that even in the current market there is always appetite for good companies," says John de Koning, partner at LSP.LSP and Sofinnova first invested in Movetis in 2007 when they co-led a €49m series-A financing round alongside KBC Private Equity, KBC Private Equity Fund Biotech, Gimv, BIP Investment Partners and Quest for Growth.

Movartis was one of a handful of sizeable exits in the life sciences sector last year. The appetite de Koning refers to is not limited to institutional money; trade buyers are also in on the game.

In September SV Life Sciences, Clarus Ventures, HBM BioVentures, HBM BioCapital, Novartis Bioventures, BioMedinvest and VI Partners sold their stakes in Swiss pharma ESBATech AG to strategic investor Alcon Inc for €150m cash as well as $439m in milestone payments. A month later, a syndicate of investors, including Gimv and Sofinnova, divested French ocular specialist Fovea Pharmaceuticals to Sanofi-Aventis for a hefty €370m.

But trade buyers in the sector don't only play a part as an exit route; they can also play a role as co-investors. Earlier this week, Dutch biotech firm Merus closed a €21.7m series-B round co-led by LSP, Novartis Option Fund, Pfizer and Bay City Capital. Alongside this financing, Merus also entered into an agreement with the Novartis Option Fund for an exclusive license to one of Merus' oncology programmes totalling over $200m, plus royalties.

This interest by pharmaceutical companies form an inherent part of the company development fabric, particularly nowadays. "Even in the Netherlands where there are relatively many seed funds investing in start-ups and university spin-offs, pharmaceutical companies are actively seeking out interesting early-stage projects in which to invest," notes de Koning.