Clarus raises $660m for new biotech fund
Clarus Ventures, a Cambridge venture capital firm, has raised $660 million for a sizable new life sciences fund, the company plans to announce today.
It's the latest evidence investors are continuing to pour money into promising young biotechnology and medical device companies, despite worries about an economic slowdown and trouble in the financial markets.
"Venture capital is a long-term endeavor," said Clarus's managing director, Nicholas Galakatos.
In the fourth quarter of last year, venture funds raised more than $11 billion, the second-highest tally in the past two years, with much of the money earmarked for life sciences and healthcare, according to the National Venture Capital Association and Thomson Financial.
Indeed, in the fourth quarter, nearly one-third of the VC money invested in companies went to biotech and medical device makers, according to a report prepared by the association, Thomson, and the accounting firm PricewaterhouseCoopers.
Despite the slowdown, biotech and medical device makers have continued to see strong demand for their products. And large pharmaceutical companies have continued to shell out billions of dollars to license promising new drugs from smaller biotech companies to replenish their product pipelines.
In late 2005, Clarus launched a $500 million biotechnology venture fund. But Galakatos said it has already committed 90 percent of that money, spurring it to launch a second fund.
Other major players abound.
Last fall, Boston's Third Rock Ventures raised $378 million to focus on early-stage life sciences companies in the Boston area.
Polaris Venture Partners in Waltham frequently taps its $1 billion fund for life sciences investments.
And MPM Capital, which has a Boston office, launched a $550 million life sciences fund in mid-2006.
In 2005, Galakatos and five other partners left MPM to launch Clarus. MPM, Third Rock, and Polaris partners declined to comment or could not be reached.
Galakatos said Clarus plans to invest the $660 million over the next three years. It plans to invest $20 million to $60 million in each company. But Galakatos said it invests in both early-stage firms and more mature businesses that are already generating profits, as well as companies in between.
Clarus has previously invested in a number of companies, including Hypnion Inc. in Lexington, which was sold to Eli Lilly & Co. for $315 million last year. But many of the companies are based outside of New England.
Galakatos said the $660 million fund is backed mainly by large institutional investors, including university endowments and pension funds.
Todd Wallack can be reached at twallack@globe.com. 