VenGrowth launches fund to profit from medical tech
Focus on clinical trials: 'We will absolutely not fund research'
nationalpost.com
Jill Vardy
Financial Post
OTTAWA -- VenGrowth, one of country's largest venture capital managers, has launched a new life sciences fund it says will capitalize on the maturing medical technology sector in Canada.
Beginning this month, Ontario investors can put their money in the VenGrowth Advanced Life Sciences Fund, which will raise $50 million a year to invest in later-stage biotechnology, pharmaceuticals, medical technologies and services companies. This is VenGrowth's sixth fund, but its first to focus on life sciences.
"We now feel life sciences have matured to a point where we have a critical mass of latter-stage companies," said David Ferguson, managing general partner at Toronto-based VenGrowth.
The fund is categorized as a research-oriented investment fund and offers Ontario investors a 35% tax credit, in additional to the tax breaks offered for investing within a registered retirement savings plan.
The fund will be run by Luc Marengère, a venture manager and scientist who joined VenGrowth last summer from CDP Sofinov, a subsidiary of the Caisse de dépôt et placement du Québec.
Dr. Marengère said he has already met with about 30 prospective investee companies, and expects to put $4-million to $5-million each in seven to nine companies this year.
Dr. Marengère said most life sciences companies spend about six years proving their product in principle, one year of pre-clinical trials and then five to six years going through three phases of clinical trials before they get approval to market their products."VenGrowth is going to focus on companies with products in clinical trials and later stages of development," he said. "That exposes us to vastly less risk than in the proof-of-principle stage." It also positions VenGrowth investments for an exit with 3-5 years of the initial investment, Mr. Ferguson said.
Dr. Marengère said he believes Canada has enough later-stage companies and management teams with experience to build "outstanding life sciences companies."
"As well, an aging population, increases in health care expenditures, expedited drug approvals and climbing company valuations are factors which make the maturing life sciences sector an ideal fit for VenGrowth's later-stage investment strategy," he added.
VenGrowth, which unveiled the fund yesterday, will face competition from other big life sciences investment funds, such as Sofinov's and the Canadian Medical Discoveries Fund. But those and other medical funds tend to invest in companies at earlier stages than VenGrowth will.
"We will absolutely not fund research. We won't be putting money into opportunities coming out of universities or in the proof of principle stage. We will be financing companies with products," Dr. Marengère said.
jvardy@nationalpost.com |
