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Fresh $668 million Foresite Capital biotech venture fund aims to quench hunger for data, target university startups

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October 18-20, 2023 / Tucson, AZ
The annual summit for research institution gap fund and accelerator programs, including proof of concept programs, startup accelerators, and university venture funds

The Story

A San Francisco venture capital firm backing data-intensive approaches to developing new drugs has raised a $668 million fund that it looks to turn loose on new ways to marry data and biology to bring therapies to market faster.

Foresite Capital, whose recent investments include the machine learning drug development company Insitro, recent IPO Arcus Biosciences Inc. (NYSE: RCUS) of Hayward and Pleasanton sequencing company 10X Genomics Inc., said its fourth fund will focus on companies with “technical innovations” tackling knotty health care issues, such as glaucoma, diabetes and migraines.

Foresite targeted a $650 million fund, said founder, managing director and CEO Jim Tananbaum. Its three previous funds, starting in 2013, had raised some $850 million total.

“The dots have been going in the right direction,” Tananbaum said.

Foresite’s new fund emerges at a time where venture capital firms are throwing monster rounds at life sciences startups with little human clinical data but the promise of disrupting a disease area. ARCH Venture Partners, for example, participated in the $217 million Series A round for neurodegenerative drug developer Denali Therapeutics Inc. of South San Francisco, which went public last year, and the $600 million raised by San Francisco infectious diseases startup Vir Biotechnology Inc.

“Capitalization is a success factor in health care,” Tananbaum said. “We’re deploying capital at a fairly standard rate, and what this fund allows us to do is stay out in the market a little longer.”

Foresite’s first fund of $100 million was open nine months, the second fund of $300 million was deployed over 20 months, and the third fund of $450 million is a 30-month endeavor. Fund four is meant to last three or four years, Tananbaum said.

“We can stay with those companies longer,” he said, noting that Foresite has been with single-cell sequencing technology company 10X Genomics since its Series A round in 2013 through its Series C two years ago. “Our view is to set up and stay with companies a very, very long time.”

Key to that timeline is data. That means investing in companies with deep information, including claims data, to figure out how to get their drugs to the right patients at the right time — the core of personalized medicine — as well as turning data into machine learning methods to make drug development more efficient, such as startup Insitro.

In the capital-intensive life sciences arena, Foresite doesn’t see any problem finding takers for the fund, but Tananbaum said more-sophisticated entrepreneurs and more-efficient development of technologies will lead to better deal flows. University spinouts, for example, are standing on the shoulders of previous basic biology work and, as a result, don’t have to spend as much time translating that science into a potential commercial drug.

“Most of our entrepreneurs come to us saying, ‘Here’s the insight, here are the licenses and here’s the application, and here’s what it will take to bring it to market,'” Tananbaum said.

Yet even as venture capital firms raise new, large funds, the amount of capital in biotech is relatively small compared to the tech sector, especially since health care represents 20 percent of the U.S. gross domestic product, Tananbaum said. Where turnover of products is common in tech, though, health care innovation is a slow process — the industry-cited norm is it takes more than $1 billion and a dozen years to take a drug from lab bench to patient bedside.

The combination of biology, data and learning how to efficiently turn unique insights into commercial products will bring more personalized treatments to the market, Tananbaum said.

“Over the next decade,” he said, “the rules are going to be different.”


Source: Fresh $668 million Foresite Capital biotech venture fund aims to quench hunger for data – San Francisco Business Times

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