Biotech funder Lightstone raises another $375M for life sciences investing – BioPharma Dive

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Dive Brief:

  • Lightstone Ventures, a bi-coastal venture capital firm focused on the life sciences, said Tuesday it has raised another $375 million to invest in early-stage companies.
  • The new fund, Lightstone’s third, exceeded what the firm hoped to raise, and received “strong support” from existing limited partners as well as new ones. Lightstone says that since forming in 2012, it has raised over $850 million and invested in more than 30 companies, including ALX Oncology, Disarm Therapeutics, Ra Pharma and Tizona Therapeutics.
  • Lightstone’s latest haul adds to a flurry of big-ticket funds from venture firms focused on drug companies. This year alone saw Versant Ventures, venBio and Flagship Pioneering — the biotech incubator that founded Moderna — collectively raise billions of dollars for further investing.

Dive Insight:

For the past few years, and especially since the coronavirus pandemic put healthcare in the spotlight, investors have flocked to young biotech companies.

Their interest is largely tied to the returns these kinds of companies can make. STAT News recently reported, for example, that Flagship’s fourth fund is on track to deliver a 15-times return — a figure far higher than the typical payout for venture investing.

To turn a profit, venture firms usually need their portfolio companies to either get bought or go public through an initial public offering. In the case of biotech, acquisitions and IPOs have hit record highs in the last couple years, which has made it easier for firms to go back to investors and ask for more money. Citing data from BioCentury Online Intelligence, the journal Nature reported that venture firms raised $29 billion for biotech investing last year, up from $20 billion in 2019.

That momentum appears to be continuing into 2021 as well. Versant, which has invested in roughly 70 companies, including CRISPR Therapeutics, Five Prime Therapeutics and Audentes Therapeutics, completed a $950 million fundraise in April. Then in June, San Francisco-based venBio announced it had collected another $550 million through an oversized fund that saw interest from a “broad range” of institutional investors.

Weeks later, Flagship revealed that it had re-opened its seventh so-called “Origination Fund” and added $2.2 billion to its initial haul of $1.1 billion.

Lightstone is the latest firm to secure more money for biotech investing, with a specific focus therapeutics and medical technologies. Formed by members of the life science teams at Advanced Technology Ventures and Morgenthaler Ventures, the firm completed its first fund in 2014, raising $172 million. It then followed with a second fund in 2017, which closed at $250 million. 

In addition to the funding update, Lightstone announced Monday that it has appointed Christina Isacson as a partner and Young Kwon as an operating partner.

Isacson was a principal at Third Rock Ventures for three years, but most recently served as chief business officer for Magenta Therapeutics, a company developing treatments for blood cancers, genetic disorders and autoimmune diseases.

Kwon, meanwhile, is coming off a decade at Momenta Pharmaceuticals, which was sold to Johnson & Johnson for $6.5 billion last year. At Momenta, Kwon held leadership roles like senior vice president of corporate development and strategy and chief financial and business officer.

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