The firm also made a series of promotions, including Dan Estes to General Partner
Developing new drugs isn’t easy, or cheap; in fact, the cost of bringing a new drug to market has been estimated to be over $2 billion. Yet, that’s one of the main areas of focus for venture firm Frazier Healthcare Partners.
The firm has a dedicated life sciences team, led by Patrick Heron, James Topper and Dan Estes, investing in therapeutics-focused companies that develop and commercialize pharmaceuticals. On Thursday, Frazier announced that it made a number of promotions, including Estes, has been at the firm since 2011, to General Partner, while also unveiling that it closed its latest fund, Frazier Life Sciences X, with more than $617 million in capital commitments.
With this, the firm, which was formed 29 years ago, has now raised roughly $4.8 billion in total.
“We do two things at Frazier: we have a private equity group based up in Seattle that invests in profitable healthcare services and pharmaceutical services companies; we call it a growth buyout strategy. I work on our life sciences venture team, based in Menlo Park, and we invest in early stage companies, developing novel therapeutics,” Estes explained to me in an interview.
While this is the tenth fund for Frazier, it’s only the third that is dedicated specifically to life sciences. The first fund, raised in 2016, was $262 million, and the second was a $419 million fund raised in 2018. Prior to that, the company would invest in both prongs out of the same fund. The reason for the split, Estes said, was that the two sides of the firm had very different investing strategies.
“Creating separate funds dedicated to growth buy out and to life sciences was a function of the fact that investment strategies and mindsets are pretty different between a late stage buyout fund, and an early stage venture fund. We basically realized that to really grow the firm it made a lot more sense to separate into two separate funds,” he said, noting that have a dedicated fund also allowed the life sciences division to bring on more institutional LPs.
“A lot of the LPs who had supported us historically stuck with both strategics, but we were also able to bring in new investors in our funds who wanted specifically that strategy. In our first dedicated life sciences fund, we were able to attract some really high quality institutional investors, who have stuck with us across all of our life sciences specific funds, and, in our most recent fund, the vast majority of the fund was taken up by insiders, although we did add several high quality investors who were looking to add their exposure to this sector.”
A strategy of creating new companies
When it comes to its life sciences division, Frazier invests in three types of companies: early-stage venture, late private/public opportunities, and companies that it creates itself. The last group are generally involving spin-outs from larger biopharmaceutical companies, and they represent around half of the firm’s investments, while 30 percent are other private deals, and 20 percent are public companies.
“We are able to spin out a drug that is not being developed, for whatever reason, at a company, create a new company around it, then also bring in a team who can focus on developing that asset to make the company successful,” Estes told me.
“We’ve got a group of entrepreneurs in residence and venture partners who are focused on talking to every pharma company, understanding what’s available, sometimes even proposing drugs that are in their pipeline that we think could make sense for a new company, and then working to spin those drugs out and form new companies.”
Frazier has created 24 companies in the past 15 years, and 14 of them have been formed in just the last five years alone. One of the most recent ones, for example, was Phathom Pharmaceuticals, a spin-out from Japanese pharma company Takeda, thanks to Frazier venture partner Tachi Yamada.
“Tachi was one of the most senior R&D executives in the world. Before joining Frazier, he was the head of R&D at Takeda, so he knows the Takeda pipeline extremely well, he developed quite a few drugs in that pipeline, and one of the drugs he developed was a drug that treats acid-related gastrointestinal disorders. It basically goes after H. pylori and other very common diseases,” said Estes.
“He developed drug in Japan, and it’s an extremely good drug that treats acid-related disorders, but he also knew that Takeda was not developing this molecule in the US and Europe. That was for various reasons, but they were choosing not to do so. So, for the past few years, he has been trying to convince Takeda, now that he’s at Frazier, to spin that drug into a new company that he would help to run and get started. After several years of having this discussion, Takeda, this year, was ready to do that.”
Having that connection to Takeda gave Frazier “unique access,” and it also allowed the firm to spin out the drug with Phathom, which went public last year.
Another company that Frazier formed is one called Mavupharma, which was acquired last year by Abbvie. In this case, the idea to form the company came from one of Frazier’s clinical advisors, who often have decades of experience in the pharma space.
“One of our advisors, together with a former employee at one of our companies, came up with a target that had just been described in literature. They read journals all the time and they said, ‘We think that this target could be relevant for oncology,’ and it was in a very hot pathway at the time called STING, that we knew that if you had a drug that had a certain profile on this pathway it would be attractive,” said Estes.
Mavupharma was seeded with $1 million from Frazier, which was put toward understanding if the target was druggable, and if it would have the biological effects in cells that Frazier believed it could. Once those were proven, it was funded with a Series A round to invest more in the chemistry and biology, after which Abbvie came in and bought it.
“Ideas come from all over the place, so it’s really important to have a broad set of people who are looking, have ideas, are following the literature, and our job as investors is to pick which ideas to go after. That’s what we’ve done pretty successfully over past funds, especially life sciences funds,” said Estes.
Frazier expects to invest in around 8 to 10 companies a year, the vast majority of which will be private investments, at $30 to $40 million each.
Growing the team
In addition to promoting Estes to General Partner, Frazier also announced a series of promotions, including Jamie Brush to Partner; Gordon Empey to Partner and General Counsel; Aditya Kohli to Principal; and Liz Park to Vice President of Investor Relations.
Brush has been with Frazier since 2016, and has led investments in companies that include Krystal Biotech and Translate Bio. Empey, who joined in 2017, was previously a partner with biotechnology and technology law firm Cooley LLP, while Kohli, who joined the Frazier Life Sciences team in 2016, co-founded Phathom Pharmaceuticals and Scout Bio.
Park originally joined Frazier in 2003, and re-joined the firm in 2015, helping to raise nearly $1.3 billion across the three Life Sciences funds.
“I think Frazier is really unique in the investment world, especially in life sciences, because we are very focused on development of people, and we’re also very willing to promote people when they perform. A stat that we’re really proud of is Frazier, both on the life sciences and the growth buy out side, is that seven of the 10 partners in the firm started as associates and worked their way up. So, developing people is a huge focus of what we do,” said Estes.
“For me, going from partner to general partner, obviously I’m very thankful that the firm continues to believe in me, and has invested in my development. I’ve been involved with a number of successful deals we’ve done, and I particularly enjoy working on the early side, so Series A deals and company formation, and the promotion is an opportunity to keep doing more of that.”
Coinbase Custody selected by 21Shares for Bitcoin ETP
Today we’re proud to announce that 21Shares AG has chosen Coinbase Custody to store its digital assets for its Bitcoin ETP. 21Shares AG is listing its 21Shares Bitcoin ETP (ISIN: CH0454664001 — WKN A2T64E) on the Deutsche Börse’s Xetra electronic venue on Thursday July 2nd 2020. Coinbase Custody will serve as custodian for the underlying assets of their Bitcoin ETP.
21Shares selected Coinbase Custody after reviewing our institutional-grade offline storage solution, which includes world-class security, regulatory compliance and insurance coverage. Coinbase is committed to serving a wide spectrum of institutional clients and we are excited to be the chosen custodian for the 21Shares Bitcoin ETP, Europe’s first physically-backed bitcoin ETP.
Hany Rashwan, CEO at 21Shares AG, says, “21Shares is delighted to bring this historic product to Europe. We are honored to give investors access to the best performing asset class of the last decade and we believe the next ten years as well, through our simple, transparent, and regulated crypto ETP product suite.”
Coinbase Custody is the world’s largest and most trusted crypto custodian. To learn more about Coinbase Custody click here.
Compound (COMP) is now available on Coinbase Earn
Earn COMP while learning how to borrow crypto and earn interest with Compound
Coinbase’s mission is to create an open financial system, where anyone in the world can participate on equal terms from their computer or smartphone. To bring this vision to life, we’ll need to make blockchain technology more accessible, both in the sense of making cryptocurrencies easier to obtain and easier to understand.
Coinbase Earn is a trusted source where customers all around the world can educate themselves about new developments in crypto and earn assets as rewards. Starting today, Coinbase customers can start earning Compound (COMP) by watching lessons and completing quizzes about the Compound protocol and its governance token COMP.
Compound (COMP) is an Ethereum token that governs the autonomous Compound protocol. The protocol allows anyone to borrow and lend Ethereum tokens through a decentralized market. Lenders earn interest on the crypto they supply to the protocol and borrowers pay interest to borrow it.
The ability to earn crypto assets has become an increasingly important function in the crypto ecosystem — alongside buying, staking, voting, and mining — especially when paired with education.
Since the launch of Coinbase Earn in 2018, we’ve announced nine different assets, including 0x, Basic Attention Token, Zcash, Stellar Lumens, EOS, Dai, Tezos, Orchid and now Compound. In less than a year, asset issuers offered over $100M in crypto to distribute to our customers, and we have launched Earn internationally. As we expand globally, millions of people are gaining access to a trusted, secure, and legal bridge to the crypto economy — even if they don’t have a credit card or bank account with which to buy crypto.
Check out all Coinbase Earn campaigns through our homepage or access them directly through the Coinbase mobile app.
Coinbase receives a servicing fee from the participating asset issuer. Consideration for Coinbase Earn is wholly independent of our digital asset framework for new listings. Click here for our Earn FAQ and terms.
Compound (COMP) is now available on Coinbase
Starting today, Coinbase supports Compound (COMP) at Coinbase.com and in the Coinbase Android and iOS apps. Coinbase customers can now buy, sell, convert, send, receive, or store COMP. COMP will be available for customers in all Coinbase-supported regions, with the exception of New York state.
Compound (COMP) is an Ethereum token that governs the Compound protocol. The protocol allows anyone to supply or borrow Ethereum tokens through a decentralized market. Suppliers earn interest on the crypto they supply to the protocol and borrowers pay interest to borrow it.
One of the most common requests we hear from customers is to be able to buy and sell more cryptocurrencies on Coinbase. We published a process for listing assets, designed in part to accelerate the addition of more cryptocurrencies. We are also investing in new tools to help people understand and explore cryptocurrencies. We launched informational asset pages (see COMP here), as well as a new section of the Coinbase website to answer common questions about crypto.
You can sign up for a Coinbase account here to buy, sell, convert, send, receive, or store COMP today.
Coinbase owns COMP tokens as a result of a 2018 investment in Compound. Coinbase intends to maintain its investment in Compound for the foreseeable future and maintains internal policies that address the timing of permissible disposition of its digital assets, including COMP tokens.
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