Forbion Capital Partners: Geert-Jan Mulder. Optimising commercial potential of portfolio company's products and technologies




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Video title: Forbion Capital Partners: Geert-Jan Mulder. Optimising commercial potential of portfolio company's products and technologies
Released on: December 21, 2012. © PharmaTelevision Ltd
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In this episode of PharmaTelevision News Review, filmed at BioEurope 2012 in Hamburg, Germany, Fintan Walton talks to Geert-Jan Mulder, General Partner at Forbion Capital Partners
Forbion's funds and investment strategy
Fintan Walton:
Hello and welcome to PharmaTelevision News Review here at BioEurope, in Hamburg in 2012. On this show I have Geert-Jan Mulder, who is General Partner at Forbion Capital Partners, welcome.
Geert Jan Mulder:
Thank you.
Fintan Walton:
Forbion Capital Partners is based in the Netherlands.
Geert Jan Mulder:
Yes.
Fintan Walton:
You are obviously a venture firm, a venture capital firm, you've got a broad portfolio of investments, particularly in the life sciences, is one of the areas that you focus in, just let our audience understand a little bit about Forbion because you've obviously got a number of funds over the years, could you tell us where those funds are and what new funds you've got?
Geert Jan Mulder:
Forbion was actually spun-out in 2006 from ABN AMRO Life Sciences, which was part of ABN AMRO Capital Bank, and what we did is we took the whole portfolio with us in the form of secondary deal and raised on top of that another 100 million to start our own independent Fund which is Forbion. So we currently manage two major funds, its Forbion One and Forbion Two. Forbion Two was raised first close in 2008, second close in 2010, which is 140 million in size, and the fund one is now after the two co-investment funds we put on top of that in the order of 300 million in size.
Fintan Walton:
Okay, now what is the, what's the rationale? What's the strategy behind Forbion's investments?
Geert Jan Mulder:
Well we invest in life sciences of course as any VC, but we are looking for special deals that we think will provide great returns of the fund, and where we differentiate from other funds is that we, I think what you could call at as we take the extra mile to prepare ourselves to identify as it's, it is not unusual that we work on a specific deal for about a year, before we invest, closely with the future management of the transaction or look at assets that we find, identify through our key opinion network. Two examples of this was a spin-out that we did from Mass General Hospital in fund two, which is a company called Exosome Diagnostics, it's a diagnostics company focused on personalized medicine in cancer, and we worked with the management team that we knew already years before, for about a year until it met the entry criteria that Forbion could invest in it as a fund. Another example recently which is a deal that we haven't announced yet is based upon a collaboration with one of our senior advisors in the field of cardiology it's a spin-out from an asset from one of the leading pharmaceutical companies. And I think we spent about a year to structure it, to get the licensing agreement done, to build the new company, to structure the financial requirements, to build the development plan and source the syndicate, so we lead probably 95% of all our deals which makes us more of an active player, I would say.
Fintan Walton:
Sure, I suppose today it's difficult to do an IPO, so what sort of, has that changed the character of types of investments that you make, you are really looking now more at companies that have a greater potential to be sold as trade sale?
Geert Jan Mulder:
I think our group started to make serious investments in life sciences from on 1998 and 1999 where we started to kind of learn the business as a small group within ABN AMRO Bank. And I think within our exit strategy we never banked on these companies would go public and it would make an easy return, and if you look at the vintage years of the funds that were raised after 2001 more or less none of those had great successes only based on public offerings. So in our investment strategy we always look for what are the potential pharma buyers, what are the deliverables that they would like to see and we actively engage with them and a multiple of them to more or less verify the development plan and the regulatory endpoints, but also the feasibility which is quite important as you know time and delays are one of the biggest threats for our business. I see on the other hand some kind of positive trends recently in the IPO arena especially in the US where after a number of IPOs like the Synageva, the Sarpeta based upon more or less companies that developed themselves in the orphan drug space, I see there is a trend emerging, that there is a new interest also from crossover investor to support companies in the pre-IPO Phase in more or less kind of mezzanine rounds which we've recently seen in one of our fund one portfolios, portfolio companies called bluebird bio which just raised US$60 million with the current, with the existing investors and quite a number of crossover investors. So the window is absent in Europe as of now, but there is definitely a trend in US and what would be nice if that trend would increase the spirit around biotech deals, increase the excitement and will have an impact on more kind of M&A deals and different kind of structures and evaluations, that's lot to ask for but.
Fintan Walton:
We'll come back to that in a moment but I suppose just in terms of your co-investors, don't you have to choose them just us carefully as who you are going to invest in, because you what you don't want to happen is have a conflicting view on when you should actually cash out?
Geert Jan Mulder:
Right, that's a good point, that is partly related to the fact that also Forbion leads most of its deals, so we built a syndicate, we structure the deal which makes it more or less, you are the partner who actually sets the stage and manages the expectations and then looking for like minded investors, so it is quite important. If you are looking at deals which already have existing investors in them, which has also multiple examples in our portfolio, it's always important to spend a lot of time with what their expectations are, you know, how much they invested before and that circles back to structure which should work for everybody, right.
Focus and spreading of risk across portfolio
Fintan Walton:
Yes, the other component to all of this of course is risk and everybody talks about spreading risks, so how conscious are you in terms of your portfolio and the spread of risk across that portfolio?
Geert Jan Mulder:
What I think there is no life science portfolio without risk, and if you look at the trends that people followed in the last five to eight years, where you have seen some switches to funds that were initially early stage then moved to late stage, I think it's very difficult to kind of make money if you don't have a consistent strategy, so that's one of the things that Forbion does, so we more or less have never changed our investment strategy. So we are looking at the balance in our portfolio where we balance investing in very new emerging technologies and platforms, like for instance bluebird bio, uniQure, which is previously known as AMT, a number of other companies like the spin-out I've just told you about Exosome Diagnostics which is an early stage deal and the new kind of cancer diagnostic platform and we would level we level that risk with investments that are less risky, like for instance deals we've done in the medtech space, so the fund is 70% focused on drug development and 30% is focused on medical technologies.
Fintan Walton:
Right, now of course in the field of risk coming to pharmaceutical companies, because obviously ultimately you are transferring the risk from yourselves ultimately on to back into the pharma company on the basis that either the pharma company licenses the technology or ultimately buys the company, so how would you gauge the environment currently amongst pharmaceutical companies and their interest in the types of companies that you invest in?
Geert Jan Mulder:
I think there are some trends, but if you look at our investment strategy we always try to identify not only one but a handful of companies that could ultimately be interested in the assets we invest in, we ask them their feedback, but we ask them their feedback on multiple fronts, so development program, regulatory endpoints, strategic fit and you ultimately have to decide whether an investment opportunity would become a commercial product. So we've seen some trends in the pharmaceutical interest in more kind of structured deals, more risk averse, so deals which are not one out acquisition but deals which are structured with upfronts and milestones and so on, and although an important point is that the total value of the structures deals have actually exceeded the original you know one straight forward buy out deals, and I see there is a number of trends if the pharma industry would become more risk averse by even reducing the upfronts and putting more back loaded, I think that would jeopardize the environment in a negative way. Recently on the PharmaTelevision one of our partners, ,Venture Partner, Philip Astley-Sparke said it very nicely, he came up with the word ecosystem between pharma and VC, which I thought was a very elegant way to describe what's going on, and if you change certain things within an ecosystem actually the system might not work anymore. So if pharma we get more risk averse the VC throughput might can have get hampered, on the other hand if you look at the trends within pharma there is a big need for new innovative products, with all products going off patent, and you would wonder why they are not more aggressive in acquiring new companies and technologies.
Importance of corporate venture arms
Fintan Walton:
Right, and how important are the pharmaceutical venture arms, the corporate venture arms?
Geert Jan Mulder:
They are very important, because there has been some consolidation in the venture world in Europe, but also in the US, funds that don't exist anymore, when I started in this business 12-years ago funds that have not been able to kind of raise more money, or kind of closed smaller funds and the pharma venture groups have actually filled a gap, of ultimately the cash is required to continue the VC business, and in our most recent deals I think may be apart from one or two, in most syndicates there was a pharma partner, or recently pharma partners joined existing portfolio companies in subsequent rounds, so they are very important. They are also important because you can leverage upon their network when you are doing your due diligence and it's a clear sign of interest, and if you take the right measurements with respect to corporate governance so that they can sit on the board as being observers but they excuse themselves with respect to strategic discussions when they emerge, I think it's a very good balance. Also as of today I've heard that for instance Merck has decided to increase their commitment as a limited partner to invest in venture groups, and you've seen a number of trends there also recently which I think it's another positive sign of pharma increasing their communication and network into venture capital, yes.
Geert Jan Mulder's perspective: Future of biotech
Fintan Walton:
Sure, so in that, taking that into account obviously and also the fact that the IPO market may be coming back, have we got reason to be more optimistic?
Geert Jan Mulder:
As a venture General Partner you always have to be optimistic.
Fintan Walton:
But can you be more optimistic?
Geert Jan Mulder:
I think personally yes. I've seen a number of trends recently and what you see in a lot of these situations is that things start in the US and then emerges in Europe, a year, a year and a half later, so the interest that there is in those kind of orphan drug IPOs, as I think it's very positive sign, because if you think about the market that has been absent for the last five, six-years was the mezzanine interest in large kind of groups like Deerfield, Ramius, Fidelity, you know those kind of people investing in biotech companies with either the idea to you can bring them public or to sell them and I think that's a positive trend. I think that will also have, I personally hope that that will boost the industry and will also increase the potential value that pharma can put on the assets.
Fintan Walton:
Geert-Jan, thank you very much indeed for coming on the show.
Geert Jan Mulder:
Thank you as well, it was a pleasure being here.
Fintan Walton
Dr Fintan Walton is the Founder and CEO of PharmaVentures . After completing his doctoral research on the genetics of cell proliferation at the University of Michigan(US)and Trinity College (Dublin, Ireland), Dr Walton gained broad commercial experience in biotechnology in management positions at Bass and Celltech plc (1982-1992).
Geert Jan Mulder
General Partner
At the time of recording this PTV interview Geert Jan Mulder serves as General Partner at Forbion Capital Partners. Geert-Jan Mulder MD, co-founding partner of Forbion, is an experienced life sciences investor who led multiple deals in both Europe and the US. Geert-Jan led the firm's successful investments in Acorda Therapeutics (NASDAQ:ACOR), which went public in 2006 where he was part of the AMPYRA board panel to evaluate a new clinical endpoint in Multiple Sclerosis; and PanGenetics B.V leading their Series B and sold to Abbott for USD190 million in 2009. Other past investments include Transave, where he served on the Board of Directors until the merger with Insmed (NASDAQ:INSM) in 2010. Currently, Geert-Jan serves on the Board of Directors of bluebird bio (USA), Exosome Diagnostics GmbH (Germany), Promedior (USA) and Provesica (UK). He also acts as an observer to the board of Amakem N.V.(Belgium). In addition Geert-Jan supports various Forbion portfolio companies in their clinical development strategies and regulatory matters. His efforts have supported the development of robust development programs, IND/ NDA filings, a Special Protocol Approval (SPA), and US / EU Orphan Designations for several products.
PharmaVentures
PharmaVentures is a corporate finance and transactions advisory firm that has served hundreds of clients worldwide in relation to their strategic deal making in the pharmaceutical, life science and healthcare sectors. Our key offerings include: Transactions / deal negotiations; Product / technology valuations; Deal term advice; Due diligence & expert reports; Strategy formulation; Alliance management; and Expert opinion for litigation/arbitration cases. PharmaVentures provides the global expertise to ensure our clients generate the highest possible return on investment from all their deal making activities. We have experience of all therapeutic areas and can offer advice on both product and technology commercialisation.
Forbion Capital Partners
Forbion Capital Partners is a dedicated Life Sciences venture capital firm with offices in Naarden, The Netherlands, and Munich, Germany. Forbion invests in life sciences companies in drug discovery & development as well as medical device companies addressing substantial unmet medical needs. Forbion's investment team of nine investment professionals has built an impressive performance track record since the late nineties with successful investments in Rhein Biotech, Crucell, NeuTec, Glycart, Borean, Impella, Alantos, Acorda, Fovea, PanGenetics, Argenta Discovery and most recently BioVex and Pathway Medical. Current assets under management exceed $550M, split between four active funds and comprising some 29 promising portfolio companies. Forbion Capital Partners Fund II is supported by the European Investment Fund through its ERP and LfA facilities. Forbion co-manages Biogeneration Ventures, an early stage fund focused on (academic) spin-outs and seed investments in the Netherlands.