Manuel Lopez-Figueroa, Vice President at Bay City Capital talks about their Investment philosophy and shares his views on the current climate of investment in biotechnology




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Video title: Manuel Lopez-Figueroa, Vice President at Bay City Capital talks about their Investment philosophy and shares his views on the current climate of investment in biotechnology
Released on: May 25, 2011. © PharmaTelevision Ltd
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In this episode of PharmaTelevision News Review, Fintan Walton talks to Manuel Lopez-Figueroa, Vice President at Bay City Capital
Types of investments
Fintan Walton:
Hello and welcome to PharmaTelevision News Review here at BIO-Europe in Milan, in spring 2011. On this show I have Manuel Lopez-Figueroa, who is Vice President at Bay City Capital based in San Francisco, welcome to the show.
Manuel Lopez-Figueroa:
Good morning and thank you.
Fintan Walton:
Bay City Capital is a famous I suppose venture capital firm that has focused on the life sciences your role there is Vice President, could you describe to us the funds that Bay City Capital has under management and the types of investments that Bay City Capital normally does?
Manuel Lopez-Figueroa:
Yes, so basically helping around since 1997, we have five funds which are total of 1.7 billion under management, we have invested in about 85 companies and I can tell you little more about our people and our strategy.
Fintan Walton:
Sure, so the types of investments that you typically deal with your funds?
Manuel Lopez-Figueroa:
So within this 85 companies that we have invested we have invested in a spectrum of companies starting from Seeds or companies that we have formed ourselves, we have invested in early stage to the point that about 50% of our companies at the time of inception where of that stage. We also invest in companies that there are in Series B, Series C as well as later stage companies and we also have investments in public companies we do types, in terms of the areas that we invest we cover probably all of the areas of life sciences from CNS which is my area of expertise to oncology, cardiovascular you name it, we also invest in medical devices and we also invest in diagnostics.
Investment philosophy
Fintan Walton:
Right so would Bay City Capital typically follow a company through various series or do you just dip in and dip out of investments?
Manuel Lopez-Figueroa:
Now our investment philosophy is that we wanna be the lead or colleague in the investment and we normally take a board seat in the companies we invest.
Fintan Walton:
Right, so you closely manage the companies that you've invested?
Manuel Lopez-Figueroa:
We believe that we provide added value to the companies and we assist the companies and anything that we can do, I mean whether it is through our networks or whether we from the experience that our people have from the financial, from the scientific, or from the operating role that they have had in the over 250-years of experience that the whole management team have.
Fintan Walton:
Okay, so I mean clearly with biotechnology at the moment are you funding start-up companies or are you just continuing to fund the companies that are already established?
Manuel Lopez-Figueroa:
So as I mentioned before Bay City have history of starting a company from scratch, our 52% of our portfolio have that kind of companies we continue to do that, we are fond of innovation, we like to put teams together, we like to find what is going to be the next innovative idea that we can put a company around and then we sit those ideas, we put a scientific advisory board to that our thinking is in the right direction and hopefully we'll find the right syndicate later on to fund those companies.
Fintan Walton:
Right and the size of the funds, you've said you have got five funds typically the size of those funds are what size?
Manuel Lopez-Figueroa:
So to get an idea our last fund, fund 5 was in the year 2007 and it was $500 million.
Fintan Walton:
Right, and it's that all been invested or it's still?
Manuel Lopez-Figueroa:
No, no we still have plenty to invest.
Involvement with Neuropsychiatric Consortium
Fintan Walton:
To invest, okay. Now you've talked about innovation and one of the things that you've done and you do personally is to work with this neuropsychiatric consortium, could you tell us a bit about that consortium and why you are involved in that?
Manuel Lopez-Figueroa:
Yes, so my background as a scientist many years ago I was working in a network that was funded by Pritzker Family Fund Chicago that network became a consortium which means that the universities that were involved in these case were Stanford, Michigan, Cornell that UC Davis, UC Irvine and now Hudson Alpha have integrative research with idea of trying to find our diagnostics and therapeutics for neuropsychiatric disorders in particular depression, bipolar, schizophrenia this group that this lead by key opinion leaders in all this universities from different aspects from the clinical all the way to the genetics and molecular biology in between have worked very closely in the last 10-years funded by the Pritzker Family in trying to identify these novel targets and therapeutics that is part of the network that we use in evaluating opportunities but at the same time have been a great source of opportunities to Bay City Capital to define that one, for instance one of the BI's is in our Scientific Advisory Board, Rich Myers and another BI is in the Advisory Board of one of our portfolio companies BrainCells, so that's we have a very close relation between the innovation that takes place in academia and the kind of investments that we do.
Fintan Walton:
Right, and BrainCells is an example of where you've identified an innovation and put it into a company?
Manuel Lopez-Figueroa:
Exactly, so it was the funding that we put it into three key opinion leaders among them (indiscernable) that search the idea that neurogenesis can be used as a way of treating psychiatric disorders and cognition internally obesity we put together a team they called it (indiscernable) that evaluated this opportunity and then we syndicated with Oxford Biosciences and formed BrainCells.
Manuel Lopez views on current climate of investment in biotechnology
Fintan Walton:
Okay, so you know again the last few years has been difficult for a lot of biotechnology companies, what's Bay City Capital's view of the current climate for investment in biotechnology?
Manuel Lopez-Figueroa:
It's certainly a difficult time, but I think it's getting better and it's we see it as an opportunity. I think that there is plenty of opportunities out there we are opportunistic in that regard and we hope that we are making the right investment that provides right returns for our investors.
Co-investment with corporate venture arms
Fintan Walton:
Right, and one of the other features I suppose have emerged over the last decade and particularly in the last five-years is the emergence of pharmaceutical venture arms which now co-invest alongside businesses like yours at Bay City Capital, so do you see that as a good thing obviously it's always nice to have somebody else put some money in into an investment, but is there a proper alignment between your interests in terms of return on capital and the interests of the pharmaceutical company who is probably not looking for the same exactly the same type of return?
Manuel Lopez-Figueroa:
We like the idea of co-investing with corporate VC's, if you look at our portfolio companies and particularly the latest investments to give you some examples in Merus, we have Pfizer, we have Novartis Ventures, we have in BrainCells we have MedImmune and in Epizyme we have Astellas and Amgen. So we like the idea of incorporating corporate VC's because they provide some guidelines on what is that they would like to see to become a potential target acquisition and through the way those guidelines and the milestones that they suggest may be their way to get an exit in those companies so we like the way they do.
IPO market and strategy of exits
Fintan Walton:
Right, now the other thing of course is exits and how you exit out eventually, I mean obviously the IPO market has more or less disappeared or some trickle of IPOs attempts that IPOs but obviously one of the issues is that if you are successful in doing an IPO the share price doesn't exactly go in the right direction either, so how much change has taken place from your organizations point of view in terms of looking at exits?
Manuel Lopez-Figueroa:
You know we have probably been lucky in the last couple of months (indiscernable) to give you some examples, Epocrates is one of our portfolio companies just went public a couple of weeks ago had been the amongst one of the most successful IPOs this year in terms of acquisitions to give you another example Ion Torrent one of my investments it was acquired by Life [PharmaDeals ID = 37121] at the end of last year for 725 and we also invested in ZymoGenetics at the end of the life of that company and are seeing now very successful exit as an acquisition, so far (indiscernable) we have been lucky in the exits that our company have had, but you know I wouldn't under estimate the IPO market it is clear there have been other exits that have been as fruitful for the investors.
Fintan Walton:
Sure, right.
Manuel Lopez-Figueroa:
As one would have liked.
Fintan Walton:
Right, so the strategy for preparing a company for IPO is different to a strategy for a company that's going to exit through an acquisition?
Manuel Lopez-Figueroa:
Certainly have to prepare in a different way. I think that we obviously have to be opportunistic and make sure that we provide the direction that is best for an exit whether it's gonna be IPO, whether it is potential to acquisition and as you know those takes different paths.
Manuel Lopez's perspective: Changes and opportunities in biotech sector
Fintan Walton:
Sure, and then just finally you are here at BIO-Europe in Milan now, what's the mood are you optimistic, how would you compare your mood to say five-years ago as with about to biotech?
Manuel Lopez-Figueroa:
Well certainly I mean five-years ago I would say you know market conditions were different, there were more VCs around, there was more money around that have changed, the number of VC's are have been reduced significantly the money the amount of money around it is also small, but at the same time that presents an opportunity to us we can be more picky, we can be selective, we also try to syndicate with those groups that have enough capital which may be a handful and in terms of the quality of the investments have also changed, I mean there is obviously a spectrum here and particularly in Europe and I have find interesting opportunities, we have an investment in Holland, in Merus to give an example when I mean Europe there is always issues with evaluation, there is always issues with management there is certainly bit of discrepancy between the US and Europe, but I would say that entire Europe I mean have received a significant amount of request for meetings hard to may all those accept all those in a limited amount of time that we have here, but that's why we come very often to Europe to satisfy the spectrum of possibilities that we can see.
Fintan Walton:
Manuel, thank you very much indeed for coming on the show.
Manuel Lopez-Figueroa:
Thank you for having, pleasure.
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).
Manuel Lopez Figueroa
Vice President
Manuel Lopez-Figueroa, PhD, is Vice President at Bay City Capital and has been with the firm since July 2001. He specializes in evaluating investment opportunities with an emphasis on CNS. In addition, Dr. Lopez is the Scientific Liaison for the Pritzker Neuropsychiatric Disorders Research Consortium, a collaborative research enterprise comprised of a group of leaders in psychiatry, neuroscience and genetics from Stanford University, University of Michigan, Cornell University and the Universities of California at Davis and Irvine. The consortium aims to discover the neurobiological and genetic determinants of mood disorders and schizophrenia with the goal to develop novel diagnostics and therapeutics. Dr. Lopez is responsible for planning and directing all aspects of the consortium including strategy, R&D, legal (IP & contracts) and financial, to facilitate the commercialization of discoveries to fund additional research. Dr. Lopez has over 15 years of experience in the field of Neuroscience, has won numerous awards during his academic research career, and has published extensively. He completed post-doctoral work at the University of Michigan and at the University of Copenhagen, Denmark. Dr. Lopez received a PhD in Medicine and Surgery, and a MS in Molecular and Cell Biology from the Universities of Las Palmas and Universities of La Laguna, Spain respectively.
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 commercialization.
Bay City Capital
Bay City Capital LLC (Bay City Capital) was established in 1997 for the purpose of managing investment funds in the life sciences industry. Since that date, we've managed seven venture funds representing $1.6 billion in capital invested in over 85 companies. Five of these funds are general life sciences funds, and two are sector funds.