Frazier Life Sciences has added more than $630 million to its evergreen public fund, the firm said Wednesday.
The long-only fund, which is based in Palo Alto, CA, has been marketed to investors as a “hybrid structure to navigate volatility and liquidity in SMID-cap biotech,” according to materials posted by the New Mexico State Investment Council, which is committing up to $50 million to the public fund.
“We are seeking to strategically take advantage of market volatility,” the firm said in June in its investor presentation.
It now has $1.7 billion in total commitments after debuting with $830 million in 2021 and raising $243 million a year later.
The biotech landscape is far different than when Frazier unwrapped its public fund in the fall of 2021. In September of that year, the number of life sciences companies with a negative enterprise value was 21. As of Sept. 20 of this year, that tally stood at 133, according to a recent Stifel report.
“The number of early-stage companies going public has just exploded over the course of the last five-plus years,” general partner Jamie Brush told Endpoints News in 2021. “So the opportunity set for early-stage companies where Frazier wants to be investing has really increased on the public side.”
The biotech IPO market cratered soon after that unveiling. Since then, initial public offerings have been few and far between, though there’s been a string of debuts this fall and more interest-rate cuts could be a positive signal for the market going forward. Follow-on offerings, meanwhile, have had a “very strong year,” according to Stifel.
Frazier’s strategy
Frazier has five main strategies for the fund.
The first is “fallen angels,” which Frazier has described as companies that have “fallen out of favor but have promising assets,” like BridgeBio and Immunovant. Bain Capital Life Sciences, which just raised a $3 billion fourth fund, employs a similar strategy.
Another bucket is “proprietary information,” in which Frazier gets data that are not publicly available, as it has done in the case of Rocket Pharmaceuticals and Mirum Pharmaceuticals. The third is “structured terms” or “creative” deals.
The firm also invests in companies that are newly public like CG Oncology, which had the largest biotech IPO of the year at $380 million in January. And the final strategy is “off-the-beaten path,” or companies that are “lesser known” such as Egetis Therapeutics and Chinook Therapeutics. Novartis bought Chinook in a deal worth up to $3.5 billion last year.
Frazier has said its public fund portfolio companies have secured a dozen FDA approvals, including Acadia’s Daybue, bluebird’s three gene therapies, Iovance’s Amtagvi and Phathom’s Voquezna. Some companies have been acquired, including Iveric Bio, which sold to Astellas for $5.9 billion; Reata’s $7.3 billion exit to Biogen; Alpine Immune Sciences’ $4.9 billion sale to Vertex; and Sierra Oncology’s $1.9 billion exit to GSK.
On the venture side, Frazier last disclosed a $987 million life sciences fund in March 2022.