Canadian venture capital firm CTI Life Sciences has secured $134 million in the initial close of its second partnership, CTI II, earmarked for investments in biotherapeutics and other life sciences companies.
The result puts CTI II within reach of the $150 million target set for the fund, which is expected to wrap up by mid-2015, said Ken Pastor, co-founder and general partner of the Montréal-based firm. Initial fund capital already exceeds by 34 percent the $100 million raised in total by CTI I (2006).
Pastor said the first close was anchored by existing limited partners, the Caisse de dépôt et placement du Québec and Fonds de solidarité FTQ, which increased their commitments this time around, and by new LPs Teralys Capital and BDC Capital.
Pastor said he appreciates the “vote of confidence” obtained from new and existing backers. He believes it owes to the “superior financial performance” of CTI Life Sciences after nearly eight years of dealmaking in North American life sciences sectors.
“Our first fund has done very well, so far achieving a minimum of two times invested capital,” he said. “In the coming months, we believe it will do even better.”
Fund I’s performance to date is grounded in exits from three portfolio companies. They include the 2012 sale of Enobia Pharmaceuticals, a developer of therapies for bone disorders, to Alexion Pharmaceuticals for US$1.1 billion. Additionally, vaccines and therapeutic proteins platform Medicago was sold two years ago to Mitsubishi Tanabe Pharma for $357 million.
Pastor said Fund II will build on this track record by focusing primarily on biotherapeutics and opportunistically on medical technologies and healthcare IT. The fund will target startups that are developing assets at the pre-clinical to early clinical phase. About two-thirds of financings will be located in Québec and Canada, with the remainder located in the United States.
“We believe a key element in life sciences is the science,” he said. “With this in mind, CTI Life Sciences aims to pick high-growth companies that are able to differentiate themselves from the pack.”
Going forward, Pastor and his team will be supported by a pair of high profile hires.
Concurrent with the first close, CTI Life Sciences announced that it has recruited Janelle Anderson, managing director of Merck Research Labs Ventures Fund, the technology investment arm of U.S. pharmaceutical giant Merck. Anderson joins the firm as a partner and will operate from its newly opened offices in Boston and New York.
Additionally, CTI Life Sciences recruited a principal, Laurence Rulleau, who previously worked as vice president of business development at Québec commercialization hub Univalor.
Pastor said the recruitment of Anderson and Rulleau add to the firm’s bench strength, “giving us even greater depth in terms of science-rooted backgrounds.”
CTI Life Sciences’ other senior investment pros are Jean-François Leprince, formerly the head of Aventis Pharma Canada, and Shermaine Tilley, formerly a vice president at Canadian private equity firm DRI Capital.
The firm’s portfolio currently comprises four companies. They include Zymeworks, a developer of next-generation protein therapeutics. The Vancouver startup had an active 2014, capturing a disclosed $21.3 million in rounds involving a mix of first-time and existing VCs. Last October, it also announced an expansion of the company’s strategic partnership with U.S. healthcare provider Eli Lilly.
Pastor said he is feeling “very bullish” about future prospects for the portfolio and for the firm’s new investments.
“It is an exciting time to be investing in life sciences,” he said. “Canada’s market ecosystem has gained dynamism in the recent years, and we now have more and better-capitalized partners with which to do deals. Back in 2006, we were almost by ourselves.”
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