Healthcare-focused Foresite Capital raises $668 mln for data-driven approach

Foresite Capital, which uses a data-driven approach to its multistage healthcare and life-sciences investments, has raised $668 million for its fourth fund.

Founder and CEO Jim Tananbaum tells VCJ that the San Francisco firm aimed to raise $650 million but closed 3 percent higher, having added new LPs as well as a “significant representation of existing investors,” including university endowments, pension funds, insurers and foundations.

Foresite was founded in 2011 and raised its first institutional fund in 2013. With the close of Fund IV, it now has $2 billion of assets under management.

The firm invests in drug development, sequencing, platforms and healthcare solutions in a variety of specialties. The firm will back about a dozen companies a year and is focused on the U.S. market “at the moment,” says Tananbaum, who is a physician.

Foresite sets itself apart by using various datasets, including R&D and patient analysis, as well as analysis of cost, benefits to patients and compliance issues.

“Our data approach helps us calibrate investment opportunities and diseases that are not well-treated,” Tananbaum said.

The firm takes referrals and other meetings, the CEO says, but “with Fund IV we are continuing our thesis that the future of medicine will be defined by data.”

Tananbaum also says Foresite is not necessarily looking to exit the companies. “We don’t see an IPO as the endgame,” he said. Instead, the firm aims to bring products to market and have the portfolio companies become self-sustaining businesses.

Last year, one of its portfolio companies, Aerie Pharmaceuticals, launched what Tananbaum described as the first new class of glaucoma products in 20 years.

Another portfolio company, 10x Genomics, has a platform to enable researchers to sequence every cell in a sample. That compares with the current standard, which is to sequence the average of all genetic material in a sample.

Portfolio company Insmed focuses on a form of tuberculosis that attacks people with thickened airways and for which there is no treatment, Tananbaum says. “We believe it will significantly change lives,” he says.

Tananbaum says he expects the firm’s portfolio companies to bring six products to market in the next year.

Before founding Foresite, Tananbaum co-founded Prospect Venture Partners and was a partner with Sierra Ventures.

Foresite expanded its leadership team by adding Vik Bajaj last year. He joins Managing Directors Matt Buten, Dorothy Margolskee, Dennis Ryan and Brett Zbar.

Foresite Capital Founder and CEO Jim Tananbaum. Photo by Elisabeth Fall at FallFoto and provided courtesy of Foresite.