Quaker states its case

P. Sherrill Neff is prone to understatement.

“We had a strong reception from limited partners,” the co-founder of Quaker BioVentures says of the firm’s sophomore fund. The Philadelphia-based firm not only beat its target of $300 million, it beat it by a mile, raking in $420 million. Its 2001 inaugural fund totaled just $280 million.

All but two of the large institutional investors that put money into Quaker’s first fund came back for its second, and the two that didn’t are no longer making venture capital investments, Neff says. The Pennsylvania Public School Employees’ Retirement System, which was one of the lead investors in Quaker’s first fund, is also a lead investor in its second, committing $100 million to the new vehicle.

Other LPs include the Pennsylvania State Employees’ Retirement System, Dow Chemical Co. and new investor New Mexico State Investment Council.

In addition to Neff, Quaker’s investment team includes co-founders Brenda Gavin and Ira Lubert, as well as Richard Kollender, Adele Cirone Oliva, Dr. Matthew Rieke and Geeta Vemuri. (Oliva joined Quaker from Apax Partners last year.)

Neff proudly points out that the firm was able to rustle up an oversubscribed fund in a soft economic climate in which many state pension funds and other LPs are changing their allocations to alternative investments.

“I have heard stories of many investors reneging on their commitments to some funds as they adjust their allocations to alternative investments,” he says. “Thankfully, our LPs have taken notice that we have developed an excellent investment team, and we’re well-positioned to invest in this region, which is a center of life science innovation.”

Quaker focuses on life sciences companies located in the Mid-Atlantic. It backed 24 companies with its first fund and has already invested in five from its second: Argolyn BioScience, Diasome Pharmaceuticals, EKR Therapeutics, Optherion and Transave. Quaker invests in early and late stage life sciences, but puts about three-fourths of its capital into pharmaceutical companies.

Quaker’s first fund has already had three liquidity events and it has two more pending. Portfolio company Amicus Therapeutics Inc. (Nasdaq: FOLD) went public in May 2007, while Eximias Pharmaceutical Corp. was acquired in April 2006 and MedMark Inc. was bought in June 2006. Acquisitions are pending for portfolio companies BioRexis Pharmaceutical Corp. and Precision Therapeutics Inc.

Though the IPO market has been soft for VC-backed startups, Neff says that the outlook for M&A is still good, since many large pharmaceutical companies are looking to acquire early stage assets. Neff expects that trend to continue.

For example, BioRexis raised $38 million in funding from Quaker and other investors before Pfizer agreed to acquire the King of Prussia, Penn.-based biopharmaceutical company.

“With many large drug companies looking to buy, right now is not a bad time to be an early stage life sciences investor,” Neff says.




Location: Philadelphia

Founded: 2001

Team: Partners Brenda Gavin, Richard Kollender, Ira Lubert, P. Sherrill Neff, Adele Cirone Oliva, Matthew Rieke and Geeta Vemuri.

Fund name: Quaker BioVentures II

Fund size:


LPs: Pennsylvania Public School Employees’ Retirement System, Pennsylvania State Employees’ Retirement System, the Dow Chemical Co. and New Mexico State Investment Council.

Did you know? Quaker’s new fund includes $20 million from the firm’s general partners.

Source: VCJ reporting