Westlake Village Biopartners, the California-based venture capital firm, said Monday it has raised another $450 million to invest in early-stage biotechnology companies.
The fund is Westlake’s third, and brings the total raised by the firm since its launch in 2018 to $1.3 billion. Westlake currently has 20 biotech startups in its portfolio and expects to invest in roughly a dozen more with the fresh capital.
The fund’s close comes during a protracted down period in the biotech stock market that, for many young drug companies, has made securing more money difficult. Over the past two years, fundraising challenges have forced scores of biotechs to lay off staff, pare down research or enact broad-scale restructurings.
Still, venture capitalists focused on the life sciences have been able to raise additional funding. Arch Venture Partners, which has backed companies like Illumina, Alnylam Pharmaceuticals and Juno Therapeutics, last summer closed its largest fund yet. Billions more have been raised this year across existing and newly formed firms like Dimension and Cure Ventures.
Westlake, too, has continued to invest despite the turbulent market. Most of the limited partners that previously invested with the firm returned to participate in its latest round, which Westlake said drew more interest than initially expected. These partners are primarily university endowments and foundations.
To Beth Seidenberg, Westlake’s founding managing director, the response affirms that investors support how her firm deploys capital and supports new drug developers.
“As the market conditions got tighter and tighter, our entrepreneurs have been able to extend their runways,” she said.
Seidenberg argues that Westlake’s portfolio companies, by focusing on advancing science rather than market conditions, have been able to do “extensive” business development deals to bring in nondilutive capital. “Our lesson is: just stick with the fundamentals and don't get caught up in market frenzy.”
That doesn’t mean Westlake-backed companies haven’t hit setbacks. The gene therapy developer Capsida Biotherapeutics, for example, turned to layoffs just a few months after entering separate partnership deals with AbbVie and Eli Lilly’s Prevail.
Yet, one of Westlake’s startups, Acelyrin, in May raised $540 million through an upsized initial public offering — a rare occurrence this year. Another, Tmunity, was bought by Gilead Sciences’ cell therapy unit.
Seidenberg estimates that the biotechs backed from earlier funds are generally on track to either go public or get acquired roughly four to five years after Westlake’s initial investments.
“The consistency is a big part of [our limited partners’] confidence,” Seidenberg said. “They see us providing liquidity at the right time.”
The firm has also been growing its team. It brought on former 5AM Ventures partner Mira Chaurushiya in early 2022. And David Allison, who worked alongside Chaurushiya at 5AM, was just appointed a managing director.
With the new fund, Westlake will be “doubling down,” according to Chaurushiya. The firm remains interested in a range of technologies and therapeutic areas, from immune and cardiovascular to cancer and the nervous system. It’s also open to investing in both “platform” companies and those built around single assets, so long as they have a “line of sight” to getting a medicine on the market.
There are some preferences, however. Allison said the Westlake team is particularly intrigued by the possibility of treating more commonplace diseases with technologies like gene editing and cell therapy — which, so far, have been mostly directed against rare conditions.
“What we're incredibly excited about is these modalities becom[ing] more mainstream,” Allison said. “As pharma gets more comfortable with them, as biotech companies get more comfortable with them, it opens up a whole new universe for therapeutic potentials.”
Westlake also touts a “CEO-first” strategy, meaning many of its companies are formed around a specific researcher or executive at the helm. Chaurushiya said Westlake has already identified and is in discussions with two to three people who the firm would like to invest in with its new fund.