Frazier Healthcare Partners has closed a $617 million life sciences fund, setting it up to place another set of bets spanning from company creation through public investments. Two-thirds of Frazier Life Sciences X will go into seed and series A rounds.
The tenth fund is significantly bigger than its predecessor, which topped out at $419 million in 2017. However, Dan Estes, general partner at Frazier, expects the additional funding to have little effect on the investment approach.
“It’s really an evolution of where we’ve been headed the past few funds. The larger fund should enable us to return to a 3-year cycle between fundraises, whereas the past two funds have been 2-year cycles. On the private side, we look to invest $30 million to $40 million per company over time, although we will continue to seed, incubate and invest in companies where the initial check may be much smaller,” Estes said.
One benefit of the additional money is Frazier will have the flexibility to write larger checks. Estes said Frazier will take advantage of that flexibility “where it makes sense,” pointing to opportunities to invest in late-stage assets spun out from pharma companies as an example of when having more cash to invest may be useful.
Frazier has already shown its ability to support such spinouts, notably through its work with Takeda to create Phathom Pharmaceuticals, but it is far from the only organization that wants to help pharma companies find new homes for excess assets.
“The upfront payment and investment to catalyze a large syndicated round can be competitive with our peers and other biopharmas,” Estes said.
In other cases, Frazier may use the financial flexibility to free early-stage companies from the need to bring many, or any, other investors on board. Estes sees Frazier taking advantage of that flexibility to help the startups it founds advance with just one or two investors, citing its status as the sole backer of Arcutis’ series A as an example of when going big early can pay off. Arcutis used the series A cash to generate data that set it on the path to a $100 million IPO filing.
As Frazier looks for the next Arcutis, it will focus on product-based opportunities, not platforms, and be largely agnostic to modality. Frazier is interested in hot approaches such as cell and gene therapies but also sees exciting applications of small molecules and topical formulations.
“One of the most exciting aspects of biopharmaceuticals right now is the ability to pick the modality that makes the most sense for the disease or target that you are trying to modulate. The focus is really to pick the best approach for the problem at hand, and then bring in the best possible team to help execute on a highly focused plan to reach clinical data that is meaningful,” Estes said.