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'Biobucks' make a return as Schroder raises $402m


Anglo-American venture capital firm Schroder Ventures Life Sciences has raised $402 million (€344m) for a new biotechnology investment vehicle, providing a powerful signal that venture capital may at last be turning its head back in the direction of the sector.

Schroder's announcement came just ahead of another fundraising, to the value of $210 million, from Canada's MDS Capital. This fund is also destined for investment in health and life sciences companies.

Venture capital funding has almost completely dried up in the last couple of years as the values of biotech stocks slumped from a peak in 2000, on the back of a string of product disappointments and the downturn in the global economy. This was also compounded by a lack of interest in the sector from the public markets.

Latterly, something of a resurgence has taken place, however, with some of biotech's major players rolling out new biological drugs. Examples include Genentech/Xoma's Raptiva (efalizumab) and Biogen's Amevive (alefacept) for psoriasis, Trimeris and Roche's Fuzeon (enfuvirtide) for HIV and Gilead's Hepsera (adefovir dipivoxil) for hepatitis B. The sector has also gained some lustre on the back of new biological treatments for cancer, highlighted at the recent American Society of Clinical Oncology meeting, which promise to breathe new life into this therapeutic category.

Schroder's International Life Sciences Fund III has just under $900 million to invest in companies, and says it is seeking out unlisted life science companies in Europe and the US, with a focus on biotech and pharma, medical devices and instruments, and healthcare information technology/services. The anticipated investment size will typically be between $5 and $20 million.

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