Sofimac Investment Managers will increasingly focus on the health sector in the years to come. The French society of capital investment, specialized in the financing of SMES, is preparing to launch a fund dedicated to life sciences with $ 200 million in the United States. Named Crosslife, it will be managed by in partnership with Bay City Capital, a private equity firm american manager 1.5 billion euros of assets, which focuses on investments in healthcare companies.
“Bay City does not put money in Crosslife. But with this partnership, the latter will be a key interlocutor when one wants to bring a French company in the United States. We hope to have access to its underwriters, us and the Middle East, which will help to internationalise the biotech French”, explains Pascal Voulton, chairman of the management board of Sofimac Investment Managers, at a press conference on Monday 2 October. The French company management hopes to put in place this fund in the first half of 2018.
“It will be predominantly French, but should be opened up to foreign capital,” says the officer.
Avoid “valley of death” for biotech with high potential
“Our management company is well-equipped for the level of funding to boot, but we want to go further”, underlines François Miceli, member of the board of Sofimac Partners. The fund Crosslife aims to invest at all stages of development of biotech, in particular, the steps from the exercise of series A (step that comes after the boot phase) up to the stock market, or even send new financing after an ipo. The “tickets” awarded to biotech firms ‘could reach 15 to 20 million euros”, says François Miceli.
To be clear, the goal of Sofimac is to support companies from the life sciences with high potential, from the beginning to the end of the financing chain, and this, in order to avoid the “valley of death” – a period following the boot phase, during which the company, blocked by lack of funding, is in danger of disappearing, depriving thus potentially the risk capital for a return on investment. Biotech, as a result of their long phases risky devoted to R and D, and their financial needs consistent are particularly concerned by this phenomenon. Achieve the market often takes at least ten years for a drug, and the rate of failures during the clinical trials of phases I to III scores of over 90%, according to the Leem.
“Companies with high potential with a seed fund might find itself in a stalemate in France. There is a portfolio of biotechs with very good quality in the country, but they have failed to develop due to a lack of interim financing, in particular,” recalls Pascal Voulton.
According to the “Panorama of 2016, the industry of life sciences in France”, prepared by France Biotech, 67% of French companies surveyed are seeking funding to conduct clinical trials, which can cost several tens of millions of euros. And for 46% of the biotech firms, it is the number one concern.
For Pascal Voulton, the companies in lack of funding can also be transferred or, at best, listed. But, even in this case, the risk of the “valley of death” remains present, the judge does it, hence the need to continue to accompany them.
“Companies that introduce Stock in the index Next Biotech to find 30 million euros can experience a dangerous cycle. The sum is not enough for a development up to the marketing, and when these biotech firms in search of new funding is addressed to the american funds, they will be less interested because of their low valuation.”
Sofimac is aimed at the billion euros of assets under management
Sofimac favours internationalisation, which will come primarily from the United States. The French fund does not ogle the chinese market, for example.
“50% of the biotech firms are located in the United States. Be present there is a key to the success”, adds Pascal Voulton.
Today, Sofimac Investment Managers, manages more than 750 million euros of assets. With the creation of this new fund, the French society of investment capital expected to surpass the one billion euros of assets under management as of next year.