The CipherBio List of Top Life Science Investors in 2019 and 2020

By Matthew Gibbs CipherBio@svb and Ryan Roller @RyanRoller Director of SVB Life Sciences.

Top Companies

2019 was an outstanding year for the Life Science sector. Out of the 10 top performing initial public offerings (IPOs) in 2019 in terms of their returns, almost all companies were life science companies (including Karuna Therapeutics at the top, followed by NextCure, Applied Therapeutics, InMode, and Turning Point Therapeutics). This is quite a leap from 2018 in which the top performing IPOs were carried out mostly by cloud-services and ERP software companies, among others. This leap could not have happened without the investors who made bold but wise capital allocation decisions.

In this article – the first of two – we will give due credit to the investors who backed some of the top biotech companies and management teams. In the second article, we will focus on the entrepreneurs/founders and CEOs who rolled up their sleeves and built those companies from the ground up. Together, those investors and founders made 2019 a spectacular year in which life science companies could generate significant alpha.CUMULATIVE INDEX PERFORMANCE — GROSS RETURNS (USD) (APR 2005 – APR 2020)

Thus far in 2020, many public life science companies have been performing well despite jittery market conditions. At the height of the COVID-19 pandemic, many analysts spoke of an expected V shaped recovery. This recovery is perhaps most pronounced in the life science sector. Although the MSCI World Health Care Index had dropped in February and March 2020, it has returned to pre-pandemic levels and has retraced 100% of the decline. This is a far better recovery than that of the S&P 500 which retraced approximately 61 percent of the losses. Although many healthcare companies declined in price and then recovered, some only spiked up, showcasing the potential of life science companies in times of crisis.

Below we highlight the top performing public life science companies from an investment standpoint. We look at companies that returned top dollar on their capital and exceeded $1 Billion in valuation, which reflects investment prowess from the VCs and Corporate VCs that saw promise in them. Those companies are a testament of the investors’ abilities to make big and courageous bets that pay off handsomely.

1. Moderna (Nasdaq: MRNA, market capitalization: approximately $26.5B)

At the top of the list comes Moderna, a Massachusetts-based company that devises therapies based on instructions from mRNA. It has been among the earliest companies to work on a vaccine against COVID-19, and its stock soared after it received federal funding to do so and shipped the first potential vaccine for human testing.

Noubar Afeyan | Top Life Science Investor 2019-2020
Noubar Afeyan

Moderna was co-founded by Noubar Afeyan and Robert Langer. Noubar is the CEO and Founder of Flagship Pioneering, a venture capital investment fund that invests in companies that help advance human health. Flagship has helped build and supported over 100 science-based innovative companies, which together have an aggregate value of over $30 billion. Afeyan is currently serving on the board of Moderna.

Bob Langer
Bob Langer

Bob Langer, is one of the 12 Institute Professors at MIT.  Langer is the most cited engineer in history, and has a lab at MIT department of chemical engineering with his name on it: Langer Lab. He was named the Edison of medicine as he has more than 1260 issued and pending patents in his name. In 2019, he was awarded the Dreyfus prize in Chemical sciences, and in 2020 he won the Maurice Marie-Janot award. These are only a few of the over 200 major awards he has received. Forbes magazine named him as one of the 25 most important individuals in the biotech field in the world. Bob Langer’s 3.2% holding of Moderna stock, including stock options, rose to $1.4B in value.

Since its IPO in late 2018, Moderna has managed to more than double its stock price and market valuation. This is on top of the fact that its IPO was the largest ever for a biotech company raising $600M. Today, its market capitalization is around $26.5 billion. Its one year return is a staggering 82%, largely driven by the optimism around its efforts to manufacture a vaccine against the novel coronavirus.

Timothy Springer | Top Life Science Investor 2019-2020
Timothy Springer

Fidelity Management and Research Company and BlackRock Funds Advisors are among the holders of the company’s shares. Moreover, Harvard Professor, Timothy Springer saw a staggering 17,000% return from the spike in the stock price as he was among the early holders of Moderna’s shares. The spike increased the wealth of the already rich academic by $400 million and made his net worth $1 billion. Springer recently won the Gairdner Award, which is often referred to as the Canadian Nobel, for his discovery of the first immune system adhesion molecules.

2. BioNTech (Nasdaq: BNTX, market capitalization: approximately $11.7B)

BioNTech, a Germany-based biotech which provides individualized cancer treatments, launched its IPO in October 2019. The company then sold 10 million American depositary shares (ADS) at $15 per share, which valued the company at $3.39 billion. Since the IPO, the stock price has increased in value and now the company has a market capitalization of approximately $11.7 billion, which represents a 200% return on investment. One of the key factors behind the spike in the price has been the cooperation between BioNTech and Pfizer on a vaccine against the COVID-19. The two partnering companies began the trials in early May. If successful, they would commercialize the vaccine together.

Michael Motschmann | Top Life Science Investor 2019-2020
Michael Motschmann

Currently, Invus Public equities Advisors, Fidelity Management and Research company, Platinum Investment Management, and Redmile Group LLC are among the owners of BioNTech. Those four owners were among the investors that backed the company in its series B financing round, along with Mirae Asset Financial Group, Jebsen Asset Management, BVCF, and Athena Capital. Janus Henderson Ventures, Invus, and MIG AG were among the backers in series A financing. Michael Motschmann is a General Partner and a co-founder of MIG AG.

3. 10x Genomics (Nasdaq: TXG, market capitalization: $7.6 billion)

10X Genomics is a California-based biotech company that makes gene sequencing technologies and tools and equipment for laboratories to conduct single cell analysis. It conducts research in life sciences in general, including oncology, immunology, and neuroscience. The company was listed in September 2019 on Nasdaq with an initial price of $39 per share. However, it did not take long before the share price spiked and then fluctuated, to trade today around $79, making its market capitalization approximately $7.6 billion. Higher revenues and higher profit margins were among the factors behind the upward move.

Since its early start the company has had many backers including Meritech Capital, Wells Fargo, Paladin Capital, and Fidelity Management and Research Company. Foresite Capital was a significant investor in 10X Genomics since the Series A financings and led the Series B financings in December 2014. Jim Tananbaum led the investment for Foresite Capital.

Its board of directors includes Dr Bryan Roberts from Venrock Associates, Kimberly J. Popovits from the Clinical Laboratory associations and California Biomedical Innovation alliance, and John R. Stuelpnagel from Element Biosciences, Inc,.

Dr Bryan Roberts | Top Life Science Investor 2019-2020
Dr. Bryan Roberts

Dr. Bryan Roberts holds a Ph.d in Chemistry and Chemical Biology from Harvard University, and  invests across the healthcare sector with an impressive financial track record, as he was involved in more than one deal on this list. He favors first time entrepreneurs as they tend to have a longer time horizon and thus are likely to be more committed. He is among the top 100 tech investors in the world, according to Forbes.

4. BridgeBio Pharma (Nasdaq: BBIO, market capitalization: approximately $4.2BB)

When BridgeBio Pharma was listed on Nasdaq in June 2019, its stock price was priced at $17. Today, the stock is trading at above $30, and the company’s market capitalization is over $4.2B billion. The company follows a decentralized management model by providing seed funding to its subsidiaries, each having a single drug program led by a research group. This model is proving to be appealing for investors. An additional attractive factor is that the company focuses on rare diseases, and thus it is subject to less competition than others.

Michael Dixon | Top Life Science Investor 2019-2020
Michael Dixon

Michael Dixon, who previously worked on digital health growth equity at Sequoia Capital had co-led investment in BridgeBio, among many other successful investments. He currently serves on the boards of three healthcare companies which are Health Catalyst, Implantable Provider Group, and Clover Health, and is a managing partner at Transformation Capital.

5. Karuna Therapeutics (Nasdaq: KRTX, market capitalization: approximately $2.19B)

Karuna Therapeutics is another remarkable company that deserves a spot on this list. Its IPO took place less than one year ago in July 2019, yet the stock price more than quadrupled since then. Today, its market capitalization is roughly $2.19 billion.  The rise in stock price took place after its phase 2 trial for its schizophrenia and acute psychosis drug, KarXT, showed promise. Many investors have been interested in the company before the IPO. Karuna raised $68 million in series B financing in March 2019. In April, the company received $12 million more in extension funding. The series B financing had attracted many prominent investors such as Arch Venture Partners, Fidelity Management and Research Company, Eventide Asset Management, Sands Capital Ventures, and Pivotal BioVenture Partners. Dr Bryan E Roberts Ph.d. from Venrock Associates is currently on the board.

Robert Nelson
Robert Nelson

Robert Nelson, a managing director at Arch Ventures, has played a key role in early investment in Karuna Therapeutics, among many other companies such as Juno Therapeutics and Beam Therapeutics. Twenty seven of the companies he led investments in reached a valuation of over $1 billion. He previously worked as Trustee of the Fred Hutchinson Cancer Research Institute, the Institute for Systems Biology, and was a director of the National Venture Capital Association. He is ranked the 28th top tech investor in the world by Forbes in 2020.

6. Turning point therapeutics (Nasdaq TPTX, market capitalization: approximately $2.7B)

Turning Point Therapeutics provides treatments for cancer related diseases. The company had raised more than $191.5 million in its IPO in April 2016, but then it raised $202.3 million in a follow-up offering. This happened after the good results the company achieved from testing its lung cancer drug, repotrectinib, which is designed to inhibit mutations. The IPO share price was $18 and today it is trading at $52.15, and the company’s market capitalization is approximately $1.91 billion.

Among the owners of the company are Fidelity Management and Research Company, OrbiMed Advisors LLC and BlackRock Fund Advisors. Its board includes Dr. Carl L Gordon from OrbiMed Advisors LLC, and Dr Jacob M Chacko from ORIC Pharmaceuticals, among others. NextTech Invest, OrbiMed Advisors, SV Tech Ventures, and Foresite Capital are among the VCs behind the company’s growth.

Brett Zbar
Brett Zbar

From Foresite Capital, the Managing Director, Brett Zbar, had served on the board of Turning Point Therapeutics. He has also served on the boards of many other companies including Peloton Therapeutics, VenatoRx Pharmaceuticals, Tempest Therapeutics, ConnectiveRx and Signant Health. He was formerly a partner at Aisling Capital.

7. Cortexyme Inc (Nasdaq: CRTX, market capitalization: approximately $1.6B)

Cortexyeme is a clinical stage pharmaceutical company working on leveraging data to fight degenerative diseases such as Alzheimer’s. The company went public in May 2019 at a share price of $17. Currently, the share is trading at above $42, and it has a market capitalization of $1.34 billion. The company’s main drug candidate is COR388, and it has passed through preclinical and phase 1b testing. In December 2019, the company presented data linking bacterial pathogen P gingivalis as a potential cause for Alzeheimer’s disease. All of this was promising to investors, although the clinical trials are expected to be concluded in 2021.

Casey Crawford Lynch, Stepehn S. Dominy, and Margi Mcloughlin are on the board of Cortexyme. Breakout Ventures, Pfizer Ventures, Lamond Capital Partners, and Dolby Family Ventures, were among the backers of the company in its series A financing rounds. Verily Life Sciences, Vulcan Capital, Sequoia Capital, and Smallcap World Fund were among the backers in series B funding. Currently, BlackRock Fund Advisers is among the shareholders of the company. Michael Dixon had worked previously at Sequoia Capital and also was an investor in Cortexyme.

Andrew Conrad, Ph.D.
Andrew Conrad, Ph.D.

Andrew Conrad, Ph.D., the CEO of Verily Life Sciences, played a role in the investment in Cortexyme. Dr Conrad co-founded the National Genetics Institute (NGI) along with Mike Aicher in 1991. In 2006 Conrad founded the California Health and Longevity Institute. He is considered  among the top Influential people in Biopharma.

8. Springworks Therapeutics (Nasdaq: SWTX, market capitalization: approximately $1.7B)

SpringWorks Therapeutics, a clinical-stage biopharmaceutical company, conducted its IPO in September 2019, which helped it raise $186.3 million from selling 10,350,000 shares at $18 per share. The company was working on developing gamma-secretase inhibitor in partnership with GlaxoSmithKline, and results from a similar program were positive for investors and the company.  Today, the share is trading at $31, and its market cap at above $1.36 billion.

Dr. Stepehen P. Squinto | Top Life Science Investor 2019-2020
Dr. Stephen P. Squinto

On its board are Dr. Stephen P. Squinto from OrbiMed Advisors LLC, and Dr Freda C. Lewis-hall from Pfizer, among others. OrbiMed Advisors invested early in the company and contributed funds in series A and B rounds, alongside Bain Capital Ventures. In its series B round, the company attracted many VC investors such as Perceptive Advisers, Boxer Capital, and HBM Healthcare Investments. Orbimed Advisors, Perceptive Advisors, BVF partners, HBM Partners AG, and Fidelity Management and Research Company are among the shareholders of the company.

Dr. Freda C. Lewis-Hall
Dr. Freda C. Lewis-Hall

Dr. Freda C. Lewis-Hall, who is on the board of SpringWorks, has worked as a clinician, a researcher, and a leader in the biotech industry and life science sector at large. She is a psychiatrist and she has many achievements behind her name. She has founded the Lilly Center for Women’s Health in the 1990s, created Pfizer’s public health information program Get Healthy Stay Healthy in 2012; and the industry’s first public compassionate access request portal, PfizerCARES, in 2015; just to highlight some of her astounding accomplishments in the field. She currently works as Chief Patient Officer and Executive Vice President Pfizer Inc. She led the investment and founding of SpringWorks back in 2017. Today, it turned out to be another success she could add to her honorable track record.

Springworks was founded mainly by Pfizer, with the initial task of testing four drugs that were orphaned by the pharmaceutical giant. The four drugs are meant to help with desmoid tumors, neurofibromatosis, hereditary xerocytosis, and posttraumatic stress disorder. Pfizer wanted to launch a new company and assign it the task of testing those drugs to ensure that the true potential of existing science is being met. With SpringWorks, Pfizer wanted to overcome the bureaucracy usually associated with organizations of its size, and let agile and responsive startups handle the responsibility. The newborn company quickly received $103 million in series A funding from Pfizer and Bain Capital. The growth that SpringWorks achieved afterwards proves that the new model for developing works is indeed fruitful.

9. NGM Biopharmaceuticals (Nasdaq:NGA, Market capitalization: approximately $1.4B)

NGM Biopharmaceuticals, is a California based biotech company that developed therapeutics for cardio-metabolic, liver, oncologic, and ophthalmic diseases. Its IPO share price was $16 which helped it raise $102 million. It released promising results from its phase 2 trials of its drug aldafermin which is intended to help non-alcoholic steatohepatitis (NASH). Currently, It has a market cap of approximately $1.23 billion.

The Column Group, Prospect Ventures, and RHO ventures, were solid backers of the company as they invested in its series A, B, and C rounds. BlackRock Fund Advisers is a key shareholder currently as it holds more than 2 percent of the company’s shares.

Dr Eric Aguiar from Aisling Capital LLC is on the board, alongside Dr David V Goeddel from Column Group, Dr David Schnell from Prospect Ventures, and others.

David Goeddel
David Goeddel, Ph.D.

David Goeddel, Ph.D. who is a managing partner of the Column Group has had several roles in NGM Biopharmaceuticals. Currently he is an independent director, but previously he was the Chairman of the board and before that he was the Chief Executive Officer. Dr. Goedeel is a leading figure in the biotech industry. When he served at Genentech, he used genetic engineering to coax bacteria into creating synthetic human insulin, human growth hormone, and human TPA for use in therapeutic medicine. He founded Tularik in 1991, and is a member of the National Academy of Sciences and the American Academy of Arts and Sciences. Dr. Goeddel received a B.S. in Chemistry from the University of California, San Diego and a Ph.D. from the University of Colorado.

10. IGM Biosciences (Nasdaq: NGMS, market capitalization: approximately $1.7B)

Christina Teng Topsøe
Christina Teng Topsøe

IGM Biosciences works on developing IgM engineered antibodies to treat cancer patients. In a matter of a few months since its IPO, which was the 11th IPO from the Bay Area in Sep 2019, the stock price of IGM Biosciences tripled in value from $16 to over $50. Currently, its market capitalization is over $1.2 billion. Its stock quickly moved up after its IPO which helped it raise $175 million by offering 10.9 million shares.

Its board of directors include Jakob Haldor Topsøe, and Christina Teng Topsøe, both from Haldor Topsøe. Christina holds an MBA from London Business School, and Columbia business school. She is also on the board of Haldor Topsøe.

Redmile Group, RA Capital Management, BlackRock Fund Advisers, and Invus Public Equity Advisers are among the shareholders of the company.

Peter Kolchinsky, Ph.D. | Top Life Science Investor 2019-2020
Peter Kolchinsky, Ph.D.

Peter Kolchinsky, Ph.D., the co-founder of RA Capital Management, played a role in the investment in IGM Bioscience. Mr Kolchinsky teaches about biomedical entrepreneurship. He serves on the boards of several public and private drug development companies.

Final Words

By looking at the top deals, a few names emerge as astute life science investors that had good foresight. Those include Redmile Group and BlackRock fund advisors. Those companies are giving a strong push forward to the sector and are being rewarded handsomely for their prudent choices. Among the Venture Capital firms, two firms shine based on the above deals. Those are Venrock and Sequoia Capital. Both have impressive portfolios that encompass a significant portion of the life science sector. Venrock has Interos, Iris Medicine, Cyteir Therapeutics, Devoted Health and Astranis in its portfolio, whereas Sequoia has companies like AgilOne, AMP Robotics, Aurora, Confluent, and others in its portfolio (In addition to BridgeBio and Cortexyme). The aggregate value of companies in Sequoia’s portfolio exceeds $3 trillion.

The success of those funds came largely from the prudent decisions that people in those funds have made. From Venrock, Bryan Roberts was behind two of the top deals, namely 10X Genomics and Karuna Therapeutics. From Sequoia, Michael Dixon was behind the investment in BridgeBio Pharma and Cortexyme.

There is currently a tidal shift in favor of life science companies and this is evident in the increasing number of high-value deals. The number of life science companies with market capitalization of over 1 billion is increasing. This bodes well for the healthcare sector at large. The VCs and corporate VCs that supported those companies played a key role in this shift. Undoubtedly, this required a well-placed leap of faith in those companies and the clinical trials of some of them. The companies are turning out to be great assets in any portfolio they are placed in, and are generating premium returns.

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