Hatteras Venture Partners, which just announced the first closing of Hatteras Venture Partners VI, LP (HVP VI), with $94 million in deployable capital toward an ultimate target fund size of $200 million, sees continued growth in the biotech and healthcare space.
“The pace and quality of our deal flow has grown tremendously during the past several years,” said Clay Thorp, co-founder and general partner of Hatteras. In an interview with WRAL TechWire, Thorp said, “More than 700 deals came through last year and we made six new investments.”
That’s why Hatteras is promoting two analysts to partner and adding two new analysts to its team, Thorp said. He noted that in addition to the new fund, Hatteras still manages it previous funds. It also “Has to do with the quality of opportunities and ambition we have to generate new deals,” he added.
Clay Thorp.
Hatteras Venture Partners photo.
Hatteras promoted Mike Dial, Ph.D., and Jeff Terrell to Partner. Dial and Terrell both joined Hatteras as analysts.
“Mike and Jeff have proven themselves to be invaluable members of the Hatteras team,” said Robert Ingram, general partner of Hatteras. “They will be key drivers in our funds’ performance going forward.”
Hatteras Venture Partners closes on $94M for new fund; target is $200M
In addition Hatteras has added Ben Scruggs, Ph.D., as associate, and Kseniya Simpson, Ph.D., as analyst. Both are core members of the investment team, which has capability to analyze and add value to a range of companies solving critical, unmet medical needs.
Thorp said one reason the biotech, medical device and healthcare sectors are experiencing significant growth now is that both investors and the science has grown more sophisticated.
The lost decade
“From 2000 to 2010 was a lost decade and a tough time to invest in the space,” Thorp said. “The industry and the entrepreneurs were not as sophisticated in the process.” The dawn of gene sequencing, which resulted in 16,000 new papers a year on how genes are causitive or related to disease, is one driver of today’s greater success.
Another is the increased sophistication around clinical trial design and execution, Thorp said.
Hatteras has had considerable success in the space. Successful companies in the HVP IV and V portfolios include transformative therapy companies like G1 Therapeutics, StrideBio, Graybug Vision and NeuroTronik Inc. and disruptive technology companies like Bivarus Inc., Elligo Health Research and Qvella.
“We tend to meter our way into these opportunities,” Thorp explained. “We would rather lose a little money early than a whole lot later. Take G1 Therapeutics, for instance. Our first check was for $600,000, enough to develop a lead product to take to the clinic. We had to recruit a large number of other investors and ended up investing nearly $15 million by the time of its IPO was completed. G1 Therapeutics develops drugs to improve the lives of cancer patients.
The biotech sector has been on a roll and Thorp doesn’t see it subsiding anytime soon. “Globally, 2018 was the best year for IPOs since 2014. A lot of capital is flowing with a lot of success. There are a couple of hot beds in the Triangle, including gene therapy and vital vectors.”
The Triangle also has a strong chemistry base due to the chemistry department at the University of North Carolina at Chapel Hill, “One of the best in the world,” Thorp notes.
While overall market sentiment is hard to predict, he said, Many predicted pull-backs were not really pull-backs in the past. “We have to find the best science and managers in the world and capitalize those,” he said. “The markets are always looking for opportunities and that’s the good formula playing out right now.”
