OrbiMed Raises $4.3 Billion Amid Investment Downturn, Spotlighting Chinese Biotech

On October 24, OrbiMed announced that it had raised more than $4.3 billion for its three latest private funds: OrbiMed Private Investments IX, OrbiMed Asia Partners V, and OrbiMed Royalty & Credit Opportunities IV. Investors in these new funds include healthcare institutions, university endowments, foundations, pension funds, sovereign wealth funds, and family offices.

As one of the largest global biopharmaceutical investment firms, OrbiMed manages approximately $17 billion in assets. The team spent over a year raising these three new funds, which are expected to support financing for at least 75 startup companies.

OrbiMed was founded in 1989. Having navigated a turbulent and ever-changing investment landscape, the firm has seized numerous opportunities along the way. Recognizing significant prospects amid the current downturn in the capital markets, OrbiMed has launched three new funds and completed their fundraising. “The current capital environment is challenging, but we have been through this before,” said Managing Partner Carl Gordon. “This is typical of the biotechnology sector; you need to ensure you are targeting the right investment opportunities.”

As with its previous funds, OrbiMed’s three new funds will invest globally, covering rounds from seed stage to late-stage. Assigned distinct investment mandates by OrbiMed, they will provide tailored financing solutions, including equity, credit, and royalty-based financing.

Private Investments IX, which raised $1.87 billion, will be managed by Managing Partner Carl Gordon. The fund will support the financing and investment of approximately 40 companies, with investments planned to be deployed over a three-year period. According to Carl Gordon, the fund will invest an average of $50 million per company, covering rounds from early-stage to late-stage.

The other two funds have more specific focuses within the healthcare sector.

Asia Partners V is the fifth fund established by OrbiMed, focusing on early-stage companies in Asia., raising over $750 million, essentially on par with the amount raised by the fund in March 2021. This fund will focus on investments in China and India.

Managing Partner Carter Neild stated that OrbiMed expects to invest in more Chinese biotech startups, noting that China has “world-class levels of innovation” in therapeutic technologies such as antibody-drug conjugates (ADCs) and cell therapies.Neild added that Asia Partners previously made approximately 15 investments on average, with typical deal sizes ranging from $10 million to $75 million.

Royalty & Credit Opportunities IV is OrbiMed’s latest royalty and credit fund. Matthew Rizzo, the partner responsible for managing the fund, stated that it has raised approximately $1.71 billion and plans to pursue around 20 to 25 financing deals with pharmaceutical companies of varying sizes.“The current market downturn has led to a significant rise in royalty financing and credit financing in the biopharmaceutical sector, which many pharmaceutical companies will find attractive,” said Matthew Rizzo.

For Royalty & Credit Opportunities IV, OrbiMed has adopted a more flexible and versatile deal structure, encompassing not only royalty financing but also hybrid transactions that combine credit and royalty components. Reportedly, amid the current capital winter, OrbiMed has attracted significant attention from large biotechnology companies seeking royalty-based deals.

Matthew Rizzo stated, “We have observed that some companies with market capitalizations ranging from $100 million to over $3 billion, which might have previously raised equity directly, are now considering convertible debt. However, in reality, these structures significantly dilute existing shareholders’ equity.”

Previously, OrbiMed’s royalty transactions ranged in size from $20 million to $400 million. Rizzo indicated that the new fund may favor larger-scale deals.

Carl Gordon stated that after the establishment of OrbiMed’s new fund, it would seek to invest in sectors that are currently validated and hold significant growth potential, while also exploring investment opportunities in technological fields with promising future prospects.

He stated that one of his areas of particular interest is small-molecule drug discovery, citing KRAS inhibitors developed by companies such as Mirati and Amgen as a prime example. “I believe this is an area of genuine interest to us, as more proteins are becoming druggable.”

Furthermore, in light of the significant interest in antibody-drug conjugates (ADCs) at the 2023 ESMO Congress, Gordon expressed strong enthusiasm for ADC technology and revealed that a company, currently under confidentiality, is pursuing further innovations in ADC therapies.

Data compiled by IT Juzi shows that over decades of healthcare investment, OrbiMed has invested in approximately 170 companies in the medical and health sector. The portfolio companies are primarily concentrated in the biopharmaceutical field, with 100 companies receiving investment, accounting for 58.9% of the total. In China, OrbiMed has further supported the growth of renowned biotech firms such as Gracell Biotechnologies, Harbour BioMed, InnoCare Pharma, and RemeGen, firmly establishing it as a bellwether for financing and investment in the biopharmaceutical industry.

As for what types of biotech companies to focus on, OrbiMed has provided an answer. Gordon believes that successful biotechnology companies can maintain a relatively low cash burn rate, possess late-stage pipeline assets, and make business development (BD) collaborations with pharmaceutical companies a key part of their strategy.

Amid the capital winter, OrbiMed’s ability to raise funds in billion-dollar increments underscores its robust financial strength and professional investment acumen. This has enabled it to strategically position itself in the biopharmaceutical sector with remarkable ease, while each of its future financing and investment transactions will serve as an industry bellwether that cannot be ignored.