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Region Gets Additional Dose of Life Science VC Funds

Frank Stonebanks

San Diego’s growing hub of biotech and other life science firms is attracting fresh investors to the region.

Lumira Capital, a major Canadian fund for health care companies, recently expanded into San Diego with the appointment of Frank Stonebanks to the investment team. Stonebanks is managing partner of Blackcomb Advisors LLC, a strategic advisory firm in Solana Beach serving life science and technology companies.

“It’s not often that a top fund announces a San Diego-based partner,” Stonebanks said. “When more top health care and medtech-focused funds have a permanent presence in San Diego, it fosters the growth of this ecosystem, enhances the people networks, and leverages all the innovation coming out of San Diego.”

The local biotech industry is one of the most impressive in the nation, with upward of 1,100 life science firms in the county, according to the local trade association BIOCOM. The number of local companies, along with the number of people employed in the industry and the capital the industry attracts, have landed San Diego alongside powerhouse biotech metros such as Boston, San Francisco and Raleigh-Durham in North Carolina.

Stonebanks will be the West Coast venture partner for Lumira Capital, covering not only Southern California (San Diego, Los Angeles and Orange County) but also San Francisco.

Industry Connections

Lumira brings considerable resources and investment experience to the local community of health care firms. The company, which has been investing in life sciences and other medical technology for 25 years, was an early investor in New Jersey-based Pharmasset Inc., one of the hottest public biotechs in the past decade. Pharmasset was acquired by Gilead Sciences Inc. for $11.2 billion in 2011. Lumira also invested in Corus Pharma Inc., another firm purchased by Gilead for $365 million.

The presence of Lumira should be a boon for life science firms in San Diego, as Stonebanks is well-connected to the local industry. Early in his career, Stonebanks held a number of executive roles at biopharmaceutical companies, including vice president and general manager at Centocor Inc. and Johnson & Johnson, where he led global marketing for oncology and infectious disease and served as vice president of J&J’s venture arm.

Stonebanks has a long career in health care-focused investing. He served as CEO of Triphase LP, a biotech-focused fund where he structured a $1 billion partnership with Celgene Corp. Earlier, he was a senior advisor for IBM, leading its health care and life science acquisition efforts, and co-managing IBM’s $500 million venture fund.

Lumira has 20 companies in its current fund, and 18 successful exits to its name.

Another Newcomer

Lumira isn’t the only new VC in town. St. Louis-based RiverVest Venture Partners, an active life sciences investment firm, announced in April that it had opened an office in San Diego led by newly installed managing director Nancy Hong.

Hong, a former principal at BioMed Ventures specializing in therapeutics and medical devices, has a Ph.D. in molecular and cell biology from the University of California, Berkeley. She also worked at Forward Ventures, advising biotech and pharmaceutical companies.

RiverVest, which has offices in St. Louis and Cleveland, made 10 investments in San Diego companies over the past decade, including Amplyx Pharmaceuticals Inc., Otonomy Inc. and Lumena Pharmaceuticals Inc. Six of those firms have been acquired and one went public, RiverVest said.

Hong is joined in San Diego by managing director Niall O’Donnell, who spent five years as an immunologist for Johnson & Johnson here before joining RiverVest. He came to RiverVest in 2006 and has split his time between San Diego and St. Louis, a company spokeswoman said.

RiverVest has $290 million in assets under management. It has funded 34 companies, with 20 exits or public offerings.

Proximity to Capital

Mike Krenn

The presence of new investors to the region is a welcome one, as the local industry often laments the need for closer proximity to cash.

Although many venture capitalists call San Francisco home, money doesn’t always travel south. It’s much easier to invest in one’s own backyard, investors often say.

Mike Krenn, president of San Diego Venture Group, said last year that money will travel south if the company is impressive enough, but he admits that proximity to capital plays a part.

“The capital may be easier to come by if it’s local, and it’s easier for money to travel from Silicon Valley to San Diego than from Boston to San Diego,” Krenn said.

Still, Krenn said San Diego is home to several investor groups, including traditional venture capitalists such as Domain Associates, OrbiMed Advisors, and Pappas Ventures.

San Diego also has less conventional sources of funding, such as venture funds through major real estate firms BioMed Realty and Alexandria Real Estate Equities Inc., and even successful biotech executives who have started their own funds, such as Magda Marquet’s Alma Life Sciences.

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