Since its founding 10 years ago, San Francisco-based Foresite Capital has invested in 85 life sciences companies, including gene therapy developer AveXis (acquired by Novartis in 2018 for $8.7 billion), cancer blood test developer Grail (to be acquired by Illumina for $8 billion), and single-cell biology tools developer 10x Genomics, which raised $411 million in net proceeds when it went public in 2019).
Foresite intends to add to its portfolio of successful startups through a pair of new funds totaling nearly $969 million that the firm launched today—the $775-million Fund V and a $193.75 million fund for selectively making additional investments in their highest conviction Fund V portfolio companies, called the Opportunity Fund. The new funds bring Foresite’s assets under management to approximately $4 billion.
“It’s a validation of our investment strategy, which for a long time has been exploring the themes of data science, precision medicine, new ways of delivering healthcare, new ways of producing information that drives our growing knowledge of disease-related biology,” Vikram Bajaj, PhD, a managing director at Foresite, told GEN.
Bajaj is also Co-Founder and CEO of Foresite Labs, the firm’s center for entrepreneurial innovation focused on launching companies that apply data science tools to solve unmet medical needs.
“We really span the entire space of healthcare product development, from company creation all the way to this robust crossover in public equity practice,” Bajaj said, noting that 37 Foresite-backed companies have completed initial public offerings (IPOs) since the firm was founded in 2011. “The fund is really purpose-built to handle healthcare products throughout that whole life cycle. I think that is a thesis that’s been increasingly validated over the last few years.”
Foresite is describing investors to Fund V and the Fund V Opportunity Fund only as a broad array of limited partners, including institutional investors and university endowments. Many of those investors have backed the firm’s earlier funds, the most recent of which was the $668-million Fund IV launched in 2018.
“For most of our LPs [limited partners], what is drawing them to us is the increasing validation of a set of investment theses that we’ve been pursuing for a long time,” Bajaj said. “Those investment theses relate to the marriage of data science with life sciences, with healthcare, and accelerated product development in precision medicine, and precision oncology, new kinds of platform companies, and new ways of actually delivering healthcare.”
Bajaj said Fund V and its sister Opportunity Fund are unlikely to depart radically from Foresite’s previous investment practices, “but you’ll see a refinement and a pace of growth in those areas that’s increasing, especially in an environment after the COVID crisis is resolved.”
Looking Beyond Cancer
One of Foresite’s focus areas has been precision oncology. The firm’s portfolio includes Kinnate Biopharma, a developer of targeted therapies whose lead programs include preclinical candidates for cancers driven by specific oncogenic alterations in genes encoding kinases including BRAF, FGFR2 and FGFR3.
“It’s a wonderful company that’s really going to produce precision medicine products that over time will address a far broader spectrum of needs than oncology,” Bajaj said. “Now, you’ll see precision medicine approaches extended beyond oncology, into other therapeutic areas, driven by the availability of genetic information, at much larger quantities and other disease states. That would be an example of how this thesis will be more broadly applied. We’re really at the forefront of finding those opportunities.”
Another is improving mental health care—something the firm aimed to address by joining several firms in May 2020 to complete a $100-million Series C financing in Mindstrong, a San Francisco developer of a virtual care model for people living with serious mental illness.
Mindstrong’s model includes a tech platform for remote patient monitoring and mental health symptom measurement; an in-house clinical team of therapists, psychiatrists, and care coordinators; partnerships with national private and public insurers; and a smartphone app. The app lets members monitor their own mental health symptoms through AI-powered digital biomarkers that can track changes in mental health symptoms—and trigger alerts to the clinical team when the markers indicate their mental health may be at risk or deteriorating.
Another area of focus for Foresite is single-cell biology. The firm has been a longtime investor in 10x Genomics, starting with its Series A financing in November 2013, followed by the $55-million Series B round, led by Foresite, and including the company’s IPO. Foresite and affiliated entities retained a 22% stake in Pleasanton, CA-based 10x.
Uncovering Biology
“You’ll see a continued evolution of this theme of really uncovering biology, by going to the single cell level, understanding the spatial relationships between cells, and understanding how multicellular components really communicate with one another. That’s going to be a theme,” Bajaj predicted. “And then, what can we do with that information in synthetic biology, functional genomics, and other disciplines.”
Foresite joined two other firms — General Inception and OMX Ventures — in October in seed-funding Sestina Bio, the first company launched from Foresite Labs. Sestina’s platform for automated synthetic biology combines new instruments for single cell genome editing, tools for single cell phenotyping, and closed-loop, machine learning-driven design and control of experiments.
That alternative approach, Sestina asserts will no less than transform synthetic biology from room-scale automation involving thousands of cells to deeply modifying, individually following, and functionally characterizing single cells.
“You will have changed that purpose-built apparatus which fills a room into something more like a reprogrammable, repurposeable computer,” Bajaj explained. “You have the edits being performed at the single cell level, the readouts at a single cell level, and this allows you to increase the combinatorial density of these experiments by many, many orders of magnitude. You can explore a space of biology that was just unreachable before.”
“To do that, you need a new vocabulary of how to think of the experiment because they’re no longer experiments that human minds can design and conceive of,” Bajaj continued. “They have to be designed using machine learning and other approaches. The readouts are influenced by machine learning, and other approaches as well. It’s a new way of imagining a biological experiment, and I think it will have huge impacts in making many industries more sustainable.”
Marrying Biology and Data
Another investment theme Foresite plans to build upon is marrying biology as applied by single-cell and other advanced tools with data science to deliver precision healthcare. In the process, Bajaj said, biology will continue to evolve from a descriptive science to an increasingly quantitative, data-focused specialty such as engineering.
“The uses of data science in everything from drug discovery to the way that clinical care is delivered, to really understand how evidence can be generated rapidly that changes the course of treatment for an individual patient—those are important trends. You’ll see us either investing in, or incubating companies across an area that is really influenced by those trends,” Bajaj said.
Bajaj joined Foresite in 2017 after serving as chief scientific officer of Grail, which Illumina will acquire in an $8-billion deal set to close later this year. Before Grail, Bajaj co-founded and served as chief scientific officer of Verily (formerly Google Life Sciences), and once chaired its Scientific Advisory Board. Bajaj is an adjunct professor at Stanford Medicine’s Radiology/Molecular Imaging Program.
Bajaj is one of 27 MDs and PhDs working across Foresite Capital and Foresite Labs, among a staff of more than 70 employees.
“We function a great deal like a well-run scientific organization. We spend a lot of time understanding the details of the products that our companies are developing, understanding their scientific basis,” Bajaj said. “In that sense, coming to an investment firm like Foresite was a very familiar environment to me, and it’s something that [Founder and CEO] Jim [Tananbaum, MD] and [Managing Director] Dorothy [Margolskee, MD] have cultivated over many years, given their backgrounds.”
“We really will continue to grow at a measured pace, and grow organically,” Bajaj added. “We have a strong emphasis on cultivating talent from within and promoting from within. I think that’s the kind of growth that you’ll see, much more than external hiring.”
