BN: Yes, it is never fun to go through the effort and decide not to go. It is nice in this case to be playing from a position of strength and to have the cash to be able to walk away, though.
X: Without doing an IPO, how are you going to get liquidity from your investment in Ikaria?
BN: Even if they went out, they would not expect immediate liquidity, especially in a weak market. Ikaria is the only company I have ever seen in biotech which literally can execute an aggressive pipeline internally on several great later stage clinical products, have an active development effort looking for additional products, and do it with our own cash. We are already back focused on growing the business and hitting internal milestones. We will watch the markets and re-evaluate over time, but we are not in a hurry. There is huge value here and we will be patient.
X: Will this affect the timing and your ability to raise a new fund at ARCH?
BN: We have not yet decided when to raise a fund and do not expect this to impact the timing of our fund raise. We have strong LP (limited partner) demand already to raise a new fund, but we have dry powder until well into the end of 2012/2013 and are investing Fund 7 actively now. We have done two new startups in the last two weeks.
Our portfolio performance has been incredibly strong in the last two years since the crash, with only one “involuntary” wash-out in the whole portfolio of close to 50 companies, and many flat and a large number of up rounds. Companies like Ikaria, Sapphire Energy, VentiRx Pharmaceuticals, Xtera Communications, Impinj, Kythera Biopharmaceuticals, Nanosys, Agios Pharmaceuticals, Semprius, Achaogen, Quanterix, VLST, Allozyne, Theraclone Sciences, Variation Biotechnologies, and many others are on deck.
