The Boston biotech scene was abuzz about a year ago when news broke about three of the most influential figures in the sector—Rich Aldrich, Michelle Dipp, and Christoph Westphal—joining forces to form a new venture capital firm called Longwood Founders Fund. Yet this power trio has been mostly mum about what they are doing with the new fund, until I gathered more insight this week from Aldrich.
Last week Boston-based Longwood revealed that the London-based drug giant GlaxoSmithKline (NYSE:[[ticker:GSK]]) and Cambridge, MA-based Genzyme (NASDAQ:[[ticker:GENZ]]) helped the firm raise its first fund, which ultimately was worth $86.9 million, according to an SEC filing. This was the firm’s first announcement about its own fund-raising activities, even though its partners had been pretty vocal about its investments in Cambridge, MA-based biotech startups Alnara Pharmaceuticals and Verastem at different points last year.
Aldrich, who became a biotech industry star earlier in his career as the head dealmaker for Cambridge, MA-based Vertex Pharmaceuticals, has more recently allied himself with Dipp and Westphal on several biotech ventures. The biggie was Sirtris Pharmaceuticals, the Cambridge, MA-based developer of drugs for diseases of aging, which they sold to Glaxo for a sizable $720 million in 2008. Expectations are likely high among investors in Longwood that Aldrich and his partners can deliver more big wins. Impressively, the venture firm has already received returns from its investment in Alnara, which Eli Lilly (NYSE:[[ticker:LLY]]) agreed to buy the startup for $180 million in cash upfront and up to $200 million in earn-outs in July 2010.
Still, I had some questions for Longwood and its partners. For one, $87 million doesn’t sound like much money for a venture fund, and I wondered whether that total was below expectations. Aldrich provided some insights on that as well as what the fund means for Dipp and Westphal, both of whom appear to still have active executive roles at Glaxo—Dipp as senior vice president of Glaxo’s Center for Excellence in External Drug Discovery and Westphal as president of SR One, a venture arm of the drugmaker.
Xconomy: What is your strategy going to be for investing in biotech?
Rich Aldrich: Our strategy will essentially be a
