Irish venture capital firm Seroba Life Sciences stands to make a return of up to €100 million following the recent sale of a company it invested in just over a year ago.
Seroba co-led a €29 million Series B funding round for the Swiss-Dutch company Prexton Therapeutics in February 2017 as the company sought to advance its novel Parkinson's therapeutic known as Fologlurax.
Prexton was acquired by the Danish pharma giant Lundbeck late last week in a deal that could be worth as much as €905 million, leading to a significant return for the Dublin-headquartered VC firm.
Seroba, which backs high potential life sciences start-ups, was one of five investors in last year’s Series B for Prexton, whose flagship treatment entered clinical phase II testing last July.
Under the terms of the agreement, Lundbeck will pay €100 million upfront to the current investors in Prexton and up to a further €805 million in development, regulatory and sales milestones, depending on the successful outcome of certain undisclosed milestones.
The result is that Seroba is expected to make between two times and 18 times its original investment.
The early deal for Prexton is seen as a reflection of the competition for high-quality clinical assets in the biotech sector. Rather than wait for the results of the clinical study, Lundbeck has opted to move on the asset now and accept the clinical risk, rather than wait and face increased competition should the results come back positive.
"We invested in Prexton from our latest fund in February last year and the early exit is welcome news," said Seroba's managing partner Peter Sandys, who is also chairman of the Irish Venture Capital Association (IVCA).
“The robust demand for new products in the biotech industry is leading to stiff competition for assets, with corporates prepared to acquire earlier in the product cycle. This, in turn, is leading to faster and better returns for investors,” he added.
Prexton was one of the first investments made by Seroba under its third fund, which totals €100 million. That fund, which closed in early February 2017, has also supported a number of other companies, including Endotronix Ireland, whose products are used in treating heart disease.
The fund, which places up to €10 million with each business it chooses to back, focuses on new companies developing drugs, medical devices and other treatments with the potential to deliver a “significant return” on investment.
Other Seroba portfolio companies include Atlantic Therapeutics, Novate, Fusion Pharmaceuticals and Opsona Therapeutics.