RiverVest Venture Partners has stayed mostly under the radar as a small-but-active investor in San Diego life sciences startups for the past 10 years or so.
After making investments in San Diego’s Cabrellis Pharmaceuticals and Conforma Therapeutics, the St. Louis, MO-based firm recruited Niall O’Donnell in 2006 to oversee the firm’s deals in San Diego.
O’Donnell, who was a Kauffman fellow and immunologist from Johnson & Johnson’s San Diego pharmaceutical R&D facility at the time, said his first deal came with the firm’s 2007 investment in Excaliard Pharmaceuticals, a Carlsbad, CA-based spinout from Ionis Pharmaceuticals (NASDAQ: IONS). Pfizer acquired Excaliard four years later at an undisclosed price.
In the ensuing years, O’Donnell and RiverVest followed up with investments that included San Diego’s Otonomy (developing drugs for diseases and disorders of the ear), Mpex (antibiotics), Lumena (rare liver diseases and metabolic disorders), and Amplyx Pharmaceuticals (anti-fungal agents). O’Donnell became a RiverVest managing director in 2014.
So even though RiverVest has a decade or more of experience in San Diego—and has invested in 10 San Diego biotech startups—the venture firm says today that it is officially opening an office in San Diego.
Former BioMed Ventures principal Nancy Hong also has joined the firm’s San Diego office as a managing director. Trained in immunology and oncology, she holds a doctorate in molecular and cell biology from UC Berkeley, and a bachelor’s degree in biology from the California Institute of Technology.
In a telephone interview from St. Louis, O’Donnell said the firm’s new office is actually two designated offices and a conference room within new commercial office space recently leased by Amplyx. Truth be told, the new office isn’t that much of a breakout move for O’Donnell, who was previously couch-surfing San Diego by working out of spare offices at Lumena, Excaliard, and other local RiverVest portfolio companies.
Hong will be joining O’Donnell and managing directors John McKearn, Tom Melzer, and Jay Schmelter in investing the $80 million RiverVest raised last year for its third fund. The firm also maintains an office in Cleveland, OH, where Karen Spilizewski scouts for life sciences innovations, primarily in medical devices coming out of the Cleveland Clinic, O’Donnell said.
“Our preferred strategy is ‘build-to-exit’ companies, get good teams, and look for either an exit or a significant inflection point within five years,” O’Donnell said. That necessitates licensing something that’s ready as an investigational new drug, or ready for mid-stage clinical trial. For pharmaceutical deals, he said that usually means finding an experimental drug candidate or drug assets that were cast off or shelved by a big pharmaceutical for strategic reasons.
The portfolio’s investments have been divided evenly between drug development and medical devices. Of the 34 investments made since Schmelter and Melzer co-founded RiverVest in 2000, O’Donnell said, “Over half have M&A’ed or IPO’ed, which is a pretty good strike record in a portfolio.”
About a third of the firm’s deals have been in the Midwest, including St. Louis, Texas, and Minnesota, O’Donnell said. Of the 10 investments that RiverVest has made in San Diego, O’Donnell said six have exited through acquisitions, one went public, and three remain active.