Blackstone is back on the fundraising trail for its latest life sciences fund, targeting $5 billion in investor commitments, the Wall Street Journal reported, citing pension documents.
The fundraising efforts come roughly four years after Blackstone closed the predecessor fund, Blackstone Life Sciences VI, in 2020 after the fund hit its hard cap of $4.6 billion.
The PE giant manages a life sciences strategy that aims to fill the funding gap by collaborating with pharma, biotech and medical tech companies to bring their critical path products to market, according to its website.
In March, Blackstone announced a deal to provide up to $750 million in financing for Moderna’s influenza mRNA vaccine program.
PE firms have become increasingly involved in financing drug development in recent years, capitalizing on the increased competition among drugmakers for funding, according to the report “Life Sciences 2024 Dealmaking Trends and Outlook” by law firm Ropes & Gray.
These investments are distinct from a typical leveraged buyout, where the GP takes a controlling stake in a company. Instead, they target drugs in development. PE firms provide capital to drugmakers in return for upfront payments and performance-based payouts, including milestones tied to development progress and royalties linked to the drug’s commercial success.
Such partnerships have grown in popularity as life sciences companies explore creative ways to address funding predicaments arising from depressed valuations and high interest rates.
PE is especially drawn to drugs that have progressed to late-stage, Phase 3 clinical trials, the report says.
In Blackstone’s case, the GP stepped back from earlier-stage investments, finding them less appealing due to higher risk and smaller deal sizes, according to the Journal’s report.
Besides equity financing, Blackstone provides structured credit to post-approval, commercial-stage drugs via a $1.6 billion fund it closed in 2022.
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