After more than 20 years of incubating and investing in top-tier life sciences startups through his Bellco Capital, Arie Belldegrun, MD, reasons that the sluggish equity markets of recent years present an opportunity to fund startups in need of cash but priced out of selling stock by extending them credit.
So Belldegrun has joined with two co-founders to launch Symbiotic Capital, a global life sciences credit firm affiliated with Bellco, the investment firm he co-founded with his wife Rebecka Belldegrun, MD. Bellco says it is a “significant” investor in Symbiotic, which publicly launched recently with more than $600 million in capital—of which about half, or $300 million, has already been deployed to companies.
One of those companies, Cleveland Diagnostics, said in January that it received a credit facility of an undisclosed amount from Symbiotic, in addition to $75 million in growth capital led by Novo Holdings, asset manager of the foundation that controls Novo Nordisk. Cleveland Diagnostics has developed the IsoPSA® prostate cancer blood test, designed to further stratify the risk of prostate cancer in men identified as having higher risk for the disease based on results from PSA testing and other screening methods.
Belldegrun is the founder of Kite Pharma (acquired by Gilead Sciences for $11.9 billion in 2017) and executive chairman and co-founder of Allogene Therapeutics. He is also co-founder and senior managing director of Vida Ventures, a venture capital firm with approximately $1.8 billion under management. Belldegrun is also a board member of Breakthrough Properties, a global life sciences real estate developer, owner and operator launched as a joint venture with developer Tishman Speyer. In March, Breakthrough Properties signed Pfizer Oncology to a 15-year, 230,000-square-foot lease at its Torrey View campus in San Diego.
At Symbiotic Capital, Belldegrun serves as co-chair along with Russell Goldsmith, the former chairman and CEO of City National Bank. Joining Belldegrun in co-founding Symbiotic were its chief investment officer Josh Bradley and Himani Bhalla, Symbiotic’s chief investment officer.
“As the field of medicine continues to advance and as the breakthrough science continues to evolve, the cost of advancing new treatments from just a research lab into a commercial marketable product continues to go up,” Bhalla told GEN Edge. “There is an unmet need in the market for a credible and an aligned lending partner that understands these businesses, that speaks the same language and that is able to bring a patient-first mentality as we look at any and every loan opportunity.”
“Ever-growing sector”
“We continue to believe that this is an ever-growing sector. And given the continuing financing needs of the smart and innovative companies in this sector, the need for capital is ever-present,” Bhalla explained. “Credit has been and will continue to be an important part of that financing solution, somewhat independent and somewhat decoupled from where the equity markets have been in the last three years and where they are right now.”
Symbiotic extends non-dilutive senior secure term loans to companies deemed capable of repaying them over four to five years. That’s a somewhat shorter timeframe than the eight-to-10-year investment horizon of traditional venture capital equity investment, though precise repayment terms vary from company to company.
The shorter repayment period is one reason why some biotechs have shied away from loans. One exception is gene therapy developer Bluebird Bio, which in March said it secured up to $175 million in debt financing through a five-year term loan facility with Hercules Capital. Bluebird drew upon the first tranche of $75 million upon closing of the loan, and is eligible to draw two additional tranches of $25 million each upon achieving commercial milestones spelled out in a regulatory filing. A fourth tranche of up to $50 million may be available at Hercules’ sole discretion.
Bluebird said the deal was expected to extend bluebird’s cash runway through the first quarter of 2026, assuming it executes three tranches totaling $125 million and sticks to its business plans—which include the launch of three FDA-approved gene therapies: Lyfgenia® (lovotibeglogene autotemcel, “lovo-cel”) for sickle cell disease, Zynteglo® (betibeglogene autotemcel, “beti-cel”) for beta-thalassemia and Skysona® (elivaldogene autotemcel, “eli-cel”) for cerebral adrenoleukodystrophy.
“We’re investing in companies that are in the later stages of development, or they’re already commercializing their product,” Bhalla said. “It’s a matter of stability. It’s a matter of maturity. It’s a matter of their ability to be able to support the credit and service the credit. That’s what we look for when we are finding the ideal borrower for a Symbiotic investment.”
The minimum amount of capital that Symbiotic prefers to invest is $20 million.
“On the upper end, there is practically no limit. We can go up to $200 million. And if there are opportunities that warrant higher commitment than that, we can participate in those as well,” Bhalla said.
Symbiotic invests in multiple life sciences sectors, including drug development, life science tools, medical technologies, diagnostics, healthcare IT, healthcare services enabled with information technology, and other subsectors within the [life-sci] space.
Disease agnostic
“We are agnostic to any specific kind of mechanism of action or any disease states,” Bhalla said.
What about faster growing areas, such as cell and gene therapy, as well as obesity drugs?
“We’re not targeting any specific subsectors where we definitely want exposure to,” Bhalla cautioned. “However, the obesity space or metabolic indications in general, and cell and gene therapy, these are exciting areas we have looked at, and which we continue to look at.”
Symbiotic isn’t disclosing how it will divide its investments among biotech, medical devices, and other life-sci segments, though Bhalla added: “Diversification is incredibly important to us. It’s not just a loan with repayment and other terms. It’s the ecosystem that we bring to bear when we extend a partnership to these companies.”
In addition to its co-founders, Symbiotic connects its clients with a team of about 15 people that includes:
- Franz B. Humer, PhD, Venture Partner and Senior Advisor with Pappas Capital, and former chairman and CEO of Roche.
- Toby Cosgrove, MD, former President and CEO of the Cleveland Clinic.
- James S. Economou, MD, PhD, professor of surgery; microbiology, immunology and molecular genetics (MIMG); and molecular and medical pharmacology at University of California, Los Angeles (UCLA).
- Owen N. Witte, MD, also of UCLA, where he is university professor, MIMG.
- Amy Schulman, a managing partner at biotech and healthcare investment firm Polaris Partners.
- Helen S. Kim, a managing director of Vida Ventures, a life sciences-focused venture capital firm.
- Joshua Kazam, a co-founder and partner of Two River, which creates, finances, and life science companies.
The loans issued by Symbiotic are structured in part to allow the firm to convert part of what it lends into equity. Symbiotic also likes to take warrant positions in its borrower companies as it makes the loans.
“In one form or another, independent of what structure we use, the idea is to be completely aligned with the company in its journey. As they do well in their enterprise value, we benefit from that,” Bhalla said.
“It is tactically a very opportune moment for us to be launching Symbiotic’s business given what’s going on in the equity markets,” she added. “But we continue to believe that the credit solutions will be an evergreen need for the kind of businesses that we are going after in this sector.”
