Flagship, Orbimed, ARCH, Alta top list of high-performing biotech venture capital firms

By Kate Sheridan Aug. 23, 2021

Flagship Pioneering is on track to return its investors’ money an eye-popping 15 times over, according to public records gathered by STAT.

The Cambridge-based firm’s fourth fund, which officially launched in 2012, reported the highest investment multiple of any fund included in a new STAT report published on Monday that looks at returns for 17 major biotech venture capital firms during 2020.

Other top performers were Alta Partners’ 2018 fund and ARCH Venture Partners’ 2007 fund, each of which returned at least $5 for each $1 an investor put in.

But OrbiMed’s steady performance led the firm to repeat its 2020 performance as the top-ranked firm in STAT’s analysis, which calculates how much better individual funds performed compared to others that launched around the same time.

“We are gratified to see the strong historical returns delivered by our funds over several decades,” OrbiMed co-managing partner Carl Gordon told STAT.

Typically, investors in venture capital funds hope for returns that ultimately double or triple their initial investments — or, in the parlance of venture investors, a 2x or 3x return multiple.

Flagship’s high-flying fund shattered that goal, and investors have noticed. Earlier this year, Massachusetts’ public sector fund invited Flagship founder Noubar Afeyan to speak at its investor conference and referred to the firm as “one of [its] very highest performing Private Equity managers.”

Flagship is a key backer of Moderna, which developed one of the first authorized Covid-19 vaccines. Flagship’s decision to sell and distribute billions of dollars of Moderna stock — including shares that belonged to its fourth fund— attracted a lot of attention.

Other individual Moderna executives drew some criticism for their choices to sell some of their own shares, too. (Those executives’ sales were part of predetermined plans that rely on a very common mechanism biotech executives use to sell stocks in the companies they help run.)

Though no other fund could even come close to Flagship’s single-fund performance, ARCH Venture Partners and Alta Partners both had good years, too.

Two of the year’s splashiest IPOs and acquisitions involved companies in ARCH’s portfolio: Sana Biotechnology and Grail. ARCH was an early investor in Grail, which Illumina acquired in September 2020 for $8 billion.

And ARCH owned nearly 25% of Sana when the company went public. However, Sana’s public market performance has been lackluster so far. One share in the company was originally worth $25 and popped up to almost $40 in the company’s first week of trading; today, that share would be worth just $20.