Regional economic development has long depended on large anchor companies. Hollywood studios built lots defining Burbank’s infrastructure and dotted the hills with its stars’ homes; Douglas Aircraft Co.’s flagship plant buoyed Long Beach’s economy during and after World War II.
In the Valley, a venture capital firm with the potential to define the biotech industry has emerged from the foundation set by legacy pharma players like Amgen and Abbvie.
Westlake Village BioPartners brought money to a biotech capital drought in 2018, debuting with a $320 million fund to stake a claim in a region overflowing with lab real estate and qualified drug developers in need of funding.
“That was a large enough amount to matter,” says Beth Seidenberg, Westlake Village’s co-founder and managing director. “People started to pay attention and then others have followed.”
The venture firm catalyzed the latest class of companies and entrepreneurs for the space. Fast forward to today, and Westlake now accounts for over $1.3 billion in capital under management, overseeing two drug developments trading on the Nasdaq and has cashed in on one acquisition.
In the past year alone, Westlake Village oversubscribed its third fund to bring in $450 million in capital commitments and announced millions in equity funding to five companies.
As the battle for regional talent grows more competitive amid a new class of institutional investors, Westlake Village says its plans for the next five years follow its founding blueprint. According to David Allison, a managing director at Westlake, the firm isn’t aiming for more venture capital market share.
“Our goal is never to be a multibillion-dollar fund, creating twice as many companies and pumping companies off of the conveyor belt,” Allison says. “The core strategy will be what it is.”
How we got here
The 101 Corridor’s rise as a life science hub didn’t happen overnight. It took the right investors incubating the right founders.
Seidenberg and co-founder Sean Harper etched their names as some of the most influential figures in medical development far before their venture days. Both rose through the ranks at New Jersey-based pharmaceutical manufacturer Merck early in their careers and later spearheaded departments at Thousand Oaks-based Amgen.
Seidenberg joined the biotech venture capital world as a general partner at Menlo Park venture giant Kleiner Perkins in 2005. She still works for Perkins while helming Westlake.
Seidenberg entered Perkins as its computing portfolio evolved amid a biotech boom. She noticed how money poured into young tech companies can have a compounding effect on a region and recognized a chance for biotech to make its own name in L.A.
“There was a series of very prolific and good tech companies that formed,” Seidenberg says. “I saw it happen there, and I said, why not make that happen for biotech?”
A stacked roster of well-resourced labs and medical schools at CalTech, UCLA and USC were ripe for business sponsorship.
There were earlier waves of entrepreneurs pulled from these institutions. Amgen let go of 2,600 workers in 2007, including some leaders and drug developers who went on to establish successful operations in the region.
Potential founders didn’t have a local life-science venture firm to pitch, until 2018, when Westlake Village BioPartners entered the scene. Seidenberg and Harper could connect with experts in their Amgen network who knew a thing or two about drug development.
“The talent is here, whether it’s at Amgen or AbbVie,” Seidenberg says. “The missing element was there was no concentration of institutional capital in an organized fashion – a venture capital firm at scale.”
Westlake Village’s $450 million fund raised last year drew a large class of returning investors from its debut.
Large university endowments, pension funds and hospital systems all bought into its vision for having a homegrown venture firm replete with exclusive biotech expertise.
With this institutional money legitimacy, other venture players have entered the local biotech and pharma scene.
Foresite Capital, a life sciences investment firm led by investor Jim Tananbaum, opened a West Hollywood office a few years back. Vida Ventures, a Boston-based life sciences investment firm with more than $1.8 billion in assets under management, expanded its team out here during the Covid-19 pandemic.
“The innovation ecosystem in the L.A. region is really ripe for translation,” says Allison.
Westlake’s incubation model
Today, 80% of Westlake’s portfolio companies are based in California, and 40% are based in the greater Los Angeles region. Mira Chaurushiya, a managing director at Westlake, says the firm’s team spends only two days a week in its offices. Its staff is mostly out in the field, meeting founders, spending time in labs and gauging whether a portfolio company is ready to emerge from stealth and take on the rigors of clinical testing.
One company its invested in is Latigo, which in late February publicly debuted with a $135 million series A round to fund its development of non-opioid pain treatments. Westlake incubated Latigo about four years ago. At the time the company’s bet on cell therapy as pain treatment was considered contrarian. Now, cell and gene editing have been validated by successful trials.
“Those treatments have shown how much farther there is to go,” Chaurushiya says. “We’ve been able to narrow in on investments and say, OK, how do we take what we’ve learned from that first inch of success and really figure out how to solve for the limitations?”
The gap between Latigo’s debut and Westlake’s initial investment displays the firm’s incubation method. Through networking and research, Westlake identifies therapies or molecules larger biopharmaceutical companies may have put on the back burner or deemed too risky.
Its model faced the ultimate stress test last year when its portfolio company Acelyrin went public in May amid an IPO drought. Its $540 million fundraise beat analysts’ expectations and remained the largest IPO for the biotech industry in 2023.
After its grand entrance on the public markets, however, Acelyrin’s stock tumbled after a late-stage psoriatic arthritis trial was reportedly botched by an outsourced research organization.
Seidenberg remains on Acelyrin’s board, and subsequent trial stages have shown a recovery in investor confidence.
According to Allison, Westlake sees promising signs on the public markets, which still serve as a cost-reducer for hefty capital needed to sustain often expensive and elongated clinical trial process.
“Investors are coming back in to fund public biotech companies,” Allison says. “A lot of these are specialist investors, but we’re starting to see some generalists come back in as well. We see these as signs of a healthy ecosystem.”
Westlake keeps its incubated cards close to the chest, but says it plans to invest in between 10 and 12 companies from its latest fundraise. Despite the slow merger and acquisition market and high interest rates, the firm maintains around a three-year horizon for this deployment.