The listing of buyers backing little-known life sciences fund Catalio Capital reads like a roll name of personal fairness and hedge fund titans. Amongst them: Thoma Bravo’s Orlando Bravo, Brevan Howard’s Alan Howard, Stanley Druckenmiller and KKR’s Henry Kravis.
How a tiny biotech enterprise capital fund led by 33-year-old managing companion George Petrocheilos attracted such a kaleidoscope of finance luminaries is a narrative of equal components hustle, chutzpah and connections.
It has not harm that the daddy of Petrocheilos’s co-founder Jacob Vogelstein is a famed geneticist who has allowed his son’s agency to incubate corporations bearing a few of his most promising concepts in most cancers therapy. Petrocheilos’s pater and mitera have been additionally early-stage buyers in Catalio, whose title is the Greek phrase for “catalyse,” or velocity up.
No matter how Catalio amassed capital or marshalled assets, the agency’s work is paying off: It has returned greater than $300mn to its restricted companions in recent times, a uncommon feat in a troublesome market.
“This man will name anyone — that’s the sweetness about him,” Kravis mentioned of Petrocheilos in an interview. “There is no such thing as a one he gained’t converse to. It’s wonderful how many individuals he has gotten to know over time who adore him. They’ve given him cash they usually proceed to offer him extra money.” KKR not too long ago bought a minority stake within the group, its first funding in an early-stage life sciences investing fund.
Led by its relentlessly networking Greek-born managing companion Petrocheilos and his co-founder Vogelstein, a scientist who met Petrocheilos whereas finding out at Johns Hopkins College, Catalio has engineered 20 exits because it was based 4 years in the past. Its property below administration have topped $1.3bn, a speedy ascent in a sector that has struggled to draw new capital in recent times.
Vogelstein performs the function of the “quiet and good” skilled “digging into the science of investments”, whereas Petrocheilos is the networker and fundraiser with “extra power than an Energizer bunny,” in accordance with Kravis, who serves as Catalio’s chair.
Catalio has managed to journey out a uneven few years within the biotech VC trade, through which corporations have struggled in opposition to rising rates of interest and a scarcity of capital obtainable to biotechnology corporations spending closely to develop merchandise with unsure monetary prospects.
Petrocheilos was launched to Kravis by KKR’s now co-chief govt Joseph Bae, who Petrocheilos first impressed over a 15-minute espresso as a college pupil. Bae provided an internship; as a substitute Petrocheilos requested Bae to vow to have lunch with him annually.
“I get many nos,” mentioned Petrocheilos in an interview from Catalio’s workplace in New York’s Chelsea neighbourhood. “No as we speak means no as we speak, it doesn’t imply no tomorrow. Asking one other time and one other time is free.” Petrocheilos’s ambition has helped Catalio break into the clubby world of early-stage life science investing, which is dominated by enterprise capitalists in San Francisco and Cambridge, Massachusetts.
Alongside Petrocheilos’s hustle, Catalio’s different “secret sauce”, Kravis mentioned, got here from Vogelstein’s father, Bert, a famed Johns Hopkins researcher, who helped the agency assemble a roster of 45 main scientists, together with a number of Nobel Prize winners, to advise on potential investments.
The older Vogelstein’s laboratory has been the supply of 5 of the 75 corporations through which Catalio has invested, together with its greatest exit up to now: most cancers diagnostics firm Thrive, which was purchased by Actual Sciences for as much as $2.1bn. Vogelstein mentioned he “by no means” anticipated to enter enterprise along with his son.
“Jacob clearly has the technical and scientific expertise that George doesn’t,” mentioned Vogelstein. “George has a considerable amount of contacts that he’s met, although he’s younger . . . that he has acquired each by his household and his personal doing, which has been very helpful. They appear to be an excellent pair.”
Johns Hopkins has additionally confirmed to be a helpful community. The agency was first backed by Philippe Laffont, the billionaire founding father of hedge fund Coatue Administration and the daddy of a classmate of Petrocheilos and Vogelstein. Laffont, whose son briefly labored at Catalio, then made introductions throughout the hedge fund trade earlier than finally promoting his stake.
KKR’s funding into Catalio is the most recent in a succession of offers whereby personal fairness corporations, together with Blackstone, Apollo and Carlyle, which generally spend money on giant suppliers to the pharmaceutical trade, have purchased stakes in biotech enterprise capital corporations making riskier bets on novel remedies.
KKR’s Bae and his co-chief govt Scott Nuttall even have private investments within the fund, alongside Druckenmiller, former Goldman Sachs chief govt Lloyd Blankfein and Greek basketball star Giannis Antetokounmpo.
Regardless of solely 24 biotechs having listed this yr throughout the entire sector, six of Catalio’s corporations, together with Arrivent Biopharma and Septerna Therapeutics, have floated. Catalio was additionally one of many first biotech funds to diversify into personal credit score, launching a fund co-led by Blankfein’s son Jonathan, an govt on the agency, that has generated annual returns of greater than 20 per cent, in accordance with buyers.
With Kravis’s steerage, Petrocheilos has additionally assembled a “board of advisers” that features main enterprise figures who wouldn’t usually advise such a younger fund. Members embody Alex Gorsky, the previous chief of Johnson & Johnson, and Dina Powell McCormick, an ultra-connected former prime Goldman Sachs govt who’s now a companion at BDT & MSD.
Petrocheilos predicts Catalio’s future could finally look much more like a personal fairness agency within the healthcare sector, just like KKR. “We might be open to all that stuff at one level,” mentioned Petrocheilos. For Kravis, the similarities along with his agency are not possible to overlook: “They remind me of KKR within the early days: we didn’t suppose too far out, we simply did offers.”
