HomeAustraliaBrandon Capital, Interview with London Based Partner Jonathan Tobin

Brandon Capital, Interview with London Based Partner Jonathan Tobin

Jonathan Tobin - Partner Brandon Capital
Image for Brandon Capital. Photograph by Chris Hopkins

Some days ago, Brandon Capital, a Melbourne, Australia-based life sciences venture capital firm, announced the launch of its sixth fund, Brandon Capital Fund VI, with an initial close of US$180M.

In conjunction with the announcement, Jonathan Tobin, London, UK-based Partner at Brandon Capital, replied to our questions about the firm, its strategy, plans, and much more.

VCWire: Hi Jonathan, can you please tell us a bit more about you? What’s your background? 

I lead Brandon Capital’s London office to help foster a two-way expertise and capital exchange between Australia and Europe. Before joining Brandon, I was a Managing Director at Arix Bioscience, a UK and US-based biotech venture firm, building the team and portfolio there, as well as a Principal at Touchstone Innovations. Previous investments included Artios Pharma ($multi-bn deals with Novartis and Merck), VelosBio (acquired by Merck in 2020 for $2.75bn), Inivata (acquired in 2021 for $415m), Pheon Therapeutics, Myricx Bio, and Astronautx, amongst others.

I joined Brandon Capital in 2021, opening the London office, for 3 reasons: 
1) the founders Chris Nave and Stephen Thompson are exceptional individuals that have built an amazing culture, and the team is a pleasure to work with. 
2) there is a rich seam of high quality research in Australia that is not obviously visible to most VCs in Europe and the US, as well as a natural fit with the investing style, the co-investors, and management talent in Europe. This has created an opportunity for an Aus-Europe axis which has not previously existed. 
3) Australia has a forward-thinking pension fund industry which has been hugely supportive of our firm and the innovative companies we create and build.

VCWire: Can you introduce your firm? 

Brandon Capital is Australasia’s leading life sciences venture capital firm, with offices in Australia, New Zealand, the US and the UK. Its unique model includes proprietary ANZ deal flow through Brandon BioCatalyst as well as accessing early-stage opportunities internationally through our networks. We are actively involved and provide hands-on support to all our companies as they grow.

Having recently announced the first close of our sixth fund, totalling A$270 million (US$180 million), the firm now has over A$1.25bn under management across six funds.

Founded in 2007 from a standing start within a nascent Life Sciences sector, support from Australian superannuation (pension) funds has helped propel our international expansion.

With more than 30 active companies in its portfolio, Brandon Capital has been transforming ANZ’s world-leading science into world-leading businesses for nearly two decades.

Many of our Australian companies have management, board members, and advisors in the UK and use CROs and clinical research facilities here—so UK expansion makes complete strategic sense for the firm.

VCWire: Which is your overall strategy?

Brandon Capital is Australia’s largest life sciences investor. It operates from offices in Australia, New Zealand, the United Kingdom and the United States. Headquartered in Melbourne, Brandon Capital leverages Australia’s biotech sector, renowned for its world-class medical research and sophisticated clinical trial infrastructure. It manages the innovative Brandon BioCatalyst member network, a collaboration that involves over 50 Australian and New Zealand medical research institutes and hospitals, dedicated to seeding emerging biomedical innovations.

Brandon Capital’s strategy focuses on early-stage innovations with strong scientific and commercial potential. We will continue its early-stage investment strategy, investing at the pre-seed/seed and Series A stage, and also support its later-stage growth into world-class life sciences companies. We’ll continue to build on our recent expansions into the UK and Europe to strengthen our presence and broaden the firm’s investment reach.

For this new fund, there are no geographic spread targets, although we anticipate that roughly 50% of the fund will be invested in ANZ and 50% will be invested Internationally.

VCWire: Beyond capital, how do you support startups?

The firm provides critical support, management, and investment to propel portfolio companies through their early growth stages.   

And beyond this, Brandon runs the CUREator incubator, which, with funding from the Australian Medical Research Future Fund, provides non-dilutive capital to promising early-stage research, an internship program and was the founding partner for a women-in-leadership (WILD for Stem) program. 

There is an emerging Australian-EU axis. Brandon Capital seeks to build the financial and capability substructure for a transcontinental Life Science Axis, introducing Australian biotechs to the US and UK markets increases their funding, talent and potential acquirer networks.

VCWire: What can you tell us about your LP base? Are they helpful? How? 

Investors in this new fund also invested in our fifth fund – they include superannuation funds HostPlus and Hesta; major pharma CSL and the Queensland Investment Corporation.

Our Funds provide superannuation funds with exposure to an asset class that delivers healthcare, investor and economic benefit and impact. We have had a relationship with Hesta and HostPlus for over ten years. Hesta, initially through IFM, invested with Brandon Capital in 2007, then directly from 2015. HostPlus in 2015 and CSL has been an investor with us since 2017.The Queensland Investment Corporation is a new investor.

We are opening up Fund VI to a broader investor base, including local Family Offices and overseas investors. We are delighted with the size of the initial close. Fund VI is already larger than Fund V, so an evolution in terms of fund size.

For our (smaller) previous Funds we did not really go ‘out to market’ with most of the demand taken up by existing investors or investors who had been following us for some time. For this larger and more international fund, we are actively in the market meeting prospective investors. Brandon is keen to partner with sophisticated investors with an interest in supporting the development of products that improve patient’s lives as it takes substantially longer to develop a pharmaceutical or biotech therapy, compared to a software product.  We are seeking investors who are comfortable with investing in a fund with a 10-12-year lifetime and who understand the long development timelines often associated with bringing new medicines and therapies to market.

VCWire: What do you like to see in founders?….And what don’t you like to see in them? I mean, is there something which impresses you at a first glance?  

First and foremost the founders must be genuine experts in their field – they must have answers at their fingertips, be across the detail, have vision and ambition, but also have the humility to understand what they don’t know and where they need professionals around them to fill those skills. They also need to be someone that values the input of investors, not just the money but for the fact that investors have the repeated experience of building and transacting companies, raising capital, and guiding strategy. There should be a genuine collaboration between founder and investor, rather than an adversarial relationship. When this works well, it is a highly productive partnership.

Brandon has a great reputation of working constructively with founders, as evidenced by all our successful entrepreneurs coming back to us for their second companies.

VCWire: Please, tell us a bit more about the portfolio. You can list five startups whose paths have made you particularly proud of.      

Our current portfolio include biotechs, medtechs, healthtechs and platform companies – approx. 80% are developing therapeutics. We are pleased that many have already reached late stage clinical trials (Phase 2 and 3) including for example Glyscend and Georges Medicines in cardiometabolic; Aravax and Certa Therapeutics in immunology and fibrosis; Catalym in oncology; Polyactiva, Azura and Allay Therapeutics in ophthalmology; Ena Respiratory and Vaxxas in vaccines and infection.

In terms of successful exits, a few examples include

  • EBR Systems, a therapeutic device for Cardiac Resynchronization Therapy (CRT) in heart failure, currently completing a pivotal Phase 3 clinical study and listed on the ASX in 2021
  • Longas Technologies, a company that developed long read DNA sequencing technologies. Our exit in 2021 in a transaction with an undisclosed leading industry player for an undisclosed amount delivered one of our best returns.
  • Elastagen, developer of a protein to renew skin elasticity, was sold to Allergan for US$260m in 2018.
  • Spinifex Pharmaceuticals, developer of a chronic pain treatment sold to Novartis for US$700 million in 2015.
  • Fibrotech, which was developing a new class of drugs to prevent fibrosis was sold to Shire Group in 2014 for US$75 million up front, US$400 million in potential milestone payments and royalties and sales.

VCWire: Which sector/s would you bet 2 cents on in the next five years?  

A tough question – we have a wide investment interest, 100% focused on the life sciences sector. We have been relatively early into the hot field of ADCs placing two bets there – one on a novel target (Pheon Therapeutics), and one on novel payload technology (Myricx Bio). Our bet is that both these areas will become hot over the next few years. We also think the antibody delivery concept will be applied to other therapeutic areas, and are very interested in alternative uses of biologics to deliver therapeutic molecules.

The other area we have placed two bets on recently is neuroscience. Having previously stayed away from the field, we decided that the timing was right, and the biological understanding emerging, to invest in this space. It is one of the largest unmet needs, particularly in the areas of neurodegeneration, and associated issues with sleep and psychiatric illness. We are invested in NRG Therapeutics, which has a novel target for Parkinson’s and ALS; and Astronautx, which is taking a completely orthogonal approach at Alzheimer’s.

VCWire

06/06/2024