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— Dealmakers —
After leaving Ernst & Young, Burrill launched his firm in 1994. Today the San Francisco biotech veteran is trying to build biotech businesses in different parts of the world in a bit of a twist to the traditional advisory model. But then, Burrill & Co. is a bit unique, offering venture capital, merchant banking and media-research experience in the biotech sector. The firm also hopes to raise a $500 million private equity fund that will invest in healthcare buyouts and listed smallcaps. This diversity has helped Burrill amass relationships. "Steve knows everyone," says Ron Ellis, CEO of oncology drug developer Endocyte Inc., which this year received VC funding from investors including Burrill. These days, Burrill, 65, is in negotiations to acquire the rights to an Indian company's midstage technology and develop it in Brazil.
"If you go to a company in India and ask for the rights to their technology in Brazil, by the time they figure out what they're doing with that technology, it'll probably be five years," he says. "So the net present value is zero, which means I can acquire it for almost nothing. But if I take it to Brazil, where I have capital, it has extraordinary value." This process -- arbitraging values across borders -- underpins Burrill's global strategy. Burrill burnished his reputation as an innovator when he got a call from Prime Minister Abdullah Ahmad Badawi of Malaysia in 2006. Burrill recalls: "He said, 'Steve, I need you to build an industry here.' And I said, 'Great, I need your money.' " Three years later, the Malaysian Life Sciences Capital Fund, a $150 million venture capital fund co-managed and co-financed by Burrill & Co. with state-owned Malaysian Technology Development Corp., has completed seven transactions; an eighth project is in the works. The venture fund itself obtained 99.5% of the capital commitments from the Malaysian partner. Burrill & Co. contributed the rest as 50% owner of the management company. So far, the partnership has founded two companies in Malaysia. Chakra Biotech Sdn. Bhd., a developer of therapeutics for mental illnesses, was spun out from Singapore's Chakra Biotech Pte. Ltd. In October, it launched vaccine maker Sentinext Therapeutics Sdn. Bhd., led by former Bavarian Nordic A/S CEO Peter Wulff. A third, Abunda Inc., a nutrition and branded foods concern, is being incubated in San Francisco. Depending on the opportunities, the joint venture fund also invests in U.S. companies that can export their technology to Malaysia for local production and distribution. It invested in Light Sciences Oncology Inc., a Snoqualmie, Wash., developer of laser technologies to treat cancer tumors, which raised $40 million in venture capital in June 2008. It's still too early to evaluate how these bets will turn out, but Burrill continues to build on the Malaysian collaborative experience. He has VCs stationed in South Korea, China, India, Brazil, the Nordic region and the Middle East who are scouting opportunities and trying to raise capital. He is pursuing similar efforts in Chile, Japan and Taiwan. Meanwhile, Burrill keeps a watchful eye on the domestic front, where he believes spinouts of business units and early-stage technologies remain attractive. He points to recent Big Pharma mergers -- Pfizer Inc.-Wyeth and Merck & Co.-Schering-Plough Corp. -- as opportunities for smaller investors to create value. Pfizer tapped Burrill to advise on the sale in July of a portfolio of dermatology products worth less than $100 million to drug distributor Graceway Pharmaceuticals LLC. "If you take an operating business unit that, say, Pfizer spent $500 million developing, and then you buy it for $25 million and develop it yourself, there's a lot of value in that," Burrill says. "We have a term sheet out on a U.S. generics firm, which would be our first generic," he adds. Interest in generics hasn't waned and companies such as Sandoz Inc. and Teva Pharmaceutical Industries Ltd. are trolling for generics acquisitions in such places as India. The middle market is generally the firm's sweet spot, but its capabilities have expanded. Burrill & Co. is advising on a $1 billion financing for a large pharma, likely to be announced by year's end. The merchant banking arm advises on transactions of $100 million to $150 million upfront, with milestone payments and risk-sharing agreements bringing total value up to the $500 million to $1 billion range. Adding to the mix is a recently acquired sales and aftermarket trading business. The firm's depth of experience has helped win over such clients as F. Raymond Salemme, CEO of a small biotech, Redpoint Bio Corp. of Ewing, N.J. In 2003, Salemme sold his drug-discovery technology startup, 3-Dimensional Pharmaceuticals Inc., to Johnson & Johnson, with Lazard advising him. More recently, when Salemme began exploring alternatives for Redpoint, he chose Burrill. Salemme says the firm has worked with companies that, like Redpoint, apply biotech to the food and beverage sector. For now, Burrill seems to be everywhere, chasing spinouts in Mumbai, funding startups in Malaysia, arbitraging values in Brazil, and overseeing the firm's annual state-of-the-industry report in San Francisco. How does he do it? "I sleep three hours a night so I can get to the office at 3:30 in
the morning," he says. "I got my local Starbucks to open at 3:30 so I
can get my morning coffee. Now that's real power." Related features |
G. Steven Burrill became a fixture in Silicon Valley in the 1960s as a partner at Ernst & Young LLP's high-tech and biotech accounting business. At various points in his 28-year career, he advised a range of clients from Steve Jobs of Apple Inc. to drug delivery entrepreneur Alejandro Zaffaroni, who founded Alza Corp. in 1968. Among his early clients were names like Genentech Inc., Amgen Inc. and Gilead Sciences Inc. 
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