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London-based Abingworth Raises $582 million

London-based Abingworth raised $582 million for its second clinical co-development fund. The fund, ACCD 2, is used to make triple-digit million investments in late-stage clinical programs.Abingworth got into clinical co-development investing in 2009.

London-based Abingworth used money from its venture funds, but by 2016 the strategy had matured to the point that it set up a dedicated $105 million clinical co-development fund. The new, ACCD 2 sets the firm to continue making late-stage bets at a time when table stakes are higher than in the past.Tim Haines, chairman and managing partner at Abingworth, said that really just allows us to participate. The deal sizes are certainly going up to some degree and Tim thinks that they probably are doing more larger deals. We may do some deals by ourselves directly.

The co-development companies both finance and facilitate clinical trials, taking on all of the clinical and regulatory risk in return for a pre-agreed return if the drug is approved. Going forward, Abingworth may also invest directly.The sweet spot for investments is in the range of $100 million to $200 million, Haines said, although Abingworth has gone up to $250 million in the past. By investing directly, London-based Abingworth will be able to support companies that have the internal resources to run a program but need capital.

Abingworth first got into clinical co-development it worked with pharma companies that had more clinical candidates than their budgets could support given the desire to limit spending  to protect earnings per share . Rather than running EPS-suppressing clinical programs, pharma companies partnered with Abingworth and only paid out if the project was successful, by which time the cost of the deal could be amortized over the sales of the product.

Abingworth has had one exit from ACCD 1 and has another four deals that are still in progress. Factoring in investments made from venture funds, Abingworth has done 11 deals, seven of which have completed. One deal failed, but the rest returned capital, generating very good returns to the funds.

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