Venture Profile: At A.M. Pappas, Life Science Firms Are the Focus of Attention

Editor’s Note: This is the 17th in a series of profiles of venture capital and investment firms operating in the Carolinas and Georgia. The series was compiled by Matthew Burns and Daniel Pearson. The series runs Monday through Friday. Former Glaxo executive Art Pappas stuck with what he knew when he formed the A.M. Pappas & Associates investment firm in 1995. The firm backs and advises only companies involved in pharmaceuticals, biotechnology or other life sciences research.

With $150 million under management in three fund families, A.M. Pappas looks for early to mid-stage investments, ranging from $100,000 seed deals to $6 million later-stage mezzanine transactions.

Its portfolio has included Apex Bioscience, ArgoMed, Bio-Informatics Group, Incellico and Nobex, and one of its funds also looks for investments in promising micro-cap public companies.

In addition to its investor role, A.M. Pappas also acts as an advisor to many companies, tapping the expertise of a veteran advisory board and a network of partners in fields like bioinformatics and contract research to assist in providing advice to clients. The firm provides guidance in licensing technology, lining up strategic partners, completing mergers or acquisitions, assessing the strength of a development pipeline or transferring research from a university lab to a for-profit spinoff.

Here’s the skinny:

Featured Firm: A.M. Pappas & Associates

Mailing address: Emerging Technologies Center, PO Box 110287, Research Triangle Park, NC 27709

Phone number: (919) 998-3300

Website: www.ampappas.com

Management Team:

Ken Lee, president
Art Pappas, chairman and CEO
Eric Linsley, executive VP, CIO
Bill McCulloch, executive VP, medical director
Russ Savre, senior VP, CFO
Ford Worthy, senior VP, legal counsel

Focus of firm: Life Sciences

Size of current fund: $102 million

Money under management: $150 million

How many of those dollars have been invested: Declined to disclose

Companies funded in 2001: Five companies, declined to disclose name of each company, saying the information is private. But some information can be found on company Web site.

Companies funded over the last five years (amount and round for each co.): Declined to reveal.

How many new deals do you expect to fund in 2002: Of the nearly 1,000 plans they receive each year 1 percent makes it to the final due diligence stage. Firm has no target or expectations for how many companies they would like to invest in this year.

In what size range: Mostly small upstarts in life sciences

Sweet Spot (types of deals, stage of the company): Although we like to avoid it fund managers will offer both investment and advisory services simultaneously.

Most important attributes for companies seeking funding: Interested companies must have a focus on biotechnology, biopharmaceuticals, drug delivery, medical devices and health information systems, although Internet and information technologies with compelling life science industry applications are also of interest. Look primarily for early to mid-stage investments.

What differentiates you: The fund prides itself on understanding the technology at the heart of most deals, and the regulatory environment through which it must traverse.

Wednesday’s Profile: Piedmont Venture Partners