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Pantheon, LGT back early-stage biotech restructuring

The deal involving Medicxi was based around six assets and completed at a premium to NAV, co-founder Francesco De Rubertis told Secondaries Investor.

European life sciences investor Medicxi has closed a complex secondaries transaction on its 2011-vintage fund.

The London-based general partner gave investors in Index Life VI fund the opportunity to sell their holdings or roll into a separate vehicle containing six preclinical- and clinical-stage assets, according to a statement.

Pantheon and LGT Capital Partners co-anchored the €200 million continuation vehicle, which is named Medicxi Secondary 1. Campbell Lutyens advised on the deal with Travers Smith acting as Medicxi’s legal counsel.

“In early-stage biotech, when transactions [like this] happen, it’s usually because the manager is desperate and is selling down the assets for cents on the dollar,” co-founder and partner Francesco De Rubertis told Secondaries Investor. “This is not a value bargain deal. The secondary guys had to pay above the NAV of those assets.”

Medicxi was examining ways to move the assets to the “next level of value creation” and was approached by Pantheon and LGT, which were not existing LPs, with the idea of a GP-led deal, De Rubertis said.

“A vast majority of investors” in the fund opted to roll into the new vehicle, consisting of €120 million to acquire the companies and €80 million of follow-on capital. The principals of Mediicxi have reinvested in the vehicle, De Rubertis said.

The companies in the vehicle include Levicept, which develops therapies for chronic pain, and oncology-focused UltraHuman, he added.

Secondaries Investor reported in 2018 that the market for healthcare assets is around $25 billion to $35 billion in size with deals pricing at an average discount to NAV of 25 percent to 35 percent.

Medicxi has around €1 billion in assets under management, according to PEI data.