This article has been revised and corrected from the original version.
A new lender has emerged on the Los Angeles scene – one specifically targeting established life science companies.
Symbiotic Capital, a non-bank lender co-founded by local biotech magnate Arie Belldegrun, officially launched last week with more than $600 million in capital raised. One of the other co-founders and co-chairs is a familiar name on the L.A. banking scene: Russell Goldsmith, former City National Bank chief executive and chair.
Symbiotic is part of Belldegrun’s investment empire that’s under the Bellco Capital banner and is based in Bellco’s Century City headquarters office.
Symbiotic has quietly been making loans since last fall to life science companies – under a dozen loans and credit facilities totaling in the hundreds of millions of dollars.
Last week marked Symbiotic’s official launch as one of the few non-bank lenders with a single focus: established life science companies. These include pharmaceutical, medical device and health tech companies seeking major capital infusions either to get their drugs or other products approved or to expand production capabilities.
To help make these credit decisions, the Symbiotic co-founders have assembled a team of life science industry experts that include a former pharmaceutical company chief executive, a major health clinic executive, life science-focused venture capital investors and bioscience academic scholars. This focused panel of experts is relatively unique in the lending world.
“The life science industry continues to experience unprecedented productivity, innovation and scientific discovery as biotechnology and technology converge,” Belldegrun said in the announcement. “As the cost to research, develop and commercialize innovative therapeutics, devices, tools and other products has increased substantially throughout the sector, credit has become an increasingly important financing tool for established healthcare enterprises. With Symbiotic Capital, we have designed a science-first credit platform to fuel those endeavors.”
Part of Bellco Empire
Symbiotic is the latest chapter in Belldegrun’s two-decade-long effort to create a bioscience ecosystem in the L.A. market through his main investment vehicle Bellco Capital. He started Bellco with proceeds from the sales of three life science companies he founded or co-founded: Agensys (sold in 2007 to Tokyo-based Astellas Pharma for $537 million); Cougar Biotechnology (which sold in 2009 to New Brunswick, New Jersey-based pharma giant Johnson & Johnson for nearly $1 billion); and Kite Pharma, which was sold to Foster City-based Gilead Sciences in 2017 for $11.9 billion.
Belldegrun has used Bellco as the platform for a biotech funding and real estate empire. He became a major partner in a biotech private equity fund Two River Group Holdings and created another life science-oriented venture capital fund called Vida Ventures that now has more than $2 billion under management. And five years ago, he created Breakthrough Properties, a joint venture with New York-based real estate giant Tishman Speyer that invests in and creates biotech research parks across the nation and in Europe.
And now, there’s Symbiotic Capital.
In comments to the Business Journal, Belldegrun said that the original impetus for setting up Symbiotic came from others on the Bellco team. And it was also a matter of timing.
“If you had approached me five or six years ago on the subject of providing credit to companies, I would have said, ‘Who needs credit? Life science companies can get as much money as they want,’” he said. “But now, with innovation in the industry at an all-time high while at the same time the financial climate being low, I see that credit can be a powerful tool to fund the growth of viable later-stage companies as they work to improve patient care.”
Filling a lending void
Traditionally, banks have been the main vehicle for offering loans and lines of credit to companies needing capital. But, according to Josh Bradley, chief investment officer for Bellco and one of the co-founders of Symbiotic, banks have generally shied away from making loans or extending credit to life science companies, even those that are beyond the startup phase.
“Banks don’t have scientists, surgeons and researchers, and they don’t have a clue about the FDA (Food and Drug Administration),” Bradley said. “You need that expertise to extend credit to life science companies and traditional banks don’t have that expertise,”
There have been a few exceptions. Bradley noted that the recently failed Silicon Valley Bank included biotech companies in its extensive tech loan portfolio.
He added that other non-bank lenders have stepped into this void in limited fashion, including Century City-based Ares Management Corp.
“But with companies like Ares, extending credit to life science companies is only one part of a very broad portfolio,” Bradley said. “To my knowledge, there is no other asset lender exclusively devoted to life science companies with the depth of our panel of scientists and industry experts.”
That panel includes Franz Humer (former chair and chief executive of Basel, Switzerland-based pharma giant Roche Holdings), Toby Cosgrove (former chief executive of the prestigious Cleveland Clinic), UCLA researchers Jim Economou and Owen Witte; and life science venture investors Amy Schulman and Helen Kim. Also on the panel is Joshua Kazam, co-founder and partner with Two River as well as a co-founder of South San Francisco-based Allogene Therapeutics (which was cofounded by Belldegrun).
Symbiotic is being welcomed by local biotech industry boosters, who have seen the lending environment for life science companies grow more difficult in the last couple of years.
“Economic headwinds and tight capital markets have challenged the industry, and new solutions to meet growing and established companies’ financial needs are welcomed,” said Dan Gober, executive director of the L.A. chapter of Biocom California, an industry group headquartered in San Diego.
“Backed by one of the L.A. life science industry’s most widely recognized entrepreneurs, this creative new mechanism for lending can serve companies facing the increased costs of research and commercialization by applying a ‘science-first’ credit platform,” Gober added.
Loan strategy
Belldegrun also tapped Goldsmith, a longtime friend, as a banking expert. Unlike those on the panel, Goldsmith is an official co-founder of Symbiotic.
Goldsmith served as chief executive of City National Bank from 1995 until early 2019, by which time the bank had been part of the Royal Bank of Canada for more than three years. Goldsmith remained as chair of City National until early 2022, when he retired.
“Arie (Belldegrun) and I have been friends for over 20 years; we’ve invested in things together,” Goldsmith said. “When he and Josh Bradley came to me with this, my first reaction was, ‘I’m done making loans.’ But I thought this was something that would be successful that I could make a meaningful contribution to in a part-time role.”
Goldsmith said he was also interested in anything that could boost life science companies.
“The ability to help companies progress in developing pharmaceuticals, medical devices and life science-oriented software was appealing,” he said.
Although Symbiotic is being referred to as a life science credit firm, it will not be extending lines of credit in the traditional sense. Goldsmith and Bradley both said that the main focus of Symbiotic will be on making term loans, with the “sweet spot” for those loans ranging from $20 million to $50 million.
“Then, if a borrower hits certain benchmarks, we will add to that total commitment,” Goldsmith said.
Symbiotic on occasion may also choose to participate in larger loan/credit deals of more than $100 million.
