Making investments in the biotech sector is notoriously difficult, especially when trying to gauge the potential of small firms with few or no commercial products. However, smart investments can be made in smaller-cap biotechs with the help of sound research and a balanced approach to risk, according to Dennis Purcell, senior managing director of Aisling Capital II, a private equity fund with $1 billion under management. Purcell, who previously spent time at Chase H&Q and PaineWebber before joining Aisling, starts his analysis by looking at the type of disease a company is targeting, how many people are affected by it and what treatments either already exist or are in trials. Aisling, based in New York, tends to make investments in biopharma companies that need $15 million to $30 million or more in new capital, depending on the firm's stage of development, perceived risk and funding requirements. During a recent interview, Purcell offered a glimpse of a few names he likes, some of which research widespread and widely studied diseases like heart ailments and cancer, and others that are trying to make life better for people with considerably less-common conditions.
One of his investments is in Myogen ( MYOG), a Colorado-based biopharmaceutical company that has joined with drug giant Novartis ( NVS) to develop treatments for heart disease. The Myogen drug ambrisentan, for pulmonary arterial hypertension, is in late-stage clinical trials and has received fast-track designation from the Food and Drug Administration. Myogen has sold the rights to the drug outside of the U.S. to GlaxoSmithKline ( GSK). Among cancer-research companies, Purcell likes Bioenvision ( BIVN), which has a drug in late-stage development for childhood leukemia, and Allos Therapeutics ( ALTH), whose experimental drug -- for patients with breast cancer that has spread to the brain -- is in phase III trials, the last stage of study before FDA approval is sought.