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  • AUGUST 11, 2009, 3:55 PM ET

Former Bear Stearns VCs Launch Consulting Firm

By Brian Gormley

(This article was originally published in VentureWire, a daily news publication covering start-up companies and the venture capital industry. For more exclusive news and analysis, please sign up for a free trial of VentureWire.)

Two investors who led the venture arm of Bear Stearns Cos. are now helping VCs and executives make investment and strategic decisions.Ryser and Czerepak have teamed up with another Bears Stearns colleague, Health Innoventures co-founder Fritz R. Buhler, to give clients access to help with technical matters such as clinical trial design. Buhler, who provides this and other services through another consulting firm, NDA Partners, is an advisor to BIOptima, based in New York.

With the downturn depressing valuations, venture capitalists have plenty of attractive opportunities, in some cases too many. BIOptima provides extra capacity to vet deals, said Czerepak, who said she has worked with one firm that was looking to take a majority stake in a biotech company. Ryser, who until July 31 was senior vice president, corporate strategy for publicly traded Telik Inc., said he will consider serving as interim chief executive of venture-backed start-ups.Elizabeth A. Czerepak and Stefan Ryser, two founding managing partners of Bear Stearns Health Innoventures, are founders of BIOptima Advisors, a consulting firm formed in May. The pair considered raising their own venture fund after Bear Stearns merged with J.P. Morgan Chase & Co. last year, but the recession steered them in another direction.

“The concept is to offer the type of connection between operations and investment that some venture firms don’t have, or don’t have enough of,” Czerepak said. “We think of ourselves as a trusted set of hands that they can delegate to.”

In addition to Health Innoventures, where they backed companies like Achillion Pharmaceuticals Inc., which went public in 2006, and Agensys Inc., sold to Astellas Pharma Inc. in 2007, each partner has Big Pharma experience.

Czerepak held senior positions in licensing, business development and finance at Hoffmann-La Roche Inc., Merck & Co. and BASF Pharma. Ryser, in addition to Telik, also has been a La Roche executive and with Buhler was co-founder of the venture firm International Biomedicine Management Partners.

Former Health Innoventures Managing Partner Jurgen Drews is not involved with BIOptima. He was not immediately reachable for comment.

VCs and executives have started to turn to BIOptima for a hand in making the most of opportunities in a cash-constrained time, partners said. The firm has quickly picked up clients, including a smaller public pharmaceutical company looking to augment near-term sales by bringing in late-stage clinical products. Czerepak said she has had to turn away a couple of requests. The names of individual clients were not disclosed.

One capital-efficient model BIOptima advocates is rescuing “fallen angels,” drugs that failed in Phase III but could be salvaged. A product that didn’t deliver statistically significant results might be saved through additional clinical work, for example.

That was the opportunity Czerepak and Ryser saw when contemplating their own fund: buying majority stakes in companies with troubled drugs worth saving. Then they would have helped companies recast and improve their clinical program to give their drug a better shot to be approved.

As part of their analysis, Czerepak and Ryser sifted through Phase III failures in search of those resulting from poor trial design, lack of funds, or other reasons apart from the drug itself. Though Health Innoventures - which closed its $212.5 million fund in April 2001 - had an acceptable track record, Czerepak and Ryser would have been raising their fund late last year, the wrong time to be looking for money. But rescuing promising therapies remains a viable strategy, they said.

As consultants, they may be able to help biotech companies secure funds they need to run optimal studies. “I know what happens if you don’t fund something as well as you should,” Czerepak said. “The value inflection gets pushed out, and possibly down.”

One way Ryser said biotech companies get themselves into trouble is by waiting too long to engage the drug-development experts: pharmaceutical companies. Well-funded start-ups often don’t make their move until they need a collaboration, but that’s not always the best course, especially if the goal is to be acquired or to strike a rich deal.

It’s often good for a company to initiate a dialogue before it is ready to partner, Ryser said. The give-and-take is useful, and can help lay the groundwork for a future collaboration, he said.

“Management teams should reach out to Big Pharma companies very early on - you can always turn down a deal if it doesn’t match your needs,” Ryser said. “You need to find your way in those organizations to identify who could be your ally or your champion.”