Nicholas McGrath – MPM Capital

It’s a different type of executive team that Nicholas McGrath interacts with as general counsel and chief compliance officer of MPM Capital, a life sciences venture capital firm with offices in Cambridge, Massachusetts, and Brisbane, California.

Nicholas McGrath | General Counsel, Chief Compliance Officer | MPM Capital

Doctorates and medical degrees, not master’s in business administration, bestow the investment professionals employed at the company.

That’s the kind of brainpower more commonly found in research centers rather than in venture investing, but MPM Capital is no typical firm, McGrath says. Even among impact investors, it stands out—its purpose being to finance life sciences companies, sometimes through partnerships with Greater Boston’s world-renowned health care institutions.

Currently invested in approximately 40 companies—most of them in oncology—MPM Capital has invested and sold its ownership in around 200 since its founding in 1996, priding itself on positioning those entities to advance. What further differentiates MPM Capital is that it donates a portion of its proceeds to foundations whose research stands to boost medical science and to provide cancer care for children in developing nations.

“Our team approaches its investment philosophy uniquely,” McGrath tells Vanguard in July. “They’re unlike the investment professionals you’ll find at other firms. They’re not just investing in companies, they’re making an impact on the world in a positive manner. It’s a privilege to work with a group of people set on making a difference.”

A fine fit

McGrath’s peers must have been duly impressed with his credentials in healthcare, business and law. They recruited him from ACA Compliance Group in the spring of 2019 to join an operations team that includes venture capital veteran Kristen Laguerre as chief financial officer and chief operating officer, and Kellie Neville as director of investor relations. Prior to ACA Compliance Group, McGrath was the general counsel and chief compliance officer at another well-known healthcare investment firm, RA Capital.

An eventful year-plus it’s been, says McGrath, whose contributions include enhancing and streamlining MPM Capital’s legal and compliance program, as well as assisting the firm with launching two new funds:

• Oncology Impact Fund 2, a collaborative investment vehicle with UBS.
• MPM Oncology Innovations Fund, a collaborative investment vehicle with Boston’s famous Dana-Farber Cancer Institute; the entities now sharing a first-of-its-kind partnership.

MPM and Dana-Farber having previously created companies such as CoStim Pharmaceuticals, their more recent initiative combines fundraising for biotech venture capital investing with philanthropic fundraising for oncology research.

Compliance and science

As one might surmise, such a business model necessitates a specialized legal eye; one tuned to, among other areas, compliance and intellectual property, particularly with some of MPM’s holdings in various states of transition and all having the potential to disrupt the life sciences.

One MPM company, the Cambridge biopharma iTeos Therapeutics, just began trading on the Nasdaq Global Market, its 10.5 million shares opening at $19. Another company, Tizona Therapeutics, piqued the interest of Gilead Sciences. Still another holding, Oncorus Inc., recently partnered with Merck on its lead program’s clinical trial. Then there’s Chiasma Inc., which in June garnered FDA approval of its capsules for acromegaly—a disorder resulting from excess growth hormone.

“It’s an ever-evolving world out there,” McGrath says of compliance, noting the need for in-house education and open-door dialogue. “You have to be thoughtful with your approach when it comes to creating and crafting a legal and compliance program. You can’t just pull it off the shelf. It has to be tailored—a living, breathing program since new rules and regulations are promulgated each year.”

As the legal boss of a registered investment advisor, McGrath says his work changes from day to day; investment vehicles to manage, public and private investments to oversee, compliance policies and procedures to implement and enforce, and other legal issues found in any business.

The workforce tech-savvy and the operations predominantly cloud-based, McGrath says COVID-19 and its stay-at-home orders had surprisingly little effect on the firm and Zoom meetings have kept everyone posted on the latest developments.

“While there have been impacts on the market overall, we believe our portfolio is relatively well-positioned,” he says. “If there’s a silver lining to COVID, it’s the focus it’s brought to our industry. A lot of companies working in our realm now are in the spotlight in mainstream and social media.”

Law prevails over biotech

Coming from an extended family well-represented in the medical profession, McGrath says he always had an interest in biotech though he opted for international business as an undergrad. He enrolled at the University of Maine School of Law and then pursued an LL.M. at St. John’s University Law School.

He cut his teeth as an associate for a couple of Boston area law firms, K&L Gates, and Hemenway & Barnes, then became general counsel and chief compliance officer at the life science investment firm, RA Capital.

At RA Capital, also a multistage investment manager in the life sciences, McGrath delved into its many legal, regulatory and compliance functions, as he does today. He spent some time as a vice president at ACA Compliance Group, and accepted MPM’s offer to join the team in 2019.

And not just any team, he emphasizes.

“The individuals whom I work with are brilliant,” McGrath says. “Their scientific background allows them to approach matters differently. The questions they ask are thoughtful and insightful, as they’re out to make an impact through lifesaving drugs.”

“It’s a privilege to help the organization develop a strong legal and compliance program so the firm can focus on enhancing the value it brings to the world by founding and investing in companies that seek to translate scientific innovations into cures for major diseases.”