It started at a Las Vegas casino in 2006.
Three former executives at Millennium Pharmaceuticals, holding forth between visits to the blackjack tables, lamented the dearth of funding for biotechnology startups working on big innovations. Then they decided to do something about it.
“We said, ‘Let’s be the supplier of these disruptive companies,’ ” recalls Kevin Starr.
The following year, Starr, Mark Levin, and Robert Tepper founded Third Rock Ventures, a Boston firm dedicated to bankrolling startups at a time when other venture capitalists and big pharma companies had shifted their focus to later-stage drug programs.
Third Rock didn’t just fund companies. It helped launch them from scratch and routinely led the businesses in their early stages. Last year, three companies built with Third Rock’s ground-up approach went public and raised a combined $328 million.
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In its brief history, Third Rock has raised three venture funds, totaling $1.3 billion under management and devoted exclusively to health care businesses. It has spawned a portfolio of 35 companies — 24 in greater Boston and the rest in the San Francisco Bay area. Together, they have more than 25 drug candidates in clinical trials in areas ranging from gene therapy to cancer metabolism.
The firm, based in a Newbury Street brownstone, closed on its third fund last year, raising $516 million. Its three portfolio companies that went public — orphan disease drug maker Bluebird Bio, cancer drug maker Agios Pharmaceuticals, and cancer diagnostics startup Foundation Medicine — were among the best-performing biotech IPOs of 2013.
The venture firm’s founders refer to their method of starting companies as TRUKK, which stands for “Third Rock Ultra Killer Kriteria” (spelling is not a priority).
That means building companies locally, going after large, unmet medical needs, and consulting with top scientists to design “product engines” that can work across disease areas. It also means bigger-than-average initial investments — often $35 million to $45 million — and venture principals rolling up their sleeves.
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Third Rock partners typically take leadership positions in startups. They put in thousands of hours over the first year to 18 months before hiring managers to take the businesses forward. They also work to shave time off the drug development process.
“We’re a company that builds companies,” said Tepper.
He said Third Rock launches three to five startups a year, all of which have been long in the planning. “The way we view Third Rock and the companies we start is we’re the front end of the drug discovery process.”
Ideas for new companies are vetted by an all-star team of science and business advisers such as Eric Lander, founder of the Broad Institute of MIT and Harvard, and Henri A. Termeer, former chief executive of rare diseases giant Genzyme Corp.
Third Rock develops detailed business and research plans before launching companies. Its startups go through a battery of reviews and “go/no go” decision points before compounds are brought to the clinic.
“They’re incredibly unique in sharing their passion and vision,” said Michael Pellini, chief executive of Foundation Medicine. “They’re willing to consider very important opportunities that come with high hurdles. They believe that, with a little more work, the right funding, and a little more patience, you can overcome those hurdles.”
Third Rock’s founders find themselves in demand by giant drug makers eager to strike research alliances or co-invest in their companies. They try to create cultures that value teamwork, looking for scientists and entrepreneurs who can play well together.
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“Individual genius is great,” said Levin, “but drug development goes well beyond individual genius.”
Robert Weisman can be reached at robert.weisman@globe.com. Follow him on Twitter @GlobeRobW.