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Insight & Intelligence:
Jul 28, 2014
When pharma and biotech firms partner with venture capital companies, the industry gets a booster shot. [© Ljupco Smokovski - Fotolia.com]
Total investment size: €150 million ($202.9 million)4 fund, to be named Index Life VI
Purpose: Stimulate promising, early-stage R&D innovation by investing in early-stage, single-asset life sciences companies with assets that have first-in-class or best-in-class mechanisms of action and target areas of unmet medical need. Companies will be in Europe primarily, as well as the U.S. and Israel.
Companies funded include: Egalet (Index led $20 million financing, in which included other unnamed existing investors participated, September 2013); XO1 (Index led $11 million Series A financing, June 2013); GenSight Biologics (participation in €32 million [$43 million] Series A financing, April 2013)5,6
Role of partners: Index will maintain full decision making rights to the portfolio companies. Fund rules and procedures will follow previous Index Ventures funds. All partners agreed to appoint executives to the nine-member Science Advisory Board: five seats for Index, two seats each for GSK and J&J.
Contributions of partners: Half the funding will come from Index, while one-quarter each will be contributed by GSK and J&J.
Rights and/or options: No exclusivity or commitment by GSK and J&J to therapeutics being developed by the startups. Drug companies will need to pursue licensing agreements with Index.
Announced: March 21, 2012
Total investment size: $250 million
Purpose: Provide seed funding for West Coast biotech startups
Companies funded include: None announced7
Role of partners: GSK will retain a seat on the fund’s advisory committee
Contributions of partners: GSK will contribute $50 million toward the $250 million seventh fund that Sanderling Ventures agreed to assemble and manage, named Sanderling VII, plans for which were first reported in 2011.
Rights and/or options: Not disclosed
Announced: January 9, 2013
Total investment size: $265 million Atlas Venture Fund IX
Purpose: Create and/or fund more than 15 new biotech firms; “Provide Amgen and Novartis with strategic proximity to Atlas Venture’s startup formation activities around innovative, potentially high-impact medicines, and catalyze future collaborations around translational research across Atlas Venture’s early-stage portfolio.”8
Companies funded include: Not disclosed8
Role of partners: Novartis and Amgen Ventures, the venture fund of Amgen, are limited partners in Fund IX. The partners’ roles include co-creation of life sciences startups, formation of asset-centric development projects, and helping translate discoveries from ongoing academic collaborations, among others.
Contributions of partners: Not disclosed
Rights and/or options: No exclusivity or any commitment by Amgen or Novartis to pursue opportunities. Atlas Venture maintains full authority over funding strategy and investment decisions.
Announced: May 16, 2013
Total investment size: $270 million
Purpose: Launch and back new ventures that apply scientific breakthroughs to the development of new drugs in areas of unmet medical need.
Companies funded include: None announced
Role of partners: MRL-created Merck Research Ventures Fund made an undisclosed investment in Flagship’s fourth VC fund becoming a limited partner in the $270 million Flagship Ventures Fund IV L.P., which closed last year. MRL will gain exposure to Flagship’s investment and venture creation model to successfully translate scientific innovation into medical breakthroughs. The partnership is also designed to provide Flagship direct access to a global pharmaceutical industry leader with deep insight into pharmaceutical development, commercialization, and regulation.
Rights and/or options: Merck will have an opportunity, but no formal option or special rights, to acquire any startups being created through the Flagship-led fund. As a limited partner, neither the Merck fund nor its pharma company Merck & Co. will be able to control Flagship’s investment decisions.
Announced: April 10, 2012
Total investment size: $495 million
Purpose: Launch up to 10 life sciences startups in San Diego over the next three years, based on technologies from anywhere.
Companies funded include: Sitari Pharmaceuticals ($10 million Series A financing, November 2013)
Role of partners: Avalon will identify promising technologies focusing on early-stage discovery across various therapy areas. Avalon and GSK will jointly approve the formation of new companies based on the technologies and finance the startups together.9,10
Contributions of partners: Avalon will contribute $30 million from its $200 million Fund X, and provide executive leadership and operational management consistent with its current portfolio strategy. GSK will provide up to $465 million in company seed funding, R&D support, and payments tied to preclinical and clinical milestones toward the 10 startups, each focused on discovery of drugs against disease targets.
Rights and/or options: GSK will retain the option to acquire each company upon the generation of a clinical candidate. Should GSK elect not to exercise its option, company ownership will remain with Avalon, which will be free to enter into other strategic transactions.
Announced: April 22, 2013
Total investment size: $760 million
Purpose: Co-invest in about 20 U.S.-based life sciences companies, including pharmaceutical and biotechnology companies, developing innovative products “that have significant applications for patient populations in Russia, and that complement Rusnano’s focus on nanotechnology-based innovation.”11 The partners also agreed to foster technology transfer into Russia, and establish a pharmaceutical and medical device cGMP manufacturing facility in Russia.12
Companies funded include: ReVision Optics (participation in $55 million in Series E financing, July 2013); Regado Biosciences (participation in $51 million Series E financing led by RMI, December 2012); CoDa Therapeutics ($20 million toward $40 million in Series B financing round, July 2012); Marinus Pharmaceuticals (participation in $21 million in Series C financing, December 2012); Lithera (participation in $20.6 million in preferred stock equity financing, December 2012)13
Role of partners: The subsidiary of Russia’s $10 billion state-owned technology fund and the U.S.-based VC firm will jointly invest in emerging life sciences technology companies. The joint venture will manage advanced-stage clinical trials in Russia of new pharmaceuticals and other products that will support regulatory approval of these products in Russia, the U.S. and other markets.
Contributions of partners: Rusnano and Domain Associates each agreed to contribute $330 million toward the joint co-investments in companies. Partners have also engaged Team Drive, a management company led by former Sistema and MTS CEO Leonid Melamed, to develop the project.
Announced: March 6, 2012
The following two alliances we've left unranked simply because we weren't able to ascertain how much they invested. Still, we mustn't overlook....
Total investment size: Not disclosed
Purpose: Identify, fund and support early stage life science startup companies in the San Francisco Bay Area. Plan is to launch one to two companies annually.
Role of partners: QB3 will identify Collaborative Startups from sources that include the institute’s five-site incubator network in the Bay Area; QB3 Startup in a Box, a program to incorporate and structure new companies; the annual Bridging the Gap award program, which provides proof-of-concept support to academic scientists; or directly from university laboratories. After due diligence, participating pharmas and QB3, through its venture arm Mission Bay Capital, will co-invest in candidate startups at the seed stage. Participating pharmas may also contribute support in the form of scientific expertise or resources; and may also invest in a Series A funding round for candidate startups.15
Contributions of partners: Mission Bay Capital will award an undisclosed amount in seed-stage funding to qualified startups. No other financial details disclosed. QB3 consists of UC’s San Francisco (UCSF), Santa Cruz, and Berkeley campuses.
Rights and/or options: Decided case-by-case
Announced: May 15, 201314
Purpose: Develop treatment options, focused on a novel target and pathway, for patients with eye diseases, such as wet age-related macular degeneration and geographic atrophy.
Role of partners: Bayer and Inception Sciences, a drug discovery incubator exclusively backed by Versant, jointly conduct early research in ophthalmology in a newly created company called “Inception 4.”
Contributions of partners: Versant agreed to provide equity funding to Inception 4, while Bayer committed to support the collaborative project through payments tied to undisclosed milestones.
Rights and/or options: Bayer will have an exclusive option to acquire Inception 4 under certain conditions, using a Build-to-Buy model.
Announced: November 18, 2013
<sup>1</sup> Size of first close. Partners have said their ultimate fund size objective is $101.4 million (€75 million).<br />
<sup>2</sup> venBio partner and cofounder Corey Goodman told Xconomy last month that the group was looking at trying to put together a larger second fund of up to $300 million.<br />
<sup>3</sup> venBio participated along with Seroba Kernel Life Sciences, Brandon Capital Partners (on behalf of AustralianSuper), and AshHill.<br />
<sup>4</sup> Reflects currency fluctuation since last year’s GEN List of industry-venture alliances, published June 20, 2013, which reported the fund’s value in U.S. dollars at $200 million.<br />
<sup>5</sup> GenSight: Index announced as a co-leader of the financing round, along with Abingworth, Novartis Venture Fund, and Versant Ventures.<br />
<sup>6</sup> Alliance information verified by a J&J spokesperson. Another startup assisted by the fund is Levicept, an Index Ventures portfolio company that discovered and is developing a novel first-in-class and safe biological agent (p75NTR-Fc) for the treatment of chronic pain.<br />
<sup>7</sup> Information disclosed by GSK last year; a spokesperson for the company at deadline had not responded to a GEN email seeking to re-confirm the information.<br />
<sup>8</sup> Information disclosed by alliance partners last year; spokespeople for Novartis and Amgen at deadline had not responded to GEN emails seeking to update the information.<br />
<sup>9</sup> Separately, Avalon established COI Pharmaceuticals (COI), a venture-pharma entity formed to provide operational support, a fully equipped R&D facility and an experienced leadership team to Sitari and future companies that may be created from the Avalon-GSK collaboration.<br />
<sup>10</sup> Information disclosed by alliance partners last year and confirmed earlier this year via interview with Jay Lichter, Ph.D., managing partner with Avalon Ventures.<br />
<sup>11</sup> From a press release announcing the investment partnership; see: <a href="http://en.rusnano.com/press-centre/news/88612" target="_blank">http://en.rusnano.com/press-centre/news/88612</a><br />
<sup>12</sup> A new pharmaceutical company, called NovaMedica, was established in 2012 as part of the collaboration between Domain and Rusnano. NovaMedica was formed specifically to develop, market, and commercialize the innovative next-generation products from the collaboration in Russia and the Commonwealth of Independent States (CIS).<br />
<sup>13</sup> ReVision: Rusnano subsidiary RusnanoMedInvest (RMI) joined Johnson & Johnson Development Corp. (JJDC) as new investors alongside Domain and three other existing investors, Canaan Partners, InterWest Partners, and ProQuest. Regado: Financing led by new investor RMI, with participation from new investor Baxter Ventures and existing investors Domain, Edmond de Rothschild Investment Partners, Quaker Partners, Aurora Funds and Caxton Advantage Life Sciences Fund. CoDa: Alliance’s $20 million came from RMI, which joined existing investors Domain, GBS Ventures and BioPacificVentures. Marinus: Domain and RMI joined Canaan Partners, Sofinnova Ventures and Foundation Medical Partners. Lithera: RMI led financing through alliance, while Domain joined Alta Partners as existing investors along with new investors AMOREPACIFIC Ventures and Numoda Capital Innovations.<br />
<sup>14</sup> Bayer’s participation was the first of several announcements by QB3 about participation in the program by pharma companies. Bayer noted that QB3 and Mission Bay Capital would work with startups in the company’s areas of interest, which include cardiology, hematology, oncology, ophthalmology, and women’s health, as well as in emerging technologies that include gene therapy and synthetic biology. The startups draw on resources at Bayer’s U.S. Science Hub and CoLaborator incubator, located across from UCSF’s Mission Bay campus.<br />
<sup>15</sup> QB3 does not disclose the amount of seed funding invested. Bayer said last year that Mission Bay Capital had committed to fund up to $500,000 per startup. The company on July 21 confirmed the accuracy of that figure and other information published last year by GEN. </p>
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