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June 24, 2013

10 Industry-Venture Fund Alliances

Pharma and biotech firms are teaming up with venture capital funds to beef up the industry. Find out which ones invested the most dough.

10 Industry-Venture Fund Alliances

Such alliances could offer a more efficient way of developing new drugs by requiring less than the billions long spent up-front by biopharmas on internal R&D. [© Dmitry - Fotolia.com]

  • #5. GlaxoSmithKline (GSK) + Sanderling Ventures

    Total investment size: $250 million

    Purpose: Provide seed funding for West Coast biotech startups.

    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

  • #4. Novartis + Amgen Ventures + Atlas Ventures

    Total investment size: $265 million Atlas Venture Fund IX

    Purpose: 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.

    Role of partners: Novartis and Amgen Ventures, the venture fund of Amgen, are limited partners in Fund IX. The partners including co-creation of life sciences startups, formation of asset-centric development projects, and helping translate discoveries from ongoing academic collaborations, among others.

    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

  • #3. Merck Research Laboratories (MRL) + Merck Research Ventures Fund + Flagship Ventures

    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.

    Roles 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’ 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

  • #2. GlaxoSmithKline (GSK) + Avalon Ventures

    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.

    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.

    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

  • #1. Rusnano + Domain Associates

    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.”2 The partners also agreed to foster technology transfer into Russia, and establish a pharmaceutical and medical device cGMP manufacturing facility in Russia.

    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.

    Rights and/or options: Not disclosed

    Announced: March 6, 2012

  • <center>Honorable Mentions</center>

    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....

  • Roche + California Institute for Quantitative Biosciences (QB3) + Mission Bay Capital

    Total investment size: Not disclosed

    Purpose: Identify, fund, and support early-stage life science startup companies in the San Francisco Bay Area through the partners’ “Collaborative Startups” program. 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, Roche and QB3, through its venture arm Mission Bay Capital, will co-invest in candidate startups at the seed stage. Roche may also contribute support in the form of scientific expertise or resources. Roche and QB3 may also invest in a series A funding round for candidate startups.

    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: Expected to be decided case-by-case.

    Announced: May 16

  • Bayer HealthCare + California Institute for Quantitative Biosciences (QB3) + Mission Bay Capital

    Total investment size: Not disclosed

    Purpose: Over three years, launch startup companies.

    Role of partners: Jointly evaluate, fund, then work with startup companies in Bayer’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. Partnership will draw on Bayer’s U.S. Science Hub and CoLaborator incubator, located on Third Street across from UCSF’s Mission Bay campus in 2011.

    Contributions of partners: Mission Bay Capital will award up to $500,000 in seed-stage funding to qualified startups. No other financial details disclosed. QB3 consists of UC’s San Francisco, Santa Cruz, and Berkeley campuses.

    Rights and/or options: Expected to be decided case-by-case.

    Announced: May 15

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