Alex Philippidis Senior News Editor Genetic Engineering & Biotechnology News

Where Biopharma Innovation and VC Investment Can Add Up To Successful Startups

Sometimes the best ideas are the simplest. Combine the know-how of startups with support from big biopharmas less willing than in the past to support internal R&D—but increasingly eager to fund research through collaborations and partnerships. One result is the growing number of industry-venture alliances. This year’s GEN List features 14 such combinations that are ranked after having disclosed their total funding, up from 12 last year and 10 in 2013, in GEN’s first such List. Another six firms listed this year have not disclosed their funding and are unranked, compared with two last year and two in 2013. Another sign of the alliances’ success: two alliances have increased in size significantly since their inclusion on the 2014 List through the creation of second funds.

Alliances are listed by their partners, the activity of their partners where disclosed, rights and/or options on drugs resulting from alliance activity, and the date the alliance was announced. All non-U.S. currencies were converted to U.S. dollars on August 12, 2015. The list does not include individual corporate venture funds, the subject of a GEN List published July 27; or the top 20 venture capital firms for biotechs, published in GEN November 28, 2014

#14. Bayer HealthCare + Versant Ventures

$25 million

Purpose: Support the development of new therapies in areas of high unmet medical need.

Companies funded include: None announced

Activity of partners: As sole strategic pharma partner, Bayer will invest up to $25 million in the fund, called “Versant Venture Capital V.” Bayer along with other limited partners of the fund, will be a member of the fund’s advisory board, contributing its expertise in drug discovery and development. Versant’s fund management team maintains full decision making rights as to investments in portfolio companies.

Rights and/or options: Not disclosed

Announced: November 3, 2014

#13. GlaxoSmithKline (GSK) + Kurma Life Sciences Partners (KLS Partners) + bpifrance (CDC Entreprises) + Idinvest Partners + New Enterprise Associates (NEA)

$48.6 million (€44 million) Kurma Biofund II: The Orphan Initiative8

Purpose: First venture capital fund dedicated to financing innovation in the rare diseases space with a network of eminent European research institutes. According to Kurma: “At least 50% of Kurma Biofund II investments will be directly or indirectly devoted to orphan diseases. These projects will largely concern therapeutic programs, primarily or secondarily targeting rare diseases and responding to a strong medical need. In general, they will involve the development of new drugs up to clinical proof of concept.”

Companies funded include: Orphazyme (led €20 million [$22 million] series B financing, January 2015); Xeltis (Co-led €27 million [$30 million] financing round, December 2014); OxThera (participated in “more than” €7.5 million [$8.4 million] financing round, April 2014); Step Pharma (Details unavailable)

Activity of partners: GSK, through its GSK Rare Diseases business, provides industrial expertise, while the other partners are venture capital firms that provide financing and/or entrepreneurial expertise. GSK has disclosed its investment of €17.5 million (nearly $20 million). CDC Enterprises, a wholly-owned subsidiary of the French Caisse des Dépôts whose investments range from technology seed funding to small-cap buyouts; and Idinvest, a private equity manager focused on middle market companies, are two historical partners of KLS Partners.

Rights and/or options: Not disclosed

Announced: June 20, 2013

#11 (tie). Chongqing Lummy Pharmaceutical Co., Ltd. + TVM Capital Life Science

$50 million; China BioPharma Capital I

Purpose: Focus on investments in life science innovation in Western companies with the objective to obtain licenses for development and commercialization in China; Provide the Chinese pharmaceutical market with innovative, exciting, effective drugs and technology to improve human health.

Companies funded: None disclosed

Activity of partners: Chongqing Lummy, a pharmaceutical company based in Chongqing, China, develops, manufactures and markets pharmaceuticals and health care products. Lummy—which went public in 2009 on the Shenzhen Stock Market—operates six fully owned subsidiaries and employs more than 2,000 people. TVM Capital Life Science is a group of independent investment advisories and fund managers, with teams based in Munich, Montreal and Hong Kong.

Rights and/or options: None disclosed

Announced: April 13, 2015

#11 (tie). GlaxoSmithKline (GSK) + SR One + Canada Life Sciences Innovation Fund

$50 million

Purpose: Significantly advance the commercialization of scientific innovation in Canada by investing in early stage breakthrough research

Companies funded include: Gladius Pharmaceuticals (participation in C$4.1 million [about $3.2 million] series A financing, June 2015); Thrasos Therapeutics (co-led $21 million series D financing, March 2015; led $35 million financing, October 2012)

Activities of Partners: GSK and its corporate venture capital arm SR One manage the fund, which will identify strategic investment opportunities within Canada's life sciences industry – including academic and health institutions, translational research centers and start-up companies. GSK agreed to contribute all $50 million toward the fund, designed to strengthen GSK's position as a Canadian R&D leader and offers the company a unique opportunity to help close Canada's innovation gap

Rights and/or options: Not disclosed

Announced: November 10, 2011

#10. Eli Lilly + TVM Capital and other investors

$201.6 million TVM Life Science Ventures VII

Purpose: Invest primarily in early-stage drug development and opportunities for life science companies

Companies funded include: Esperas Pharma (co-raised undisclosed amount, April 2015); FAAH Pharma (raised undisclosed amount, August 2014); PRCL Research (co-raised undisclosed amount, May 2014); GLWL Research (raised undisclosed amount, January 2014); Ixchelsis (raised undisclosed amount, August 2013); Kaneq Bioscience (raised undisclosed amount, January 2013).6

Activity of Partners: TVM Capital manages the fund, with expertise provided by Lilly. The fund acquires early-stage molecules from pharmaceutical or biotechnology companies, then finances a virtual project-focused-company for each molecule to develop them through proof-of-concept. If the molecule shows efficacy, the molecule and/or development rights are offered for sale to biopharmaceutical companies.7  Fund grew to $201.6 million at final closing in 2014. Fund invests mainly in Canada, the U.S., Germany and Western Europe, and is advised by a team of investment professionals based in Montreal and Munich. Fund targets a total of 12 to 15 project-focused-companies and four to five traditional, syndicated venture investments.

Rights and/or options: Companies have the option to use services of Chorus, a virtual drug development organization within Lilly’s Global External Research and Development group.

Announced: May 28, 2012 (original $150 million fund) (z); October 6, 2014 ($201.6 million at final closing)

#9. Merck & Co. + Lumira Capital + Teralys Capital

$151 million ($101 million Lumira Capital II LP + $50 million Merck Lumira Biosciences Fund)

Purpose: Lumira Capital II is designed to invest in late-stage clinical stage development of medications, diagnostics and medical devices in North America; Merck Lumira Biosciences Fund established to invest solely in Québec biotechnology companies before their products have reached proof-of-concept in humans.

Companies funded include: Gladius Pharmaceuticals (led C$4.1 million [$3.2 million] series A financing, June 2015)

Activity of Partners: Merck agreed to “screen and select potential partners with which we could form alliances,” in order to “provide a vehicle where Merck scientific expertise could be made available to the general partners of” Lumira and Teralys, which make decisions on investments in early-stage biotechs, Reid J. Leonard, Ph.D., executive director, worldwide licensing for Merck & Co., said at the 2012 Boston Venture Forum.

Merck has committed $5 million toward the $101 million Lumira Capital II, and $35 million toward $43 million first closing of Merck Lumira Biosciences Fund, which has set a closing target of $50 million. The Merck funds are part of a commitment announced in 2010 to invest $100 million through 2015 in biopharmaceutical research and development in Québec. The commitment was made when, as part of a global restructuring, Merck shut down its Merck Frosst Centre for Therapeutic Research in the Montreal suburb of Kirkland, laying off most of its staff of 180. Teralys Capital committed to a total $35 million in both funds.

Rights and/or Options: Unless negotiated separately with the portfolio companies of the Fund, Merck will not have any rights to the fund’s portfolio companies or their products simply by virtue of its role as a limited partner.

Announced: March 26, 2012 

#8. GlaxoSmithKline (GSK) + Johnson & Johnson Innovation-JJDC + Index Ventures

$166 million (€150 million) 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: XO1 (Acquired by Janssen Pharmaceuticals, March 2015; Index raised $11 million series A financing, June 2013); Padlock Therapeutics (co-invested in $23 million series A financing, December 2014); Egalet (Index led $20 million financing, September 2013); GenSight Biologics (participation in €32 million series A financing, April 2013)5

Activity 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 JJDC, the venture capital arm of Johnson & Johnson. Half the funding will come from Index, while one-quarter each will be contributed by GSK and JJDC.

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

#7. Daiichi Sankyo + Kearny Venture Partners

$180 million

Purpose: Enhance Daiichi Sankyo research and development activities

Companies funded include: None announced

Activity of Partners: Kearny Venture Partners, a limited partnership that invests primarily in U.S. life science companies, agreed to make equity investments in emerging life sciences and medical technology sectors, including specialty pharmaceuticals, emerging biopharmaceutical, drug delivery technologies, diagnostics, biotechnology, and medical devices. Daiichi Sankyo may seek to establish research collaborations with companies in the fund. Daiichi Sankyo agreed to invest $60 million in $180 million fund

Rights and/or Options: Daiichi Sankyo retains the right of first refusal to make additional investments in the Fund's portfolio of companies.

Announced: Sept. 8, 2006

#6. GlaxoSmithKline (GSK) + Sanderling Ventures

$250 million

Purpose: Provide seed funding for West Coast biotech startups

Companies funded include: None announced

Role of Partners: GSK will retain a seat on the fund’s advisory committee

Contributions of partners: GSK agreed to invest $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: Jan. 9, 2013

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

$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

Activity 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 in 2011. Role of Partners: 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

#4. venBio (Amgen + Baxter International + PPD + Alexandria Real Estate Equities)

$430 million ($180 million inaugural fund + $250 million venBio Global Strategic Fund II)4

Purpose: Investment in developers of clinical-phase drug candidates, with the goal of exit via merger or acquisition by biopharma giants

Companies funded include: Checkmate Pharmaceuticals (co-raised $20 million series A financing, August 2015); Aurinia Pharmaceuticals (co-led $52 million private placement, February 2014); Heart Metabolics (participated in $20 million series A financing, April 2014); Solstice Biologics (led $18 million series A financing, January 2013); Aragon Pharmaceuticals (acquired by Johnson & Johnson for up to $1 billion, August 2013; led $50 million series D financing, October 2012); Seragon Pharmaceuticals (participated in $30 million series A financing for Aragon spinout, October 2013); Cytos Biotechnology (led CHF 37 million [$37.4 million] equity and debt financing, March 2012); Labrys Biologics (acquired by Teva Pharmaceutical Industries for up to $825 million, June 2014; participated in $31 million series A financing, January 2013).

Activity of Partners: Limited partners contributing financing plus expertise. venBio currently investing from Strategic Fund II, which focuses on private and occasional public life sciences companies to provide strategic opportunities and financial returns to their strategic and financial limited partners. For Fund II, venBio says its strategic limited partners include three undisclosed “large” biotech and pharmaceutical companies. For first fund, limited partners were Amgen, Baxter International, PPD, and Alexandria Real Estate Equities.

Rights and/or Options: Not disclosed

Formed: June 2009; launched Jan. 1, 2010; inaugural fund closed in 2011

#3. GlaxoSmithKline (GSK) + Avalon Ventures

$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: Adrenergics, CadheRx Therapeutics, and Calporta Therapeutics (all $10 million series A financing, June 2015); Silarus Therapeutics and Thyritope Biosciences (both $10 million series A financing, September 2014); Sitari Pharmaceuticals ($10 million series A financing, November 2013)

Activity of partners: Avalon agreed to identify promising technologies focusing on early-stage discovery across various therapy areas. Avalon and GSK agreed to jointly approve the formation of new companies based on the technologies, and finance the startups together3  Avalon agreed to contribute $30 million from its $200 million Fund X, and provide executive leadership and operational management consistent with its current portfolio strategy. GSK agreed to 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 retains 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

#2. Novartis + Amgen Ventures + Atlas Ventures

$545 million ($280 million Atlas Venture Fund X closed April 2015 + $265 million Atlas Venture Fund IX, closed April 2013 and still active)6

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.”6

Companies funded include: Not disclosed

Activity 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

#1. Rusnano + Domain Associates

$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.”1 The partners also agreed to foster technology transfer into Russia, and establish a pharmaceutical and medical device cGMP manufacturing facility in Russia2

Companies funded include: Epic Sciences (participation in $30 million Series C financing, July 2014); Miramar Labs (participation in $10 million series D funding, February 2014); NovaDigm Therapeutics (participation in $14 million series B financing, October 2013); Tragara Pharmaceuticals (participation in $12 million series B financing, September 2013);  Syndax Pharmaceuticals (participation in $26.6 million series B financing, August 2013); ReVision Optics (participation in $55 million in series E financing, July 2013); Regado Biosciences (merged with Tobira Therapeutics, May 2015; participation in $51 million series E financing, December 2012); Marinus Pharmaceuticals (participation in $21 million series C financing, December 2012); Neothetics (formerly Lithera, participation in $20.6 million in preferred stock equity financing, December 2012); CoDa Therapeutics ($20 million toward $40 million in series B financing round, July 2012)

Activity of partners: The subsidiary of Russia’s $10 billion state-owned technology fund and the U.S.-based VC firm agreed to 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. Rusnano and Domain Associates each agreed to contribute $330 million toward the joint co-investments in companies. 

Rights and/or Options: Not disclosed

Announced: March 6, 2012  

Unranked Alliances

The following alliances we've left unranked simply because we weren't able to ascertain how much they invested. Still, we mustn't overlook….

Bayer HealthCare + Versant Ventures + Inception Sciences +

Investment size: Not disclosed

Company funded: Inception 4

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  

Activity of Partners: Versant has agreed to provide equity funding to Inception 4, while Bayer has committed to support the collaborative project through payments tied to undisclosed milestones. Inception Sciences was co-founded in 2011 with Versant and has established incubators in Canada (Vancouver and Montreal) and the U.S. (San Diego).

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


Celgene + Blueline Bioscience + Versant Ventures

Investment size: Not disclosed

Companies funded: Quanticel Pharmaceuticals; Northern Biologics

Activity of Partners: Celgene and Versant first teamed up in 2011, when the biotech shelled out $45 million for the right to buy the Versant-funded Quanticel Pharmaceuticals, formed to commercialize a single-cell tumor diagnostic based on work by Stanford University researchers. Celgene agreed to acquire Quanticel earlier this year for $100 million upfront and up to $385 million tied to milestones. In 2013, Versant launched Blueline Bioscience, a Toronto-based incubator. A Celgene entity holds option rights for new Bluebird-based enterprises in areas of strategic interest, such as oncology and inflammation, through its collaboration with Bluebird. In April 2015, Celgene bought an option to acquire Northern Biologics, a Bluebird-launched startup, for $30 million cash upfront, with potential for additional payments.

Rights and/or options: Not disclosed

Announced: November 4, 2011 (Celgene investment in Quanticel); September 2013 (Blueline launched); April 27, 2015 (Celgene to acquire Quanticel); April 29, 2015 (Celgene buys rights to acquire Northern Biologics)


QB3 + Calico

Investment size: Not disclosed

Purpose: Conduct research into longevity and age-related diseases; make discoveries that will translate into a better understanding of the biology of aging and potential therapies for age-related diseases.

Activity of Partners: With committed funding from Calico, the partnership will identify, fund and support QB3 research projects focused on aging. The partnership consists of a broad sponsored research agreement to enable collaboration between Calico and multiple QB3 laboratories on specific research programs related to aging, and a grant mechanism to support innovation in longevity research led by QB3. The sponsored research portion of the agreement was arranged with the help of the Office of Innovation, Technology and Alliances at UC San Francisco.

Rights and/or options: Calico has the option to obtain exclusive rights to discoveries made under the sponsored research agreement.

Announced: March 24, 2015

QB3 Collaborative Startups / California Institute for Quantitative Biosciences (QB3) + Mission Bay Capital + participating pharmas: Bayer HealthCare, J&J Innovation, Roche, and Takeda Pharmaceuticals USA9

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.

Companies funded include: Circle Pharma (received undisclosed amount of financing from QB3’s Mission Bay Capital and former participating pharma Pfizer, September 2014); 4D Molecular Therapeutics (based at QB3@953 incubator; supported via Startup in a Box [see below]).

Activity of Partners: QB3 identifies 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 startups10 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, 2013 

Roche + Inception Sciences + Versant Ventures

Investment size: Not disclosed

Companies funded: Inception 3 and Inception 5

Purpose: Discover new treatments for sensorineural hearing loss (Inception 3); Develop new small molecule remyelinating therapies for patients with multiple sclerosis (Inception 5)

Activity of Partners: Versant has agreed to provide equity funding to Inception 3 and Inception 5, while Roche has committed to support the collaborative project through payments tied to undisclosed milestones. Inception Sciences was co-founded in 2011 with Versant and has established incubators in Canada (Vancouver and Montreal) and the U.S. (San Diego).
Rights and/or Options: Through Inception’s Build-to-Buy model, Roche has options to acquire Inception 3 and Inception 5 at pre-set terms upon a first lead compound reaching the filing stage of an IND application.

Announced: October 10, 2012 (Inception 3); June 23, 2014 (Inception 5)

Shire + Inception Sciences + Versant Ventures

Investment size: Not disclosed

Company funded: Inception 1

Purpose: Develop a product candidate for fibrotic disease

Activity of Partners: Versant has agreed to provide equity funding to Inception 1, while Shire has committed to support the collaborative project through payments tied to undisclosed milestones. Inception Sciences was co-founded in 2011 with Versant and has established incubators in Canada (Vancouver and Montreal) and the U.S. (San Diego).

Rights and/or Options: Shire has an exclusive option to acquire Inception 1 under certain conditions, using a Build-to-Buy model.

Announcement: Date unavailable

1 From a press release announcing the investment partnership; see:
2 A new pharmaceutical company, NovaMedica, was established in 2012 under the collaboration between Domain and Rusnano. NovaMedica was formed to develop, market and commercialize the collaboration’s products in Russia and the Commonwealth of Independent States (CIS). On June 18, 2015, NovaMedica said it expected to develop “up to 15 new pharmaceutical products. The most part of them will involve nanotechnologies.” See: 
3 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.
4 venBio’s inaugural fund was $180 million. On March 19, 2015, venBio Global Strategic Fund II submitted a Form D filing to the U.S. Securities and Exchange Commission disclosing plans to raise $250 million. See: At the time, no portion of the fund had been sold to investors, and the fund has submitted no subsequent filing. However, in an August 12, 2015, press release, venBio said it was currently investing from the second fund. See:
5 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.
6 For Esperas Pharma and PRCL Research, Life Science Ventures VII co-invested with the Fonds de solidarité FTQ.  
7 For example, GLWL Research agreed to leverage its extensive product development expertise to potentially bring to human proof-of-concept GLWL-01, an investigational compound originally discovered by Lilly with the potential to treat Type-2 diabetes. If and when proof-of-concept is reached, Lilly will have an option to acquire the molecule, according to the fund.
8 Size of first close. Partners have said their ultimate fund size objective is about €75 million ($84 million)
9 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
10 QB3 does not disclose the amount of seed funding invested. Bayer said in 2013 that Mission Bay Capital had committed to fund up to $500,000 per startup. The company last year confirmed the accuracy of that figure and other information published by GEN. 


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