Novartis, Verily back new $300M fund for European biotechs

Dive Brief:

  • Swiss pharma Novartis and Alphabet's life sciences unit Verily are investing in the potential of European biotechs, backing a new $300 million venture fund aimed at providing growth capital for companies with promising medicines in mid-stage clinical development.
  • Launched by the investment firm Medicxi, the fund is designed to fill what Medicxi sees as a "clear gap" in the European investment ecosystem for biotech companies transitioning from early research to mid- and later-stage clinical work.
  • Novartis and Verily will join the European Investment Fund as cornerstone strategic investors. Executives from the pharma and Alphabet subsidiary will serve on a scientific advisory board supporting the fund's investing activities.

Dive Insight:

While Europe has a number of notable biotech companies, including Danish Genmab and the Swiss Actelion, the region lags behind the U.S. in developing and supporting mid- to late-stage drugmakers.

For U.S. biotechs, hubs like Cambridge, Massachusetts and San Francisco have served as efficient breeding grounds for developing scientific innovations into mature, well-capitalized companies. Major venture funds have taken full advantage of the concentration of academic research and strong bench of life sciences expertise in both locations, which also host numerous big pharma research centers.

The founders of Medicxi, which launched out of Index Ventures with a $250 million early-stage fund in early 2016, are betting they can address an unmet need in European biotech development, helping already established companies along in the development process.

"Over the past years too many talented and passionate European entrepreneurs have been forced into sub-optimal choices to either sell their innovative company too early, give up their crown jewels through licensing, or to embark on a far-reaching and often arduous fundraising tour in the U.S.," writes Giuseppe Zocco, a co-founder and partner at Medicxi, in a blog post introducing the new fund.

"This was mainly due to the lack of dedicated late-stage European investors, capable of providing smart capital to maturing companies with compounds in [Phase 2] and [Phase 3] of clinical development."

Medicxi Growth 1 will make €10 to €25 million equity investments in biotechs with at least one asset in Phase 2 or beyond. The company will continue to support early-stage startups through its Medicxi Venture fund and believes the two funds together can serve as a platform throughout a company's maturation.

Novartis is the third pharma to invest money in Medicxi funds, following Johnson & Johnson and GlaxoSmithKline's involvement in Medicxi Venture 1.

For Verily, investing in the new fund will deepen its involvement in the biopharma space. The closely watched Google spin-off recently hired former Food and Drug Administration Chief Robert Califf and has previously teamed up with GlaxoSmithKline and Sanofi to launch (separate) joint ventures.

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Filed Under: Mergers and Acquisitions / Deals Corporate News
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