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Pharma to Support Early-Stage Biotechs

Roche and Bayer team with QB3 while Atlas Ventures rounds up Amgen and Novartis.


The Burrill Report

“QB3 has helped create more than 200 life-science startups, but we need to do more.”

As Big Pharma continues to externalize its early stage R&D, it is ramping up its efforts to tap early stage innovation and support biotech startups that may eventually help fill its pipeline. Both Roche and Bayer announced that they will work with startup accelerator California Institute for Quantitative Biosciences, or QB3, to help identify, fund, and support early stage life science companies in the San Francisco Bay area. QB3 was established to create companies based on research conducted at the Universities of California Berkeley, San Francisco, and Santa Cruz.

In a three-year deal, Bayer Healthcare will evaluate and support life science startups from QB3, using its experience to help guide these companies as they advance therapeutic candidates and identify risks. Bayer’s own innovation center is located next to the UCSF Mission Bay campus. Bayer, QB3, and Mission Bay Capital, which funds QB3 startups, will jointly evaluate up to 60 companies a year to see which ones they will support. Mission Bay Capital will commit up to $500,000 per startup to the companies picked. Bayer will look for potential collaborations, and says it is creating a dedicated research team located in San Francisco to focus on facilitating discovery stage research deals.

Roche is also creating a partnership between industry, QB3, and entrepreneurs, with the goal of making sure that startups are optimally structured, operationally efficient, and funded to succeed.

“QB3 has helped create more than 200 life-science startups, but we need to do more,” says Neena Kadaba, director of industry alliances at QB3. “We need to help these companies focus on the most important technical risks and to raise capital. Forming partnerships between the startup, Roche, and QB3’s seed-stage venture fund when the startup is just getting off the ground achieves both of these goals. The startups will gain invaluable expertise and insights, and Roche and QB3 will have an opportunity to fund risk-reducing experiments for new technologies.”

The Roche-QB3 program, called “Collaborative Startups,” will identify candidates for the program through its incubator network. These will be routed through QB3’s Startup in a Box, a separate program that coordinates legal support from Bay Area law firms as startups incorporate.

After due diligence, Roche and QB3—through its venture arm, Mission Bay Captial—will co-invest in candidate startups at the seed stage. Roche may also contribute support in the form of scientific expertise or resources and both Roche and QB3 may also invest in a series A funding round for candidate startups. The plan is to launch one to two companies per year.

Early-stage venture capital firm Atlas Venture has brought in Novartis and Amgen Ventures as limited partners in its recently closed $265 million fund that will invest in startups in Boston and San Francisco starting with seed-stage investments.

Under their agreements, Atlas Venture will work with Amgen and Novartis to explore opportunities that include co-creation of life sciences startups, formation of asset-centric development projects, and translation discoveries from ongoing academic collaborations, among others.

Amgen and Novartis do not have exclusive rights and are not obligated to make commitments to any of the investment opportunities chosen by Atlas, which has final decision-making authority over all investments. The idea of the pharma-venture relationship, according to Atlas, is to facilitate the exploration of opportunities of mutual strategic interest. Atlas expect to create and/or fund at least 15 new biotech companies through the new fund, and expects that the relationships with Amgen and Novartis will be an integral part of facilitating their launch and progression.

May 17, 2013

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