The European venture group Medicxi is staking out some new terrain in biotech investing. And they’re bringing in two big players — Novartis and Google’s Verily — as key backers.
Known for a longtime strategy that clearly and carefully concentrates their attention on single-asset organizations that start out early on a limited budget, Medicxi has added a new, $300 million fund that will focus on late-stage biotech investments. But they still want to fall in love with a top drug before they buy in.
“This is the first time we’ve done a late-stage fund,” co-founder and partner Francesco De Rubertis told me in a preview of their announcement.
The focus for its Medicxi Growth 1 — MG1 — fund will start on programs at the Phase IIb level, managed by fully developed companies with the kind of management teams that they believe can go all the way. And they’ll be offering an alternative route to companies that might otherwise feel the need to jumpstart an IPO, partner out on unfavorable terms or look too early to the US markets for the financial firepower needed to execute a promising Phase III effort.
“We will still invest when we get convinced by one asset,” adds De Rubertis.
I’ve known the Medicxi partners — a group that includes David Grainger, Kevin Johnson and Michèle Ollier — for years now, and I asked De Rubertis for a little better idea of what he was looking for. He quickly turned to Genmab, one of Europe’s biggest biotechs, which his group helped launch. They want to find the next Genmab or Actelion at a time they can make a key assist.
While quite a few crossover investors that like to go for mezzanine rounds are looking for a return in 12 to 18 months, Medicxi won’t be happy unless they can go for the long haul.
To do that, they’ll ally with a dozen companies over the next two or three years, 8 or 9 in Europe and the rest in the US, able to put up $20 or $30 million each.
Earlier funds have already lined this venture group up with J&J and GSK. Now the multinational Novartis is stepping in, taking its own patient approach in identifying the most ambitious biotechs they may want to work with more directly at some point along the way.
Google more broadly, he adds, has identified healthcare as a huge field they would like to gradually build their business in. This new fund extends Verily’s reach in Europe.
The European Investment Fund also got involved in this fund.
Giuseppe Zocco, co-founder of Index Ventures and co-leader of the firm’s first growth fund in 2007, will be responsible for this new venture. And they’re adding a few new players to help pick up the extra load.
In less than two years Medicxi has now raised more than $500 million for what is now a two-prong strategy to go early and late on its biotech investments. You should expect to hear more from them in the near future.
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