SciBX's third annual comprehensive analysis of public-private partnerships and early stage venture financing activity shows that Europe's public-private partnership activity in 2013 surpassed that of the U.S. in dramatic fashion. At least 314 companies and institutions based in Europe were involved in forming new partnerships last year versus 182 in the U.S.

Europe has steadily upped its public-private partnership (PPP) activity over the past three years. In 2011, there were 13% fewer European companies and institutions participating in new PPPs than in the U.S. In 2012, 4% fewer European companies and institutions participated in PPPs1 (see "Regional breakdown of public-private partnerships, 2011-2013").

Two drivers of Europe's PPP activity last year were the European Commission via its Seventh Framework Programme (FP7) and Cancer Research UK. The two organizations took the top positions with respect to the number of disclosed PPPs in 2013.

"There is no question that for the biotech companies in Europe, where venture capital is relatively more scarce, they have to seek whatever alternative source of funding there is available, and engagement with a foundation or a PPP initiative is attractive," said Stephan Christgau, investment director at Novo Nordisk A/S's Novo Seeds unit.

He added, "I am convinced that there are more-at least relatively-foundations and PPP financiers available here in Europe. Many companies and family offices are anchored in foundations that have a hybrid purpose of not only donating money but also seeking commercial gains. I see these types of long-term, committed and well-capitalized organizations playing an increasingly important role here, as the traditional European venture funds have had increasing difficulties in raising funds from traditional limited partners such as pension funds."

In the U.S., PPP activity for 2013 mirrored that of 2011. The unanswered question is whether the spike to 257 companies and institutions that participated in 2012 was an aberration. As a group, California was the most active in the U.S., with 33 companies and 32 institutions participating in PPPs. The U.K. led the charge in Europe, with 52 companies and 56 institutions entering PPPs (see "Regional leaders in public-private partnerships").

Elsewhere across the globe, PPP activity has either stayed on course or returned to 2011 levels-as is the case for Asia and Oceania. The Middle East did show a slight increase in 2013 compared with the prior two years, driven primarily by Israeli institutions.

In addition to the regional shifts, specific business areas showed differences in 2013 versus the prior two years. Cancer again took the top spot in terms of PPPs by business area but last year showed much more separation from the runner-up sector-neurology (see "Therapeutic areas covered by public-private partnerships and seed or series A financings").

There were 84 cancer PPPs in 2013 (23% of the total), 70 cancer PPPs in 2012 (15%) and 50 in 2011 (18%). For early stage venture financings by business area, cancer remained the leading area for the third consecutive year.

Pharma shuffle

On the company side, the same 5 pharmas that topped the chart in 2012 in terms of their involvement in new PPPs did so again in 2013, albeit in a different order. AstraZeneca plc took the top company spot, and Johnson & Johnson was second (see "Leaders in the number of public-private partnerships").

One of AstraZeneca's most significant PPPs in 2013 was a deal with the Karolinska Institute to create the Karolinska Institutet/AstraZeneca
Integrated Cardio Metabolic Center, a research center focused on cardiac regeneration, islet health and diabetic nephropathy. The pharma will provide up to $20 million to the center annually, whereas Karolinska will contribute expertise and facilities.

Last year, J&J launched a series of incubators, which are key components of its focus on external regional partnerships to help fuel its early R&D pipeline.2

J&J's innovation access strategy, first announced in 2011, aims to increase early stage deal flow by building a network of incubators and partnering hubs that cultivate connections with academics in research centers throughout the world.

Since 2012, J&J Innovation has launched three U.S. regional incubators. These include the Janssen Labs site in San Diego, a facility at the University of California, San Francisco's Institute for Quantitative Biology and the LabCentral facility in Boston.

J&J Innovation also operates three partnering hubs in Boston, Menlo Park and London. A fourth center in Shanghai is expected to open this year.

Bites of the Big Apple

PPPs receiving direct support from governments and/or government-run institutions accounted for the largest PPPs by value (see "Top public-private partnerships in 2013 by value").

The biggest such deal came as 2013 wound down. In December, New York City Economic Development Corp. partnered with Celgene Corp., Eli Lilly and Co. and General Electric Co.'s GE Ventures to invest at least $100 million in early stage life science companies in New York City.

The parties will invest at least a combined $50 million in a life sciences fund, and additional VC firms are expected to contribute at least
$50 million in matching funds. The fund plans to invest in the seed and series A rounds of 15-20 companies by 2020.

Notably, the state of New York was also home to one of the largest PPPs that had no direct government support. In October, the Memorial
Sloan Kettering Cancer Center
, The Rockefeller University and Weill Cornell Medical College formed Tri-Institutional Therapeutics Discovery Institute Inc. (Tri-I TDI) to expedite early stage discovery into clinical treatments and therapies. The institute partnered with Takeda Pharmaceutical Co. Ltd. to develop small molecules.

Tri-I TDI was founded with a $15 million gift from Lewis and Ali Sanders
and a $5 million gift from Howard and Abby Milstein, and it is funded through philanthropy and direct contributions from the three academic institutions, along with a yearly $1.5 million contribution from Takeda.

'A' for effort

In addition to boasting the most PPP activity, Europe also saw some of the largest series A rounds for biotechs founded in 2013 (see "Largest series A financing rounds for companies founded in 2013"). This is in contrast to the two prior years, in which none of the top five series A rounds went to companies based in Europe.

Among the 43 companies founded in 2013 that disclosed venture financing, there were 28 U.S. companies, 5 based in the U.K., 2 in France, 2 in Israel and 1 each in Australia, Austria, Denmark, Finland, Germany and Switzerland.

The largest series A round in 2013 for a company founded that year was a $47 million financing by Jounce Therapeutics Inc. The Cambridge,
Mass.-based company is using multiple protein-based methods of cancer immunotherapy.3

The European companies represented in the top five were both infectious disease companies. Pulmocide Ltd. raised $27.4 million. The London-based biotech is developing therapies to treat viral and fungal respiratory tract infections. Allecra Therapeutics GmbH raised
$19.6 million. The Lorrach, Germany-based company is developing antibiotics to treat multidrug-resistant Gram-negative infections.

The largest series A round last year was $54 million by Cleave Biosciences
Inc.
, a California-based cancer company working on small molecule protein homeostasis inhibitors to treat cancer. The company was founded in 2011.

Edelson, S. & Lou, K.-J. SciBX 7(7); doi:10.1038/scibx.2014.188
Published online Feb. 20, 2014

REFERENCES

1.   Lou, K.-J. SciBX 6(5); doi:10.1038/scibx.2013.105

2.   Osherovich, L. SciBX 7(2); doi:10.1038/scibx.2014.41

3.   Fisher, A. BioCentury 21(7), A14; Feb. 18, 2013

COMPANIES AND INSTITUTIONS MENTIONED

Allecra Therapeutics GmbH, Lorrach, Germany

AstraZeneca plc (LSE:AZN; NYSE:AZN), London, U.K.

Cancer Research UK, London, U.K.

Celgene Corp. (NASDAQ:CELG), Summit, N.J.

Cleave Biosciences Inc., Burlingame, Calif.

Eli Lilly and Co. (NYSE:LLY), Indianapolis, Ind.

European Commission, Brussels, Belgium

General Electric Co. (NYSE:GE), Fairfield, Conn.

Johnson & Johnson (NYSE:JNJ), New Brunswick, N.J.

Jounce Therapeutics Inc., Cambridge, Mass.

Karolinska Institute, Stockholm, Sweden

Memorial Sloan Kettering Cancer Center, New York, N.Y.

New York City Economic Development Corp., New York, N.Y.

Novo Nordisk A/S (CSE:NVO; NYSE:NVO), Bagsvaerd, Denmark

Pulmocide Ltd., London, U.K.

The Rockefeller University, New York, N.Y.

Takeda Pharmaceutical Co. Ltd. (Tokyo:4502), Osaka, Japan

Tri-Institutional Therapeutics Discovery Institute Inc., New York, N.Y.

University of California, San Francisco, Calif.

Weill Cornell Medical College, New York, N.Y.