Ebb & Flow

Novartishas launched a new venture fund, the $200 million Novartis Option Fund, which will give the pharmaceutical company a first option to license a very early stage program at portfolio companies.

"As I started doing collaborations, I noticed that there had been a sea change in the way that venture investors were willing to participate in risk," Jeremy Levin, global head of strategic alliances for the Novartis Institutes for BioMedical Research, told Ebb & Flow. "An increasing number of VCs were focused on late-stage compounds or late-stage assets because the public markets were valuing them far more. New novel compounds were not being discovered."

Even among venture firms associated with pharma companies, "very few of them start up companies," noted Levin. With the options fund, he's hoping new companies and novel compounds will result.

Reinhard Ambros, head of Novartis Venture Funds, said three investments are slated to be executed in the next six weeks.

The syndicates for these deals include four independent VCs. Ambros said he expects this fund will work with 5-10 VCs on a constant basis. He expects to do two or three new investments per year.

Potential portfolio companies must have "three or four programs simultaneously - that's a really important consideration for us. We don't want to limit the company in its upside potential - if we license one program, all the others need to be free for development," he said.

Ambros expects some initial investments will be as little as $100,000 and range up to $3-$6 million. He anticipates that companies will move from the seed to the lead optimization stage

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