4:40 PM
 | 
Jun 07, 2018
 |  BC Innovations  |  Finance

Deerfield goes to school

Why Deerfield likes funding early stage research through umbrella agreements

Deerfield’s fourth umbrella agreement in the last eight months is a sign the firm is getting serious about creating newcos from academic discoveries. It thinks that with preset terms and unanimous buy-in, the model provides a scalable and streamlined system for spinning out the most translatable research from some of the top institutions.

The firm has earmarked up to $500 million in cash from existing funding vehicles, and plans to expand the slate to ten deals in total.

On May 31, Deerfield announced a $65 million deal with Northwestern University to form Lakeside Discovery LLC, a JV that will fund projects proposed by academic entrepreneurs from across the university.

The partnership comes after a $50 million collaboration between Deerfield and the Broad Institute of MIT and Harvard last October, and $65 million deals with the Johns Hopkins University and Vanderbilt University in November and March, respectively (see “Study Buddies”).

Table: Study buddies

Deerfield Management has entered four umbrella research agreements with leading academic research institutes, committing up to $245 million in capital to date. The investment firm has set aside $500 million in cash from two existing funding vehicles and plans to form partnerships with up to six more institutions. Source: Press releases and websites, interviews

Institute partnerJV nameDateCommitted capitalAnnounced projects
Broad Institute of MIT and HarvardNoneOct. 2017Up to $50 million over five yearsTwo programs against undisclosed targets to treat chemo-resistant acute leukemia and other treatment-resistant cancers, including pancreatic cancer
Johns Hopkins UniversityBluefield InnovationsNov. 2017Up to $65 million over five yearsUndisclosed compounds targeting RNA polymerase I (Pol I) for multiple forms of cancer
Vanderbilt UniversityAncora Innovation LLCMarch 2018Up to $65 millionNone
Northwestern UniversityLakeside Discovery LLCMay 2018Up to $65 millionNone

All four partnerships are structured around a joint steering committee comprised of equal members from Deerfield and the partner institution, and give Deerfield first rights to create newcos around technologies selected for funding.

The model mimics agreements pharmas have formed with academic organizations, such as Bayer AG’s 2011 umbrella agreement with the University of California San Francisco (UCSF).

But Deerfield sees it as a departure from the traditional VC paradigm in which programs are spun out into...

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