Verily Life Sciences, Alphabet’s life sciences division, is investing in a fund that will acquire stakes in biotech groups based in Europe. This is the latest show of interest by the tech giant in the biotechnology sector. The management of the fund which will be worth approximately $300 million will be under Medicxi, a venture capital firm. The fund’s sole focus will be biotech companies which need money to fund the clinical trials of their experimental drugs.
Verily Life Sciences’ investment in Medicxi is the latest such foray by a Silicon Valley tech company into medicine and healthcare as tech firms try to exploit their big data analytics’ experience in improving healthcare and possibly find new sources of revenue.
This is a new move by Verily Life Sciences, however, since previously it has avoiding backing drug development but instead favoring technological innovations. This includes smart contact lens capable of determining the levels of glucose in a person’s blood, surgical robots and a vibrating spoon meant for patients suffering from Parkinson’s.
Another company that will invest in Medicxi will be Novartis, the Switzerland-based drug maker. Both Verily Life Sciences and Novartis will be responsible for appointing two members to the scientific advisory board of the fund. Another investor in the fund is the European Investment Fund which is a public-private partnership entity which has the backing of the European Union.
The amounts that Verily Life Sciences and Novartis will be contributing to the fund was not revealed. From history though Medicxi usually obtains about 50% of its funding from strategic investors while it gets the rest from institutions. Assuming the same formula has been applied in this instance, it would mean Verily Life Sciences and Novartis each contributed approximately $75 million.
Medicxi’s partner and co-founder, Francesco De Rubertis, revealed that the found would invest in biotech firms which have at least one drug in the mid stages of a clinical trial but which require more money for the third phase of the trial which is usually the most expensive. In Europe biotech firms usually find it challenging to get money at such a point forcing them to sell their intellectual property or themselves to pharmaceutical giant. They also have the option of listing in Wall Street but it is usually at low valuations.
“In many cases, the molecules would be better served by retaining focus without the distraction of an acquisition, but it is very difficult to find that kind of late-stage specialist investor money in Europe,” De Rubertis said.