UC looks for a piece of the biotech action with $250M venture fund

Janet Napolitano

The University of California has been a rich source of innovative new medicines. It's outlicensed the IP behind such standout biotechs as Aragon and Seragon--twin biotech sisters bought out by pharma giants--as well as Kite Pharma ($KITE), a recent IPO success focused on CAR-T. And now it wants a bigger piece of the action.

UC President Janet Napolitano is setting up a $250 million venture fund to back the best and brightest ideas to come from the extensive system's researchers. And while the new fund is by no means an exclusive preserve of biotech, the rich R&D environment that made San Francisco and San Diego two of the country's three largest biotech hubs will likely make new drug development a key feature for the investment crew in charge.

Venture players have made the Bay Area home to the biggest single hub in the world for biotech investments, beating out an energetic crowd in Cambridge/Boston for top billing last year. The new move makes UC a player in a region already populated with the likes of Arch Venture Partners, Sofinnova and Alta Partners. And it will offer an added source of equity cash for the next generation of West Coast biotechs now looking for seed money.

The university's $250 million will give it size and heft in the investment field at a time a number of firms have been rounding up sizeable amounts of investment cash for its next round of biotech gambles. Arch is in the process of completing a $400 million-plus fund. In recent months Venrock announced a $450 million fund, Sofinnova came up with $500 million, and Versant is nearing a $300 million fund. There are others. Add them all up and you have billions of dollars that will be used for new venture rounds over the next 5 years. 

"UC Ventures is the result of careful evaluation of best practices to develop the most effective investment vehicle to capture the economic value the University of California is creating through its pioneering research," said UC Chief Investment Officer Jagdeep Singh Bachher in a statement. "Our goal is to build upon the technology commercialization efforts at UC while carefully managing potential risk exposures. We are confident an independent UC Ventures will achieve this."

It should be interesting to see if other universities in the U.S., the U.K. and around the globe follow suit in a similar fashion.

- here's the release