For Amgen ($AMGN) and Novartis ($NVS), investing in the latest fund from Atlas Venture wasn't enough. The Cambridge, MA-based venture firm has struck separate agreements with the two major drugmakers to join forces on biotech startups.
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| Bruce Booth |
These are "open" agreements. In each, Cambridge, MA-based Atlas has no obligation to team up with the industry giants on deals, yet the understanding between the venture firm and the companies could lead to collaborations to form startups under multiple structures, according to a press release. And the alliances mark some of the latest expressions of love between VC outfits and pharma groups.
"There's been a proliferation of these types of relationships, and I think that is going to continue," Atlas Partner Bruce Booth said. "The role of pharma to help nurture a healthy early-stage environment is an important one."
Amgen and Novartis have been syncing up with VC firms for years, and Atlas has been a major proponent of working with pharma companies early in the process of minting biotech companies. Novartis, which has its own venture funds, has previously invested with the VC firm MPM Capital. Last year Amgen, which also has a venture unit, allied with Kleiner Perkins Caufield & Byers to form a spinoff startup called Atara Biotherapeutics to develop experimental drugs from Amgen.
Last month Atlas said it raised $265 million for its 9th fund, committing to focus on supporting early-stage startups in life sciences and tech. The fund is expected to fuel more than 15 new biotech startups, Booth said, with pharma companies having roles in the process. He estimated that 70% to 80% of his firm's co-investors in recent biotech startups have been pharma companies.
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| Dr. Sean Harper |
While pharma groups have played a bigger part in early-stage biotech financing, other VC groups have abandoned the expensive and risky field, run dry on capital to invest in startups or looked for later-stage investment in drug developers. Major pharma companies generally have plenty of cash, but they may lack the expertise found in venture firms that specialize in creating new companies.
"Amgen is very excited to partner with Atlas Venture, one of a small number of venture capital groups that truly focuses on creating value by translating groundbreaking science into new companies," said Dr. Sean Harper, Amgen's chief of R&D.
- here's the release