Merck, Flagship join forces on fostering biotech startups

Fresh from raising $270 million for its new biotech fund, Flagship Ventures is teaming up with a pair of key Merck outfits--Merck Research Laboratories and its newly formed Merck Research Ventures Fund--to collaborate on fostering a string of innovative new drug developers. 

In what's being billed as a marriage of early-stage investment savvy with Big Pharma expertise on development and commercialization, Flagship is looking at this as a new twist on a major new theme in the startup sphere. In this case, Merck ($MRK) gets a seat at the table of new biotech companies that promise to launch important new treatments. And Flagship, which has its own incubator and a Rolodex full of top researchers with an entrepreneurial bent, gets a big player to step up and lend a hand when it can provide essential support.

"This is a pretty novel way for a large pharma company to draw closer to early stage" efforts, Noubar Afeyan, the managing director and chief executive officer of Flagship, tells FierceBiotech this morning. Merck had already invested in Flagship's new fund, announced in January. 

The goal here, though, isn't to line Merck up with a financial stake in these early-stage companies, says Afeyan. He sees it more in line with the open innovation movement, with Merck "going way upstream" and contributing expertise to fledgling startups so it can "gain access and provide influence into what's coming next long before it's taken the shape of an asset they may want to do a deal with."

While not a copy, the collaboration bears some resemblance to Index Venture's new fund, which included investments from Johnson & Johnson ($JNJ) and GlaxoSmithKline ($GSK) and plans to back early-stage biotechs in Europe and the U.S.

"The collaboration with Flagship underscores Merck's commitment to fully engage with the entrepreneurial ecosystem at the earliest possible stages and to access breakthrough science for the development of novel therapeutics," said Roger Pomerantz, senior vice president worldwide licensing and knowledge management at Merck.

- here's the press release