Celgene, Lilly back $100M VC effort to fund a wave of biotech startups in NYC

Eli Lilly R&D chief Jan Lundberg

Three big players in the life sciences industry--Celgene ($CELG), Eli Lilly ($LLY) and GE Ventures--are chipping in to help fund a $100 million venture fund that will be used to launch up to 20 new biotech companies in New York City, adding some fuel to a small but growing fire of R&D efforts in the Big Apple.

The Bloomberg administration took the lead on this project, according to The Wall Street Journal, seeding the fund with $10 million and teaming up with the industry partners. Now they're looking for a venture player to kick in $50 million on top of the $40 million promised by Celgene, Lilly and GE and take the lead in finding 15 to 20 new biotechs to back.

Lilly R&D chief Jan Lundberg says that the scarcity of startup funds helped persuade the pharma giant to participate.

"It's quite unfortunate that early-stage investment has been reduced over time from venture capital companies and that's the reason that big pharma companies like Lilly are interested in this area," Lundberg told the Journal.

New York has a stellar reputation in scientific research, but has never come close to developing a biotech hub that can rival Boston and San Francisco and the U.K. triangle in London-Oxford-Cambridge. Roche ($RHHBY) gave the city a big boost when it decided to move a group of 250 pRED survivors from the Nutley, NJ, shutdown to a research hub in Manhattan, neighboring Lilly's ImClone subsidiary at the Alexandria Center for Life Science on the East Side of Manhattan.

Life science backers in the area have long complained that the lack of venture capital has been one of the most important challenges faced in creating a hub, and now the big players are taking direct action to remedy that issue.

- here's the story from The Wall Street Journal

Editor's Corner: VC funding follows tepid pace in Q3 as first-time biotech rounds shrivel