Reports

 
report Life Sciences

"We make no compromises in creating the highest potential company"

26.08.2019

Versant Ventures has a strong history in building successful companies such as Therachon, Black Diamond or CRISPR  Therapeutics. We talked to Alex Mayweg, partner at Versant Ventures in Basel, about the beauty of Versant Ventures discovery engine Ridgeline Therapeutics, translating science into successful drug development programs and the future of drug discovery.

Alex, what does Versant Ventures do?

Alex Mayweg: Versant Ventures is a leading global venture fund focused on biotech that is excelling in early biotech investment and company creation. We have just celebrated 20 years in the business. Our strategy is to source the most innovative opportunities globally that could revolutionize the healthcare industry. We have three ways to build companies: One way is to invest in existing companies, together with others. However, in 50 percent of the opportunities, we create and initially finance the company all by ourselves. On top of that, we also operate discovery engines, such as Ridgeline Therapeutics – where we incubate the science, elaborate, and address the risks to then translate it into drug discovery programs and companies. To that end, we have assembled some of the best drug discovery professionals in the industry who help build the companies and science and may also end up moving into the newly created companies as they grow.

Versant Ventures has its headquarters in San Francisco and runs offices in the USA, Canada – and in Basel. Why the Basel area?

Versant has a strong track record in Europe. We have funded a number of successful companies here, like CRISPR Therapeutics or Therachon that was recently acquired by Pfizer. Thanks to our long established Basel office and our discovery engine that we launched three years ago, we can now harness the tremendous drug discovery expertise that exists in the region directly. Thousands of drug discovery professionals live here. This is unlike any other area in Europe and I think that makes the region very competitive globally. We have already committed up to 100 million dollars to the Basel area companies that we created through our discovery engine Ridgeline. We are very dedicated to the region, yet some companies may also have to grow up in the US. Many of our companies have dual footprints.

How does Ridgeline work?

The discovery engine is a team of excellent people who are creating companies that use Ridgeline as a resource and for support to be built. It’s a beautiful model. We create big vision companies that eventually become independent that initially have the support of people that know what they are doing to create a strong data set and come up with the right strategy. In this model we can attract talent that is hard for small startups to attract at an early stage. We have a great mix of biologists, cell biologists, cancer biologists, immunologists and chemists with both deep and broad experience in their fields.

What realm do you cover with your discovery engine?

We are agnostic when it comes to modalities. We have companies focused on small molecules and on proteins. Antibodies are incredibly powerful modalities, but we haven’t found the opportunity that has exited us so far. We are also seeing opportunities in cell therapy and other modalities emerging in this region. It would be very interesting for Switzerland to put a footprint down in this area as I see increasing activity and excellent science here.

Where do you find the science that excites you – or does the science find you?

It’s a mix of both. We identify themes that we feel are going to be important and we actively look for the academics with programs in those themes. We have to play to the future and look for the top quality academics in these areas. Very often, we find them in Europe and in Switzerland not too far from our front door.

Academics are often attached to their science. Versant is known to bring its own people into company creation. How do you handle that potential area of conflict?

It always amazes me where people can develop to, what they can learn and how they stretch in their careers. We want to be incredibly supportive of that. Yet, drug discovery is hard and you do need experience and a few scars from failed programs to be effective. If you don’t use your experience and don’t set up the right strategy you might apply the technology on the wrong thing. The combination of engaged academic founders, entrepreneurs with teams of smart and experienced drug discovery professionals and leadership has been very successful. That of course also means that Versant takes on an important role in company creation.
We make no compromises in creating the highest potential company in a given space. We are thinking big and I think it’s that appreciation of what it takes to build such a company. With over 150 companies in Versant’s experience, the firm can draw on a lot of knowledge on how to do this.

You were working in drug discovery at Roche before joining Versant Ventures. What is different in discovering drugs for a venture fund?

Roche is a terrific place for drug discovery – in fact I learnt most things about drug discovery there. Venture-backed biotech is a very different experience. We see hundreds of innovative technologies a year, and the opportunity to select the most compelling discoveries and build them into drug discovery companies is incredibly exciting. We invest into the latest innovation and technology with small but focused teams at an early stage. The capital availability nowadays is incredible, and you can now launch and operate full-fledged drug discovery programs outside of big pharma with experienced teams and through contract research organizations which was impossible in this way ten years ago.

How much capital does Versant invest before you do a big external round?

We reserve tens of millions for our companies, always depending on the company, on how we put that capital to work and how we allocate it. If the company or technology has capital demands that we alone cannot deliver we might bring in other investors already earlier. I would say that we are able to seed companies with significantly more capital than is the norm in this region.

Your fund sizes seem to become bigger and bigger. Why is that?

Deep pockets are needed to create leading companies, and when the technology is so broad that there are multiple applications, you don’t want to drip-feed these opportunities. It is hard and expensive to do drug discovery. We see companies who are convinced that they can get a molecule in the clinic with three million in seed capital. We know they will need much more than that. At the same time, we do not raise mega funds and the VC-backed biotech model does bring efficiencies of how we use capital to create value.

What is your first take once you decide to invest?

We de-risk the company and explore strategies, meaning among others that the science needs to be reproducible in an additional set of hands. We are involved at an early stage, which allows us to judge the scientific risk really well. Having a close proximity has the advantage of understanding and of becoming a big proponent of the science. Scientists have a tendency to fall in love with their science but if Versant is convinced and validates the science too, that is a tremendous advantage in raising additional capital and bringing in next-round investors.

Is failure an option?

Attrition is almost defining the pharma industry. In big pharma you start with 50 programs, they go down to 30, then to 10 in the clinic. You always weed out programs. Interestingly, attrition of companies in our portfolio is quite low. However, science is science, and programs don’t always work. We always plan drug discovery from A to B as a straight line and yet whenever you travel it’s a winding path. What you initially set out to do you may not end up doing. Yet, the venture model always tries to maximize, preserve and leverage the value built. It rarely happens that you let things sit and decay.

What do you expect from the future of biotech?

Look at the history of drug discovery innovation that came out of the chemical industry in the Basel area. There are innovation curves that extend over decades. Past innovation cycles have extended human life and cancer survival, have lowered heart disease death rates and completely plummeted infectious disease rates. We live in an incredible time in biotech. Years ago, it was small molecules and then antibodies emerged. Now we have the full breadth of modalities including small molecules, biologics, cell therapy, gene editing, gene therapy and others, unlocking an enormous amount of innovation potential. Besides choosing the best opportunities in existing innovation curves, we also aim to invent new curves. As one of my partners at Versant recently said: The coolest technology is one that hasn’t even been invented yet, but we can promise one thing: When it gets invented we are going to source it and build an amazing company around it.

If you want to learn more on how Versant Ventures operates and its discovery engine Ridgeline Therapeutics, join us in Basel for Alex’s presentation on 18 September: Investor Spotlight: Ridgeline Therapeutics – A Versant Ventures Discovery Engine

report Invest in Basel region

Initiative for innovative companies in Basel-Landschaft

22.11.2019

report Invest in Basel region

Investments in Basel start-ups on the rise

21.10.2019

report

Meet the BaseLaunch Startups

11.03.2018

Six of the BaseLaunch startups recently started Phase II. They received either grants up to 250,000 Swiss francs or gained free of charge access to BaseLaunch laboratory and office space at the Switzerland Innovation Park Basel Area. Hear what the startups, the BaseLaunch team and selection committee members experienced in the first year. Find out more about what makes BaseLaunch unique.

The BaseLaunch accelerator is now open for applications for the second cycle. Entrepreneurs with a healthcare based project or a game-changing innovation in diagnostics, medtech or related field at the pre-seed or seed funding stage are invited to submit their applications to the program.

Following the application deadline on 14 May, promising projects will be admitted to the accelerator program for a period of 15 months. In phase I, the startups will benefit from the support of industry experts, office- and laboratory space free of charge and access to healthcare partners. After three months, they will be invited to present their idea to the selection committee. They will determine which promising startups will proceed to Phase II that runs for one year.

BaseLaunch is backed by five industry leaders — Johnson & Johnson Innovation, Novartis Venture Fund, Pfizer, Roche and Roivant Sciences. Other public and private partners such as KPMG and Vossius & Partner also support the initiative.

report BaselArea.swiss

BaseLaunch supports Switzerland as an innovation location

27.08.2019

report Life Sciences

Swiss biotech industry growing

08.05.2019

report BaselArea.swiss

“Basel is well positioned”

09.02.2017

‘Uberfication’ will change marketing and sales in the pharmaceutical sector, says Patrik Frei. This is already seen at healthcare companies, where digitalisation is making inroads. Business angels and family offices are paying an increasingly larger role in awarding venture capital, according to the CEO of Venture Valuation. Venture capitalists are coming aboard only later.

What does Venture Valuation do?

Patrik Frei: We conduct independent assessments of companies in the life sciences sector. Our clients are looking either for capital or investments. We then try to determine a fair value and indicate a range. The price is then, of course, a matter of negotiation.

How do you rate Johnson & Johnson’s acquisition of Actelion – well negotiated or a fair value?

Actelion was already a success story before hand, one of the few biotech companies to have organised its own sale. The commercial part will now be split off while the research and innovation will remain in Switzerland. Generally speaking, this is a highly successful exit and sends an important signal to Basel as a centre of life sciences – irrespective of the fact that additional capital is again flowing into the industry.  

Is it possible to observe a consolidation process, one that could also have undesired effects?

No. While there is a concentration of large pharmaceutical companies at the top, this also creates opportunities for new companies. Start-ups have the advantage that they are faster and more agile. Some of them are acquiring others and becoming medium-sized companies. An example of this is Shire. Others are being acquired by the bigger companies, which in turn feeds new capital into the sector. I think that this innovation ecosystem is fundamentally healthy.

The US seem to profit more than Europe or Switzerland. Is there far more venture capital there?

There is four times as much venture capital in the US than in Europe, it’s true. But the number of companies is similar. In Europe, smaller amounts are usually invested and start-ups have to survive more financing rounds, while in the US extremely high amounts are committed in one go. Incidentally, investors in Asia are far more cautious than in Europe. It should also be noted that the investor landscape is changing in Europe. There are less and less traditional venture capitalists, while corporate venture funds, family offices and business angels are gaining in importance. These are often people who have made their own wealth in the sector. But this doesn’t mean that it has become easier for companies looking for capital; private investors are not only more cautious than venture capitalists, they also tend not to operate openly.

In addition, many institutional Europe investors prefer to give their money to large American venture capitalists, which are more visible and have been more successful in the past. Overall it can be seen that venture capitalists are coming on board later, creating a gap in expansion financing, especially in Europe. 

You had the opportunity to moderate an event in January about the future of the pharmaceutical industry at the JPMorgan Healthcare Conference. What came out of it?

One of the main themes was the ‘uberfication’ of the healthcare sector. Today, marketing and sales are firmly in the hands of the big pharmaceutical companies, but this could be challenged in the future by IT companies. We still don’t know how this will look like exactly, but it’s clear that new distribution channels will become possible through digitalisation.

But regulations could also slow this down.

Patients are increasingly informing themselves over the internet, and there are more and more digital diagnostic tools. Over a longer period of time, there could be some development there. But there’s no doubt that this also certainly depends on regulations.

How important is the choice of location for life sciences companies today?

We also discussed this in San Francisco. The trend is towards multiple sites - a presence in the US, development in China or even now in India, headquarters in Switzerland. Smaller biotech companies are also addressing such issues.

Where does Switzerland stand?

Switzerland and Basel are very well positioned. With the two large pharmaceutical companies, the location has widespread visibility. Many people in the sector are familiar with Basel and Switzerland from their own experience and invariably have very positive memories. But the fact is that you cannot simply rely on the past. You also have to actively shape your future.  

And what will this entail?

The keyword is digitalisation and personalised medicine or precision medicine. The trend is that markets will ultimately split off and become smaller. So you will need more products. This is also the reason for consolidation.

Will costs go up when markets become smaller through personalisation?

On the one hand, costs for medicines are rising. On the other hand, fewer medicines have to be tested until something works if they are personalised and actually work. This reduces costs. The likelihood of success of clinical trials also increases when resources are more strongly oriented towards specific groups. We can hope that costs will even fall thanks to personalisation.

Does digitalisation also open up the field for newcomers, particularly from the IT sector?

Definitely. We are noticing this trend very strongly and are increasingly conducting assessments of health tech companies. Health tech is interesting for investors because products are brought faster onto the market and the investments are smaller. This is a challenge for pharmaceutical companies since such health tech companies will be used as the first digital sales channels.

Are we prepared for this in Switzerland?

Switzerland has strong IT companies and even stronger pharmaceutical companies. The potential exists. But you have to better connect both sides, whether in research through an appropriate institution, through events or even a new association. But I am very confident that we will set the right course here.


Biography

Patrik Frei founded Venture Valuation in 1999. The Zurich-based company specialises in conducting independent assessments of start-up companies. Patrik Frei studied business administration at the University of St.Gallen and graduated from the Federal Institute of Technology in Lausanne.

report

Event Impressions and some Key Quotes: Perfecting Partnerships for Life Sciences Startup S...

02.04.2019

report Life Sciences

Basel biotech Polyneuron raises CHF 22.5 million

28.03.2019

report Medtech

«We benefit from many years of research in Basel»

08.07.2015

While Switzerland is innovation world champion in many rankings, promising innovations in the field of medical technology often lack the funding needed in Switzerland to get them to the market. The start-up investor MedTech Innovation Partners AG (MTIP) closes this gap.

CEO Christoph Kausch explains in the i-net interview what MTIP does differently from other investors and outlines the start-up projects that are especially interesting for his company.

MedTech Innovation Partners has recently established its presence in the market. How did this come about and why did you not take this step earlier?
Christoph Kausch*: About two-and-a-half years ago, the idea was conceived of bringing the work and research of Prof. Hans-Florian Zeilhofer together in a business model under the MTIP brand. This means that MTIP benefits from many years of research in Basel. Since then, the organization has developed and the concept refined. In short, we are strongly rooted in Basel thanks to our history and promote innovation here. Our work can help to prevent start-ups taking their good ideas abroad because they are unable to find the necessary funding and resources here.

And who are the people behind MTIP?
Apart from me, the core team includes Professor Zeilhofer, Head of the High-Tech Research Centre at the University Hospital Basel, who has been engaged in the field of medical technology throughout his career, and also the entrepreneur and investor Dr. Felix Grisard, who has been investing in medical technology for more than ten years. We have a strong team of board members and an equally top-class advisory board. Our skills range from medical technology and research expertise, through investor and entrepreneurial know-how to knowledge of how to manage innovation projects.

The MTIP board of directors is made up of highly renowned individuals. How were you able you motivate these people?
Until now there has not been a business concept anywhere in Switzerland with such strong links to research institutions. We are closing this gap in the market in order to promote innovations in Switzerland. The opportunity to play a part in this is very attractive.

MTIP promises to put the emphasis on sustainable development. What do you plan to differently from other funds?
Our integrated business model takes the long-term view; we are not in it to make a fast buck. We also make a contribution to society by reinforcing the power of innovation strength in Basel. What no other venture capital fund in this area possesses is our unique Swiss network and our excellent access to research institutions. At international level we are developing an “innovation ring”. For example, when we carry out a clinical trial for a start-up, we can do this much faster but to the same quality standard in collaboration with top-flight international partners. This shortens the time to market enormously.

What does MTIP expect in return from the companies you support?
A trusting collaboration and thus the people involved are very important to us. Intellectual property rights, such as patents or brands, must be clearly regulated before the technology can be developed further. We ourselves are a minority investor and strive for at least a 10 percent stake in a start-up. Our objective is to support the entrepreneur behind the company and to help him avoid the pitfalls that occur during the establishment of a company.

You write on the website that MTIP wants to get involved as early as possible and provide long-term support. For how long do you plan to support start-ups?
It’s somewhat easier here in Switzerland than elsewhere to get seed capital ranging from 100,000 to a million francs for the first round of financing. But what is incredibly difficult is the follow-up funding. This leads to many start-ups having to move away. So we also support the follow-up funding after the seed funding. To facilitate this, we join forces with other investors.

Medical technology is a very broad term. It encompasses everything from gauze bandages through implants and robot-assisted surgery to treatment and nursing. Where does MTIP focus its attention in this enormous range of options?
We have five focus areas: imaging, robotics/navigation, IT/big data management, medtech meets pharma and smart materials. This is where our core competencies lie, but this does not mean that we would exclude other areas. Interdisciplinarity is also very important. A model organization is the High-Tech Research Centre of Professor Zeilhofer, where different disciplines, such as IT, biology, engineering, the humanities, art and medicine, work together on finding the best solution for a medical problem. For it is not possible today to develop anything innovative in isolation.

You have experience yourself as a young entrepreneur. What are the biggest challenges for start-ups and how can MTIP help to overcome them?
In the case of start-ups in medical technology I see two big challenges. First of all, it is important to address the question of certification or regulatory approval early on. Secondly, young entrepreneurs have to take care from the outset that they already define a patent strategy when they are setting up the company. We can offer assistance here with established experts in the field.

MTIP has recently set up home in Allschwil at the Swiss Innovation Park of Northwest Switzerland. Is it your aim to collaborate with the technology and innovation ecosystem and to pool resources?
The whole Department of Biomedical Engineering and the High-Tech Research Centre of the University of Basel have just moved into the temporary premises in Allschwil. To ensure that the collaboration is efficiently organized in a spirit of partnership, we have also moved in there for the time being and are managing innovations and start-ups in this setting. Where we will be based in future has not yet been decided, but we are open to cooperation with the Swiss Innovation Park of Northwest Switzerland.

The search for venture capital in Switzerland is challenging and time-consuming, MTIP promises to make this easier. Are you overrun today by requests for funding?
The number of queries has doubled since we went public. Now we have to evaluate the best projects.

And what does a project have to offer in order to get support from MTIP?
An important point is innovation: we want to know what sets it apart from the state of the art so far. Another important question is whether it is a technology that can be protected by a patent or a trade secret and what market potential the project offers. We place great value in particular on a good management team: if competencies are lacking, we are happy to help in the search for suitable employees. Traditional venture capital companies invest their money and wait for the exit of the company.

Where do you see MTIP in five years?
The aim is to have a presence in Switzerland with a very good portfolio of start-ups. An organization like i-net can play an important role for MTIP and it would be great if the shared network idea could lead to new projects.

Interview: Fabian Käser and Nadine Nikulski, i-net

*Christoph Kausch has a sound knowledge of strategic management and experience in bringing innovations to market. Before founding MTIP, he led the global strategy department of Syngenta for several years. Prior to this, he was Managing Director at Hafiba AG, a boutique investment company, where he is still a member of the board of directors. He started his career at McKinsey & Company where he had specialized in private equity and life sciences.

Christoph Kausch studied mechanical engineering at the TU Munich and at the Massachusetts Institute of Technology Management (MIT) in Boston. He completed his PhD in innovation & technology management at the University of St. Gallen and at Harvard Business School.

About MedTech Innovation Partners AG
MedTech Innovation Partners (MTIP) headquartered in Basel, is an early-stage investor focusing on health technologies. MTIP offers more than traditional venture capital, delivering access to business building expertise, a systematic approach to intellectual property management, recruitment and a unique interdisciplinary culture for the entrepreneurs and start-ups that MTIP works with.
A local network which consists of well-known Swiss universities and research centres specializing in medtech, gives MTIP an early access to research outcomes. Furthermore, an international innovation ring offers scientists and entrepreneurs ideal conditions for bringing innovations to market.
Website of MTIP

 

report Innovation

Swiss freight metro clears major hurdle

10.12.2018

report ICT

Basel software developer raises new capital

06.12.2018

Cookies

BaselArea.swiss uses cookies to ensure you get the best service on our website.
By continuing to browse the site, you are agreeing to the use of cookies.

Ok