MedImmune adds $100 million to venture fund

Md. company invests in emerging biotech firms

February 23, 2005|By William Patalon III | William Patalon III,SUN STAFF

MedImmune Inc. has injected another $100 million into its 2 1/2 -year-old corporate-venture fund, a pioneer in the nascent biotech sector that has invested $85 million of its original seed money.

Gaithersburg-based MedImmune started its MedImmune Ventures Inc. subsidiary in July 2002 with an initial investment of $100 million and has invested in a dozen businesses, including two based in Germany. The parent company announced the second $100 million investment yesterday.

"MedImmune Ventures has been successful .... in providing us with a window into new and innovative products and technologies being developed by exciting young biotech companies," Wayne T. Hockmeyer, the venture unit's president and chairman and former chief executive officer of the parent company, said in a statement.

"We will continue to use our venture fund as a means by which we can work with such early stage companies, helping them financially and strategically, while seeking to create value for MedImmune."

Although MedImmune does not specify its investment in each company, it said the average is about $7 million, with a $20 million maximum, funded from the company's cash reserves.

MedImmune is the leader among biotechs in venture funding, said Tom Salemi, editor of the Venture Capital Analyst/Healthcare newsletter and an expert on financing trends in the health care industry.

Pharmaceutical and digital-technology companies created their first corporate venture funds two decades or more ago. Their biotech-sector counterparts have done so only in the past year or two, he said.

Even Amgen Inc., the largest company in the biotechnology sector, waited until November to announce its first company-managed fund, starting with $100 million in seed money, Salemi said.

"MedImmune was essentially the innovator in its industry," Salemi said.

Conventional venture funds focus chiefly on generating profits. Their corporate counterparts are more about strategy - providing tools, technologies or products that can boost the parent company's prospects, industry experts say.

That's MedImmune's strategy. By concentrating its investments on companies involved with infectious diseases, oncology or inflammatory diseases, MedImmune gets an early look at technologies or products that have a better chance of matching its focus, the company said.

An investment by MedImmune Ventures, a wholly owned subsidiary of MedImmune, can be accompanied by, or lead to, a licensing deal or co-development agreement with the parent company.

That happened in July 2003, when MedImmune and Critical Therapeutics Inc., of Cambridge, Mass., announced plans to co-develop inflammatory-disease products. MedImmune Ventures had invested an undisclosed sum in Critical Therapeutics.

Antibody technology is a strength for both companies.

Though there are no specific figures detailing how much money corporate venture funds invest annually, the National Venture Capital Association estimates that company-run venture capital operations account for about 15 percent of venture investments made each year, said Mark Heesen, president of the Washington-based association.

Because venture investments total about $21 billion annually, corporate venture funds across all industries would account for investments of more than $3 billion, he said.

Heesen thinks corporate venture funds will prove particularly important for biotech companies, meaning that many others will follow MedImmune's lead, he said.

"Biotechnology is so research-intensive that each company will soon realize that no one can do it all alone," Heesen said. "They need to be aware of all that's going on in the world around them."

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