The Novartis Option Fund was designed to provide an alternative financing vehicle.
The mission of this fund is to seed innovative start-up companies during their earliest stages. The initial equity investment is coupled with an option to a specific therapeutic program giving early validation for the startup companyâ€™s technology or programs by a large Pharma. However the scope of the option is limited. That is, the subject of the option is not customarily a lead or necessarily even an active program for the start up at the time of investment. Rather the option is structured in such a manner as to provide the young company with the potential for an additional opportunity for success. Thus the option must be consistent with the new companyâ€™s corporate development plans. Moreover, the option is limited in duration in order to maintain the full potential for the start-up company in the market. In addition to the non dilutive cash payment to secure an option to a specific program, license terms are negotiated at the time of investment and are based upon benchmarks term relevant for the stage of the asset at the time of option exercise.
The Option Fund has an initial size of USD 200 mio. The fund anticipates a total equity investment over the years of up to USD 20 mio per company. Investments are reviewed by a dedicated advisory board with a majority of external members, chaired by Dr. Spyros Artavanis-Tsakonas of Harvard Medical School. The focus of investments is on early stage, high risk / high return areas enabling the development of novel programs and technologies that may be complementary to Novartisâ€™ research endeavors. While they couple investments with a limited option for Novartis, they are committed to build companies that will be attractive to many other life science partners in the biotech and pharma arena. Thus they finance in a syndicate along with other venture capitalists and the new financing model shall be to the benefit of all parties involved.
The Option Fund targets two or more investments per year with 2009 investments having been made in Heptares Therapeutics, Viamet Pharmaceuticals and Avila Therapeutics.
|FORMA Therapeutics||12/09||Series B||$3M||3|
|FORMA Therapeutics||12/09||Series B||$25.5M||3|
|Viamet Pharmaceuticals||7/09||Series B||$18M||6|
|FORMA Therapeutics||4/08||Series A||$4M||1|
|Cequent Pharmaceuticals||6/07||Series A||$9M||4|