Venture Capital News

Oxford University Signs £12 Million Funding Deal with Technikos

Oxford University has signed a private equity deal, initially worth £12 million (US$21.9 million), to help the funding of its new Institute of Biomedical Engineering. The deal, struck with London's City-based Technikos, also includes the provision of commercial/financial advice and assistance in return for shares in future companies spun out from IBME. An innovative ‘securitization of intellectual property' is a feature of the deal.

The Institute, which is part of the University's Department of Engineering Science, will occupy some 20,000 sq ft of a new £50 million (US$91.3 million) building on Oxford's Medical Research Campus adjacent to the Churchill Hospital. Designed by London-based architects MAKE, it is expected to open in late 2007. The deal will contribute towards building and equipment costs, and the hiring of additional staff.

Technikos will be working with Isis Innovation Ltd, the University's technology transfer company, to support IBME in the following areas:

• Identifying Intellectual Property or technology projects with commercial value
• Assisting commercialization of those technologies
• Identifying the technologies that will benefit from spinning out from the University
• Contributing investment capital to spin-outs
• Planning and executing exit strategies for spin-out companies (i.e. the exit of Technikos as an investor)
• Helping to develop spin-out companies by advising on management, sales and marketing

In return for this financial and commercial support, and for its initial £12m investment, Technikos will obtain 50 per cent of the portion of the equity in any Biomedical Engineering spin-out usually allocated to Oxford University in such deals. Additionally, Technikos will receive 50 per cent of the University's share of royalties obtained from licensing out Biomedical Engineering technologies developed during the period of the agreement (approximately 17 years).

Professor Richard Darton, Head of the Department of Engineering Science, commented that a generous donation of £1.3 million (US$2.3 million) in 2005 from the Bellhouse Foundation had enabled the Department to launch the new Institute.

Technikos is a new legal entity, focused on investment in academic institutions. It is an operating division of SRPE, itself an independent private equity business supported by partners of the Sloane Robinson Group.

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Yale Licenses Potential Anti-HIV Agent to Oncolys BioPharma of Japan

Representatives of Yale University announced that it has concluded a license agreement granting Oncolys BioPharma, Inc. of Tokyo the global exclusive right for clinical and business development of a novel compound for the treatment of HIV.

A patent application has been submitted by Yale for 2', 3'-Didehydro-3'-Deoxy-4'-Ethynylthymidine, or Ed4T, a compound with a new and potentially effective anti-HIV clinical treatment.

Ed4T is a thymidine analogue that blocks HIV-1 reverse transcriptase, the enzyme that is essential for viral replication. The compound was discovered and developed jointly by Professor Masanori Baba of Kagoshima University and Professor Hiromichi Tanaka of Showa University in Japan, and Yung-Chi Cheng, the Henry Bronson Professor of Pharmacology at Yale University School of Medicine.

Pre-clinical studies have already begun and Oncolys BioPharma will accelerate the studies with a target of initiating Phase I/II clinical trials in 2008.

An estimated 20 million people worldwide have died from AIDS and 40.3 million are infected with the virus. In 2004, a reported 1,000 patients in Japan were infected — and the numbers are rapidly increasing.

Since 1985, when AZT was introduced into clinical practice, 18 products have been approved and commercialized worldwide as anti-HIV-1 treatment. The drugs are in four categories, according to their various modes of action and chemical structures. Of the available drugs, seven are Nucleoside-analogue Reverse Transcriptase Inhibitors (NRTIs), three are Non NRTIs (NNRTI), seven are Protease Inhibitors, and one is a Fusion Inhibitor.

The current standard treatment for AIDS is HAART (Highly Active Anti-Retroviral Therapy), a combination regimen including drugs with different modes of action. HAART has two standard regimens: either treatment with two NRTIs plus one or two Protease Inhibitor(s), or treatment with two NRTIs plus one NNRTI.

However, during long-term treatment with anti-HIV-1 drugs, patients can develop a resistant strain of the virus, and require a new drug to counter the mutation.

Pharmacological studies have demonstrated that Ed4T has more potent anti-HIV activity than the existing NRTI and is active against those viruses that are resistant to the existing NRTI and NNRTI drugs. Further, Ed4T does not affect DNA synthesis in mitochondria, a toxic side effect of some nucleotide analogues. These findings suggested that Ed4T might offer unique therapeutic advantages over existing anti-HIV drugs.

Oncolys BioPharma Inc. was founded in March 2004 to develop and commercialize Telomelysin, an engineered virus that infects and destroys cancer cells. In March 2006, the company applied to the FDA for approval of a Clinical Study in patients with cancer. The company has recently added infectious disease as a strategic target.

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LLR Partners and Quaker BioVentures Announce Sale of Portfolio Company Medmark Holdings Inc.

Representatives LLR Partners and Quaker BioVentures announced Thursday the sale of their portfolio company, Medmark Holdings Inc., to Walgreen Co. Medmark provides comprehensive specialty pharmaceutical services to regional and national managed care companies across the United States, specializing in the distribution of injectables, infusibles, and advanced oral medications to patients with unique or chronic medication needs. Financial terms of the transaction were not disclosed.

LLR and Quaker invested in Medmark in March 2004, shortly after formation of Medmark by Highmark Inc. in late 2003. Highmark has served as a major investor and customer of Medmark since the company's founding.

Stanley Blaylock will continue as president of Medmark, operating under the Walgreens Specialty Pharmacy division. The company will remain in Pittsburgh, and will serve as the growth platform for Walgreens' national expansion in the specialty pharmacy industry. The transaction is expected to close this summer.

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Dow Jones VentureOne Adds China to Its VentureSource Database

Representatives of Dow Jones VentureOne announced the addition of Chinese data to VentureSource, the venture capital industry's leading online database of venture-backed companies, investors, and financing transactions on June 22. The database will now track companies and investors in Mainland China, Hong Kong, and Taiwan.

The addition of Chinese data to VentureSource is the latest element of VentureOne's international expansion. A dedicated team of researchers has been in place in Shanghai since mid-2005, preparing for this launch. This expansion will add to the 28,000 companies, 7,400 investors, 75,000 financing transactions, and 185,000 executives VentureSource already tracks in the U.S., Europe, and Israel.

A preliminary review of the aggregate Chinese data in VentureSource shows that US$2.81 billion has been directed by venture capitalists into more than 310 investments in Mainland China between 2004 and the first quarter of this year. By industry, information services made up more than 38% of the deals in the information technology sector so far this year, and 36% of all deals last year. IT as a whole is responsible for 64% of all Chinese deals through the first quarter, and represented 71% of the deals in 2005. Consumer and business services are the largest segment for Chinese venture capital investment outside of the IT sector, representing more than half the deals in the products and services category.

The median size of deals in China is growing larger, reaching $9 million in the first quarter of 2006, up from $7 million last year and $5.2 million in 2004.

By region, companies headquartered in Beijing and Shanghai dominates the investments, but the VentureSource data also shows increasing activity for companies in Shenzhen.

The VentureSource database's extensive search capabilities enable investors and service providers to target smart investments, perform due diligence on potential portfolio companies, and monitor private equity deal flow. The user can compare venture-backed companies by industry, development stage, size, and age, and access complete company histories — from initial round of financing to liquidity. Furthermore, VentureSource allows for sorting of investors by fundraising activity, investment preferences, portfolio company information, portfolio company industry, and investment history. The user can also track contacts through VentureSource's coverage of executives and board members. Flexible search criteria facilitate effective, focused searches that can be customized and saved. Reports are easily downloadable and can be imported into other applications. VentureSource's Web-based interface can be accessed anywhere, anytime.

VentureOne's U.S. office in San Francisco has been tracking the market since 1987. VentureOne's London research office has been operating since May 2000, actively tracking the European and Israeli venture capital community.