Gaule: Give a brief description of the purpose of Shire Strategic Investment Group (SIG).
Melincoff: SIG was offcially formed in early 2010 and its purpose is to establish access to early-stage companies with pioneering technologies and therapeutics that can provide for future collaborations and acquisitions.
Each investment is made with sponsorship from one of the Shire businesses, and is structured to leverage the balance sheet and avoid any burden on research and development (R&D) spend.
The review, endorsement and approval process within Shire is fairly streamlined. Once an opportunity is identified,the SIG team establishes a relationship with management and the relevant investors and looks internally for an investment sponsor.
Should the opportunity be deemed viable, a proposal – presentation and full investment memo – is prepared for the internal strategic investment board. Following the board’s endorsement, the proposed investment is presented to Shire’s executive leadership team for approval, after which the SIG team transacts the investment and manages the relationship.
SIG cannot lead an investment – typically $5m or less per company – and must, at a minimum, have a board observer seat.
Gaule: What is the structure of the team and partners you work with?
Melincoff: SIG is a two-person group – myself and a colleague. SIG follows an open approach to partnering, allowing the opportunity to dictate the appropriate partners.
Typical investments involve a traditional venture capital frm’s lead and other syndicate investors, often including other corporate investors.
Gaule: Why do you think your corporate venturing approach is important for Shire and for the health development ecosystem?
Melincoff: The outfow of “biocapital” from traditional venture capital sources, along with the increased technical and reimbursement challenges in getting new therapies approved, has provided a window for corporates – often fush with cash – to use and help push new opportunities forward, which in its own small scale way is good for the entire health ecosystem.
Early-stage investing has been a diffcult place for most small companies. The approach of SIG benefts Shire, allowing the company to embrace risk-ier, more innovative, projects without stressing R&D spend. The risk profle acceptable for investment also signifcantly broadens the opportunities the business can pursue.
Gaule: What sorts of challenges do you think you face in bringing the start-ups and technologies to the core business?
Melincoff: The constant issue is alignment of strategy. A start-up takes years to mature and the Shire business continually transitions, so managing the alignment is critical.
There is also the question of risk – when is a start-up derisked adequately for the business to consider a larger commitment or acquisition?
Gaule: What has been your most interesting recent deal?
Melincoff: We recently invested in Promethera, a Belgian company pursuing therapies for orphan liver diseases using allogeneic liver cells. The disease areas and the technology are of interest to both our Human Genetic Therapies and Regenerative Medicine businesses.
Another interesting investment is Naurex, a company developing a therapy for treatment resistant depression. Besides Shire, we have Takeda Venture Investment [see a previous Gaule’s Question Time] and Lundbeck as corporate investors.
Gaule: What do you do to relax outside work?
Melincoff: I am an addicted exercise person and love to go to spinning class. I am married and have one daughter who was recently married.