What are the criteria you follow when deciding to commit to a new company? Do you consider yourselves more financially or strategically driven?
Xavier: JJDC is the strategic investing arm of Johnson & Johnson (J&J), and our global team invests in select companies to create an investment portfolio that will complement and expand the internal development pipelines and products of the Johnson & Johnson family of companies.
JJDC has a dual mandate, very much like the US Federal Reserve, and we have both strategic and financial goals. First and foremost, the investment opportunity must align with the strategic focus and areas of interest for the J&J businesses. To us, the ultimate success is marked by onboarding a transformative healthcare solution, so we can bring it to people in need. If for some reason a portfolio company no longer aligns with our strategic focus, our interest in that company shifts to a financial one. We still want that company to be very successful and are committed to providing the resources to help that happen.
What is the ideal investment case for JJDC in a life sciences company?
Xavier: The ideal investment would be a scientifically-validated technology with the potential to be transformative in one of our areas of strategic interest. Equally important criteria in our investment thesis is a great management team with a clear and grounded business plan, since venture investing is very much about investing in teams and their vision to change the world. That being said, there is no cookie-cutter approach to venture investing at JJDC. Our creative deal structures reflect the uniqueness of the entrepreneurs and companies we fund, including their area of focus and stage of development. Depending on each new partner’s needs and our own needs, we construct deals that are pure equity, equity plus options or convertible debt, or other arrangements. We also make private investments in public equity to facilitate business development transactions.
How is JJDC integrated within the context of the larger corporate family of Johnson & Johnson? In other words, what are the synergies with JLabs, the global network of incubators, and with other divisions?
De Backer: JJDC works collaboratively with the J&J Innovation team to identify the best new technologies and emerging companies. When transactions experts at the Innovation centres are creating a deal with a company that might need venture financing, they come to us. Similarly, JLabs leadership can refer resident companies that need venture capital to us, just as we refer companies that need incubation space to them. Additionally, the JJDC team works in concert with transactions and therapeutic area experts across J&J’s pharmaceutical, medical device and consumer businesses. We are always connecting with J&J business leaders to make sure we understand their strategic charter so we can identify transformative healthcare ideas and craft creative highly-customised deal structures.
How are recent regulatory developments, such as the repeal of the Affordable Care Act, likely to change the playing field for startups and other emerging enterprises in the broader life sciences and health realm?
Xavier: It is difficult to predict how the rapidly evolving regulatory landscape will impact emerging companies and the broader healthcare ecosystem. However, J&J has been around for more than 130 years and has weathered economic and regulatory ups and downs through its lifetime. As a global, comprehensive healthcare company, we will be part of shaping the future of healthcare as things continue to evolve. What is important for emerging companies to know is that whatever the regulatory landscape looks like, we will be there to collaborate with them on transforming the ideas of today into the medical breakthroughs of tomorrow.
What trends and technologies have you been observing in JJDC’s areas of interest – consumer, pharmaceuticals and medical devices – over the past year?
De Backer: One of the biggest trends we are seeing in recent years is a great convergence across all of our sectors in healthcare. It is getting harder and harder to easily sort some companies and their approaches into just one of those categories. We are seeing mobile health and medical technologies that are changing how we approach care, and all of those things have a huge potential to impact health in a positive way.
It is exciting to see this great convergence because I believe we will see some very ingenious solutions to address age-old problems that are only made possible by an inter-sector approach. As a global and integrated, broad-based healthcare company, J&J is ideally positioned to help drive this trend and shape how healthcare is delivered in the future. We are also making an impact in moving from “sick care” to “well care” and in providing personalised, coordinated care, customised solutions and better outcomes.
What new technologies and treatments are we likely to see become great disruptors in these areas in the coming years?
De Backer: The speed of technological change seems unprecedented and there is an incredible number of developments that hold disruptive promise. One such example is 3D printing technology, as it gives unprecedented control to create devices, prosthetics and medical tools that are custom-tailored for each patient or physician using them. New surgical robotic technology will potentially enable better patient outcomes. The many advances in health technology will help patients and consumers throughout their healthcare and well-being experience or journey. Liquid biopsies might help us predict cancer before it develops. Also, our growing understanding of the human microbiome and its role in human health and disease states is fascinating and already changing how we think about therapeutics. Microbiome science is exploding, with advances occurring in parallel across many modalities and disease areas. All of these new developments will allow us to serve our patients and consumers even better in the future.
What investments will we be seeing from JJDC in future?
Xavier: While we do not disclose investments before we make them, I am excited about the technologies we are seeing across our areas of interest, and I cannot wait to see what the future of healthcare holds. For instance, a new area of investing for JJDC has been consumer healthcare, where we have done several new investments over the past four years, many of which are at the growth equity stage. One of these companies, La Lumiere, was acquired by J&J, and J&J has now launched the product under the Neutrogena brand.
