Over the past year, we have tracked 278 deals in which corporate venturers from the health sector have participated. The total capital committed by all investors in those deals is estimated to be over $7.1bn. The majority of corporate investors from the health sector have been investing overwhelmingly in funding rounds raised by health-related enterprises.
Despite widespread talks about a slowdown in VC investment activity across sectors and around the globe, our data on the past year does not seem to suggest a sudden and sharp decline in healthcare. Neither the number of deals nor the capital deployed by syndicates in deals have declined. It must be noted, however, that we have tracked only the corporate venturing realm.
In the broader healthcare VC market, last year was a record year for life sciences VC fundraising, with a total of $6.8bn raised in the US, according to Silicon Valley Bank, which also found strong momentum in Europe. Its research across Europe found 46 VC-backed deals wothy $623m in the first quarter, compared with 42 worth $137m at the same point last year.
The top three corporate investors by number of deals were Johnson & Johnson, GlaxoSmithKline (GSK – SR One is its independent venture investor) and Novartis, with 43, 24 and 22 deals respectively. The leading corporate investors involved in large deals were Novartis, Pfizer and Celgene.
In terms of investments in health-related emerging enterprises, most of the corporate venturing investors are from that sector. A notable exception over the past year has been Alphabet (formerly Google). Most of the capital invested in such startups and enterprises has gone to earlier founding rounds, such as series A, B and C.
Deals
Deals in the health sector were unevenly distributed across geographies. Most of them (220) took place in the US. The table shows the 10 most significant deals since April 2015. A number of corporate venturing investors have been drawn to oncology and genetics initiatives.
In July, UK-based Immunocore raised $320m in a funding round backed by investors including pharmaceutical firm Eli Lilly – the largest raised by a European private life sciences company. In addition to Eli Lilly, the oversubscribed round featured fund manager Woodford Investment Management, healthcare investment firms Malin Corporation and RTW Investments, and undisclosed new and existing investors.
Founded in 2008, Immunocore is developing a class of biologics to fight cancer. Immunocore has not disclosed any previous equity funding, but has signed research and licensing agreements with pharmaceutical partners, including MedImmune, GlaxoSmithKline and Genentech. Eli Lilly signed a $45m development deal with the company in July 2014.
Deals in healthcare over the past 12 months
| Company | Location | Round |
Round size |
Investors |
| Immunocore | UK | – |
$320m |
Eli Lilly | Malin Corporation | RTW Investments | undisclosed strategic investors | Woodford Investment Management |
| Human Longevity | US | B |
$220m |
Celgene | General Electric | Illumina | undisclosed strategic investors |
| Adaptive Biotechnologies | US | E and beyond |
$195m |
Alexandria | BD Biosciences | Casdin Capital | Celgene | Illumina | Laboratory Corporation of America | Matrix Asset Management | Rock Springs Capital | Senator Investment Group | Tiger Global Management | undisclosed strategic investors | Viking Therapeutics |
| Flatiron Health | US | C |
$175m |
Allen & Company | Baillie Gifford | Casdin Capital | Roche |
| Surface Oncology | US | Stake purchase |
$170m |
Novartis |
| Nabriva Therapeutics | Austria | B |
$120m |
Boxer Capital | EcoR1 Capital | Global Life Sciences Ventures | HBM BioCapital | Novartis | OrbiMed | Phase4 Partners | Vivo Capital | Wellcome Trust |
| Editas Medicine | US | A |
$120m |
Alexandria | Alphabet | Casdin Capital | Cowen | Deerfield Management | EcoR1 Capital | Fidelity | Flagship Ventures | Jennison Associates | Khosla Ventures | Omega Funds | Partners Innovation | Polaris Venture Partners | T Rowe Price | Third Rock Ventures | Viking Global Investors |
| Mereo BioPharma | UK | A |
$119m |
Invesco | Novartis | Woodford Investment Management |
| Helix | US | A |
$100m |
Illumina | Mayo Clinic | Sutter Hill Ventures | Warburg Pincus |
| Grail | US | A |
$100m |
Arch Venture Partners | Bezos Expeditions | Bill Gates | Illumina | Sutter Hill Ventures |
In April 2015, US-based genomics research company Human Longevity (HLI) closed more than $220m of series B funding. Investors included genomics firm Illumina, pharmaceutical company Celgene and industrial product manufacturer General Electric. The corporates were joined by undisclosed investors from the company’s series A round, based in the UK, the US, Malaysia, Mexico, Australia, Kuwait, Hong Kong and China. General Electric also participated through its GE Ventures subsidiary.
HLI was launched in March 2014 with $70m in series A funding from backers including Illumina, and aims to create the most complete human genotype, microbiome and phenotype database in the world to help treat diseases linked to ageing.
Also last year, in May, US-based Adaptive Biotechnologies closed a $195m series F round, featuring biotech companies Celgene and Illumina, laboratory services provider LabCorp and medical devices maker BD Biosciences. The round was led by Matrix Capital Management and included property debt manager Alexandria Real Estate Equities, Senator Investment Group, Rock Springs Capital, Tiger Global Management, Viking Global, Casdin Capital and an unnamed healthcare investor.
Adaptive has developed an immunosequencing platform that profiles parts of the immune system known as T-cell and B-cell receptors to find out how a patient will react to a drug. The receptors, types of white blood cells, are a actor in fighting diseases such as cancer.
In January this year, pharmaceutical firm Roche led a $175m series C round for Flatiron Health, a US-based developer of cloud-based oncology software, as part of a new strategic partnership. Investment bank Allen & Co, investment management firm Baillie Gifford and investment firm Casdin Capital also participated in the round. Flatiron’s software platform, OncologyCloud, combines electronic medical records for oncology, an analytics tool, a patient portal and a billing management system to help care providers treat cancer more efficiently.
In April last year, Austria-based biotech company Nabriva Therapeutics closed a $120m series B round featuring Novartis Venture Fund, the venturing subsidiary of pharmaceutical firm Novartis. The round was co-led by VC firm Vivo Capital and investment firm OrbiMed, and also featured EcoR1 Capital, Boxer Capital, HBM Partners, Phase4 Partners, Wellcome Trust and Global Life Science Ventures. Founded in 2006, Nabriva is developing a class of antibiotics called pleuromutilins to treat infections caused by drug-resistant pathogens.
In August, US-based genome editing technology developer Editas Medicine secured $120m in a series B round backed by Google Ventures, now GV, internet company Alphabet’s corporate venturing unit. Boris Nikolic, managing director of Editas-focused investment firm Bng0, led the round, which included new investors Deerfield Management, Viking Global Investors, Fidelity Management & Research, T Rowe Price, Jennison Associates, Khosla Ventures, EcoR1 Capital, Casdin Capital, Omega Funds, Cowen Private Investments and Alexandria Venture Investments. Flagship Ventures, Polaris Partners, Third Rock Ventures and Partners Innovation Fund, the four investors that funded Editas’s $43m series A round in 2013, also participated in the latest round, as did a group of undisclosed large family offices. Partners Innovation Fund invests on behalf of healthcare network Partners Healthcare. Founded in 2013, Editas is working on a programme of genomic therapeutics to treat a range of diseases by making molecular modifications at a genetic level.
In July, Novartis acquired an equity stake in UK-based biopharmaceutical company Mereo BioPharma Group in return for three of its clinical-stage development programs, as part of a $119m series A round. Asset manager Woodford Investment Management and investment firm Invesco supplied the capital for the series A round, but Novartis has pledged to participate as an investor in future rounds. Founded in March this year, Mereo aims to fund and develop specialist products from large pharmaceutical or biotech companies which may not be able to allocate sufficient time to them, particularly once they advance beyond the phase 2 clinical stage.
In August, US-based genomics technology developer Helix was launched by Illumina and private equity firms Warburg Pincus and Sutter Hill Ventures with over $100m. Medical practice Mayo Clinic also contributed funds as part of a partnership with Helix. The partnership, made through Mayo Clinic’s Centre for Individualised Medicine, will focus on consumer education and health-related questions. Laboratory services provider LabCorp will also work with Helix to set up a service to offer consumers information about genetic conditions. Helix will build a sequencing lab and a secure database through which it will provide users with an insight into their genetics. The company will then create a marketplace where consumers can give third-party applications granular access to their genetic data.
In January, US-based cancer screening technology startup Grail raised more than $100m in a series A round co-led by Illumina and venture capital firm Arch Venture Partners. The round also featured Bezos Expeditions, the investment vehicle of e-commerce company Amazon’s chief executive Jeff Bezos, as well as VC firm Sutter Hill Ventures and Microsoft founder Bill Gates. Illumina has retained a majority stake in Grail, which is developing cancer screening technology to detect the disease through a blood test. The technology would enable detection even in patients who show no other symptoms.
Exits
There have been 32 exits in the health sector since April last year, mostly in the US. Most of the top 10 exiting enterprises are biopharmaceutical initiatives.
Exits in healthcare over the past 12 months
| Company | Location | Round |
Round size |
Investors |
| Naurex | US | Exit |
$560m |
Allergan | Baxter International | Lundbeck Foundation | Shire Pharmaceuticals | Takeda |
| Quanticel Pharmaceuticals | US | Exit |
$485m |
Celgene |
| Galapagos | Belgium | Exit |
$275m |
AbbVie | Capital Group | Johnson & Johnson | Van Herk Investments |
| NantKwest | US | IPO |
$238m |
Cambridge Equities | Celgene | Sorrento Pharmaceuticals | undisclosed strategic investors |
| Spinifex Pharmaceuticals | Australia | Exit |
$200m |
Novartis | Novo |
| Evolent Health | US | IPO |
$196m |
TPG | UPMC Health Plan |
| Adaptimmune | UK | IPO |
$191m |
Immunocore | Novo |
| BeiGene | US | Exit |
$158m |
Citic | Hillhouse Capital Management | Merck & Co |
| Seres Health | US | IPO |
$154m |
Canaccord Genuity | Enso Ventures | Fidelity | Flagship Ventures | Goldman Sachs | Leerink Partners | Mayo Clinic | Merrill Lynch | Nestlé |
| RegenXBio | US | Exit |
$140m |
Beacon Bioventures | Brookside Capital | Cormorant Asset Management | Deerfield Management | Fidelity | Foresite Capital | GSK (SR One) | Janus Capital Group | Jennison Associates | Perceptive Advisors | QVT Financial | RTW Investments | Sectoral Asset Management | Tourbillon Global Ventures | VenRock |
In July, Naurex – a US-based developer of treatments for central nervous system disorders – agreed to be acquired by pharmaceutical company Allergan in a $560m deal, giving exits to four pharmaceutical firms. Allergan paid $460m in cash with the remaining $100m due by January this year, with additional payments tied to sales and research-based milestones. Founded in 2006, Naurex has developed a platform to create drugs that strengthen the body’s network for neural cell communication, enabling it to treat psychiatric and neurological disorders.
In April last year, Celgene acquired US-based cancer drug developer Quanticel Pharmaceuticals, in which it had previously invested, in a deal worth up to $485m. Celgene was to pay $100m in cash, with a further $385m contingent on research, development and regulatory milestones related to Quanticel’s research and development platform. Quanticel has set up a platform for single-cell genomic analysis of cancer. It expected to advance multiple drug candidates to clinical trials by early this year.
In May 2015, Galapagos, a Belgium-based biotech company backed by pharmaceutical firm Johnson & Johnson, raised $275m from an initial public offering on Nasdaq. The company issued 6.55 million shares at $42.05 each. The underwriters have the option to buy an additional 750,000 shares, which could boost the size of the offering to more than $306m. Johnson & Johnson and AbbVie bought a combined $55m of stock as the biopharmaceutical company, already listed in Europe, went public on Nasdaq. Galapagos is developing small-molecule treatments for inflammatory-related diseases including rheumatoid arthritis, inflammatory bowel disease, cystic fibrosis and pulmonary disease.
In August, NantKwest, a US-based immune-oncology company backed by pharmaceutical companies Celgene and Sorrento, closed its IPO at $238.3m. The company had initially raised $207m when it issued almost 8.3 million shares on Nasdaq at $25 each. Its $2.6bn market cap was reportedly the largest yet in a biotech IPO. NantKwest raised an additional $31m when underwriters Bank of America Merrill Lynch, Citigroup Global Markets, Jefferies, Piper Jaffray and MLV & Co took up the option to buy another 1.24 million shares. Originally founded in 2002, NantKwest is developing immunotherapy drugs to treat cancer, infectious diseases and inflammatory diseases. Part of the IPO proceeds will fund clinical trials of three of its product candidates.
In June 2015, pharmaceutical firm Novartis agreed to acquire Australia-based drug developer Spinifex Pharmaceuticals for $200m in a cash deal, providing pharmaceutical company Novo with an exit. Spinifex is developing drugs to treat chronic pain – its lead product candidate is an oral treatment, particularly for neuropathic pain, that is intended to work with no central nervous system-based side effects.
Earlier the same month, Evolent Health, a US-based healthcare management platform developer backed by healthcare consultancy the Advisory Board Company and health insurance provider UPMC Health Plan, raised $195.5m in its IPO. Evolent had priced the IPO at $17 a share, above its $14 to $16 range, and issued 11.5 million shares instead of 10 million. Formed in 2011 by UPMC Health Plan, a subsidiary of healthcare company University of Pittsburgh Medical Centre, Evolent has developed software to help healthcare providers transition from a fee-for-service payment model to a value-based system.
In May, also last year, Adaptimmune Therapeutics, a UK-based biopharmaceutical company backed by Novo and Immunocore, raised $191.3m when it priced an IPO on Nasdaq at $17 a share. The company, backed by Novo and Immunocore, issued 11.25 million shares, and the IPO’s underwriters have the 30-day option to buy almost 1.7 million additional shares, which would push the size of the offering up to approximately $220m. Founded in 2008, Adaptimmune is developing immunotherapy products to treat cancer based on its T-cell receptor (TCR) platform. Its treatments would identify and then target cancer with genetically engineered T-cell receptors. It raised the cash less than a year after closing a nine-figure series A round.
In February, BeiGene, a China-based biopharmaceutical company that counts pharmaceutical firm Merck & Co among its investors, went public in the US, floating in a $158.4m IPO. A total of 6.6 million American depositary shares, each representing 13 normal shares, were issued at $24 each, the top of the $22 to $24 range set by the company. BeiGene is developing immuno-oncology drugs, and will invest $79m of the proceeds in advancing its drug pipeline through the dose-escalation and planned expansion phase of clinical trials, as well as other planned monotherapy and combination studies.
In July 2015, US-based pharmaceutical company Seres Therapeutics closed its IPO at $153.8m after underwriters had fully exercised the option to buy additional shares. Seres, backed by food and nutritional product manufacturer Nestlé and healthcare research company Mayo Clinic, had initially raised $134m when it issued 7.4 million shares at $18 each.
The company’s stock rocketed on its debut, and finished the first day of trading at $51.40. Although it dropped to $39.80 later, underwriters Goldman Sachs, Bank of America Merrill Lynch, Leerink Partners and Canaccord Genuity subsequently bought an additional 1.1 million shares to close the IPO. Seres is developing treatments for bacterial infections and its lead product candidate, a therapy for colon infection, will be advanced through phase 2 clinical trials with $25m from the IPO proceeds. A further $40m will help three additional candidates through pre-clinical testing.
In September, US-based gene therapy developer RegenXBio, backed by GlaxoSmithKline, priced its IPO on Nasdaq at $140m, putting up 6.4 million shares at $22 each. When the company began trading, its shares climbed to over $30. RegenXBio had filed for a flotation the month before, when it was expecting to secure up to $100m in proceeds. The company was co-founded by research firm Foxkiser, University of Pennsylvania and James Wilson, who is now chief scientific adviser. RegenXBio is working on treatments for a variety of rare diseases, and has a pipeline of 23 candidates. Proceeds from the IPO will go towards research and development of three drug candidates through phase 1 and 2 clinical trials, with part of the cash supporting preclinical trials for a range of other treatments.
People
Last month, Merck Global Health Innovation (GHI), the corporate venturing subsidiary of US-based pharmaceutical firm Merck & Co, announced it had appointed Francesca Domenech Wuttke as a managing director. Wuttke came from Spain-based pharmaceutical company Almirall, where she led the corporate development strategy team, specialising in M&A. She will lead Merck GHI’s Europe-based investments in digital healthcare technology and will be based in Barcelona. Bill Taranto, president of Merck Global Health Innovation, said: “Merck GHI has been active in Europe in the past, but we believe the current rate of innovation across Europe merits a deeper and more strategic focus. We are pleased to add Dr Wuttke to our team given her broad healthcare expertise in both the US and Europe.”
In January, Joshua Resnick left MRL Ventures Fund, another of Merck’s corporate venturing subsidiaries, to join US-based venture capital firm SV Life Sciences as a partner. Resnick was president and managing partner of MRL Ventures, a biotherapeutics investment unit, from December 2014. He is on the board of MRL portfolio companies Spero Therapeutics, RaNA Therapeutics, Miragen and Visterra. Resnick was previously a venture partner at VC firm Atlas Venture, after time as a partner at another VC firm, Prism Venture Works, for seven years from 2005. He will join SV’s biotech investment team.
In February 2016, Richard Osborn left his managing director position at healthcare investment fund RecapHealth Ventures to join Telus Ventures, the corporate venturing arm of Canada-based telecoms firm Telus, as managing director. Osborn was at RecapHealth Ventures from its foundation in 2010, before which he was a partner at private equity firm Second City Capital Partners.
Last year David Schulte became managing director of McKesson Ventures, the corporate venturing arm of US-based healthcare product and IT technology supplier McKesson Corp. He joined McKesson in September from managed care consortium Kaiser Permanente, where was vice-president and managing director of its strategic investment unit, Kaiser Permanente Ventures, for 12 years. McKesson Ventures was launched in December 2014 to invest in companies disrupting the healthcare industry. Schulte now co-leads the development and management of the unit alongside its senior vice-president and managing director, Tom Rodgers.
Also at McKesson, in April last year Jennifer Carter was promoted to vice-presient of portfolio development. Carter had been McKesson’s director of marketing communications since 2013.
Also In April, Kim Dueholm retired as a partner at Denmark-based Novo’s venturing arm. Dueholm had been a partner since 2000. He previously worked as a patent portfolio analyst at Novo Nordisk.
In July, Stephan Lensky, corporate vice-president of strategic transactions and alliance management at the Germany-based Boehringer Ingelheim since 2010, left to found consultancy firm BioteXulting.
In September, Reza Halse joined Merck’s MRL Ventures as a partner. He was previously a partner at the innovation fund of US-based Partners Healthcare. Halse will also be associate vice-president and head of Merck’s MSD European Innovation Hub.
In January this year, Angus Grant became corporate vice-president of business development at Celgene. Grant has been at Celgene since 2006 and was previously vice-president of regulatory affairs and of business development and global alliances.
In December, Denis Bronnikov was promoted to global licensing director at Roche from his previous position of adjacencies lead at Roche Partnering. Bronnikov was previously head of strategy and operations at Novartis.
Also in December, Bram Vanparys joined as investment director the team of MS Ventures, Merck’s venturing arm. Between 2010 and 2015, Vanparys was senior investment manager life sciences at PMV in Brussels. Before that he was a biotech analyst at KBC Private Equity and a consultant at Deloitte.
At the end of last year, Priyanka Rohatgi left her position of investment director at Baxter Ventures to be a director at AbbVie Ventures. She holds a PhD in biochemistry from Georgia Institute of Technology and has previously been a pharmaceutical scientist at Baxter.
In March this year, Robert Coppedge became president of Direct Health Solutions, the venturing arm of US-based Cambia Health Solutions. Coppedge was senior vice-president of strategic investment and corporate development at Cambia since 2012.
Funds
Over the past year, there have been more than 40 healthcare-related funding initiatives with some participation by corporate investors around the globe. The table below summarises the five largest and most noteworthy.
Top 5 Funding initiatives Exits from the Excel file somewhere around here]
| Fund | Corporate backers | Focus | Location | Fundraiser/beneficiary/manager |
Amount |
| Early-Stage Life Sciences Funding Initiative | VC Flagship & Arch (with corporate LPs: Celgene, Eli Lilly) | Life sciences | US | Early-Stage Life Sciences Funding Initiative |
$150m |
| Vivo Capital Fund VIII | Johnson & Johnson | Healthcare | US | Johnson & Johnson Development Corporation |
$750m |
| Furui Fund | Zhejiang Daily Media | Media, telecoms, finance, education, healthcare | China | Furui Fund |
$160m |
| Unnamed | Memorial Sloan Kettering, New York-Presbyterian Hospital, Seattle Children’s Hospital (backing Deerfield Management’s fund) | Genetic diseases, orphan diseases, cancer, drug delivery platforms | US | Darfield Management |
$550m |
| WuXi Healthcare Ventures II | Wuxi PharmaTech | Life sciences, healthcare | China | WuXi Healthcare Ventures |
$290m |
In April 2015, it was announced that Johnson & Johnson Development Corporation, the corporate venturing subsidiary of the pharmaceutical company, had invested $15m in the Vivo Capital Fund VIII managed by US-based healthcare investment firm Vivo Capital. This was the first investment by a healthcare venture group in the fund, which aimed to use it both in the US and China to provide late-stage venture capital and early-stage growth capital. Vivo Capital announced the final close of the Vivo Capital Fund VIII at $750m in March. The fund brings its total under management to $1.7bn. One of the aims of this latest fund is to foster cross-border partnerships to help companies expand their markets and gain access to new products.
In July, investment firm Deerfield Management launched a $550m healthcare fund backed by Seattle Children’s Hospital, New York-Presbyterian Hospital and cancer research centre Memorial Sloan Kettering. Deerfield Healthcare Innovations Fund’s other limited partners include Princeton and Northwestern universities, and philanthropic organisation Robert Wood Johnson Foundation. The fund will seek companies working on treatments for genetic diseases, orphan diseases and cancer. It will also invest in startups creating new technologies to develop and deliver drugs.
In December, WuXi Healthcare Ventures, the corporate venturing arm of China-based medical research firm WuXi PharmaTech, closed WuXi Healthcare Ventures II at $290m, exceeding a $200m target. WuXi Healthcare Ventures is an early-stage venture capital firm, backing China and US-based life sciences and healthcare companies, and operating from offices in Boston and Shanghai.
In April this year, laboratory services provider Charles River Laboratories and pharmaceutical firm Knight Therapeutics were among the limited partners of a €183m ($208m) fund closed by Netherlands-based life sciences-focused VC firm Forbion Capital Partners. The fund, Forbion Capital Fund III (FCF III), also attracted KfW, European Investment Fund and Dutch Venture Initiative, plus undisclosed insurance companies, Europe-based family offices, regional investment agencies and pension funds.
FCF III will follow a strategy similar to the firm’s last fund, allocating about 70% to Europe-based startups and the remainder to US and Canada-based businesses. Forbion Capital Partners now has more than €700m under management.
In the same month, pharmaceutical firms Celgene and Eli Lilly announced they would invest in a New York-based life sciences venture capital fund also backed by New York City’s municipal government. The $150m Early-Stage Life Sciences Funding Initiative, which has raised $50m over its original goal, is co-managed by venture firms Flagship Ventures and Arch Venture Partners, a VC fund spun out from Chicago University’s technology transfer office two decades ago. New York City’s Economic Development Corporation will provide $10m of the total, while Gelgene and Eli Lilly will provide the remaining $140m.
New venturing units
In October, Fidelity Biosciences, an investment subsidiary of financial services conglomerate Fidelity Investments, merged with the technology fund run by private equity firm Devonshire Investors to form F-Prime Capital. Devonshire is a subsidiary of FMR, parent of Fidelity Investments. F-Prime will continue the focus on companies operating in the life sciences, healthcare and technology sectors. The various teams making up the new entity were previously spread across five funds, having jointly contributed capital to more than 89 businesses over the past 15 years.
In April this year, Illumina announced it would invest $100m in a new venturing unit, Illumina Ventures, to be headed by Nicolas Naclerio, Illumina’s former senior vice-president, corporate and venture development. Wouter Meuleman, director of corporate strategy, is now an investment director at Illumina Ventures.
In August last year, Jordan-based generic drugs producer Hikma Pharmaceuticals established corporate venturing division Hikma Ventures, providing $30m in capital. The first deals are expected to be complete within the next two months. The fund may be opened to external investors in future. Hikma Ventures is targeting startups operating in digital health, therapeutics and diagnostics. It will invest up to $3m in seed and series A and B rounds, and may choose to provide follow-on funding at later stages.
Last month, it was announced that Japan-based drugs firm Taiho Pharmaceutical had created corporate venturing division Taiho Ventures to operate from California in the US. Taiho Ventures is equipped with $50m in initial funding. The unit will make investments worldwide, focusing on startups in the US, Europe and Japan working on cancer-related technologies and treatments.
