Index Ventures Spins Off Biotech Investment Arm Into New Firm

Print 03 February 2016
Kristen Hallam / Bloomberg Business

Index Ventures, best known for funding startups like Skype and the creator of the Candy Crush Saga online game, is spinning off its biotechnology investments into a new venture-capital firm.

Medicxi Ventures will be one of the largest firms of its kind in Europe with $750 million under management, including a new 210 million-euro ($230 million) fund formed with London-based GlaxoSmithKline Plc and Johnson & Johnson of New Brunswick, New Jersey. The two pharmaceutical giants will each put in 25 percent of the total amount, and Medicxi will make the final investment decisions, the firm said in a statement Tuesday.

The separation highlights the success of Index’s approach to the biotechnology industry: investing in early-stage companies focused on one product. That has cut in half the time needed to reach a return on the investment, as it quickly becomes apparent whether the product will succeed or fail.

“This is the moment to double down and invest in early-stage life sciences,” said Francesco De Rubertis, one of four general partners managing the new firm. He joined Index in 1997 to start investments in health-care and biotechnology companies.

European Discoveries

As many as 40 percent of the medicines approved by the U.S. Food and Drug Administration are discovered in Europe but commercialized by U.S. companies, De Rubertis said. He and his partners -- Index veterans Michele Ollier, Kevin Johnson and David Grainger -- want to give researchers from Cambridge, England, to Geneva the opportunity to develop their ideas close to their own labs.

“We can create the companies in Europe,” De Rubertis said in an interview. “Europe is a place that can be sustainable for investors.”

About 80 percent of the new fund will be invested in European companies, with the remaining 20 percent available for opportunities outside the region, he said.

“Going into a second fund with the same team at Medicxi is testament to the fact that it is and continues to be a successful collaboration,” said Richard Mason, head of J&J Innovation in London. “We really see Europe as an absolute hotbed of biomedical innovation.”

Heart Treatment

Because of its one-asset investment model, Medicxi finds the companies that come into its portfolio are higher quality, according to De Rubertis. Typically about three out of 10 molecules yield positive results in early-stage human testing. With Medicxi companies, that has increased to more than seven out of 10 molecules, according to the firm.

Index introduced its first fund solely for life-sciences companies three years ago, in partnership with Glaxo and J&J. One of that fund’s three dozen investments was a Cambridge, England-based company called XO1, which had a heart treatment called ichorcumab in laboratory testing.

XO1 was sold to J&J last year for an undisclosed amount before the drug entered human trials. It was enough to return the entire 160 million-euro fund, De Rubertis said. Index had invested about $11 million.  

Among Index’s biotech investments that have led to marketed medical treatments are Aegerion Pharmaceuticals Inc. and Novocure Ltd. Outside of health care, the firm also invested in King Digital Entertainment Plc, the developer of Candy Crush Saga.

The Medicxi name was inspired by the Medici family that ruled Renaissance Florence and whose members were patrons of the arts and sciences. The name includes an X as a nod to parent Index.

“Index is associated with Skype and with Candy Crush, all the technology investments we have done,” De Rubertis said. “When I go to pitch a scientist, and they say ‘I’ve seen Candy Crush on your website. And you understand science?’”

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