Steve Dickman, a former venture capitalist, the CEO of CBT Advisors and author of Boston Biotech Watch recently penned an open letter to the CEO of Sanofi, pleading with him not to overlook the talent within the R&D organization of Genzyme. He further suggests that the combined entity, which I’ll now call Sanofizyme, create a VC fund (akin to SROne, Lily Ventures, Novartis Venture Fund, etc) that would provide a “transition” for these employees, and prods that this fund needs serious skin in the game, “at least $150 million to $200 million”. He further mentions that by implementing the traditional syndicated deal structures it would be possible to fund about six to eight preclinical deals through early clinical development or three or four deals to proof-of-concept.
I would like to stir up the pot a bit, and add a different perspective to this idea. Assuming the goals of a traditional Pharma VC should be to develop a nice pipeline of external candidates that either work in synergy with, or at least complement the internal portfolio, this would certainly meet the need, BUT there is no added benefit as is typically seen when these candidates come from a comprehensive external due diligence process. It’s also not a secret that among the typical LP-based-ROI aims of a Pharma VC, they are tasked with scouring the landscape for who might have the potential to steal some of the thunder from any of the Company’s blockbuster pipeline. Its also fairly likely, the traditional Pharma VC, like their Pharma parents, subscribe to the notion of innovation driven by acquisition.
Consequently, and more to my point, a traditional Pharma VC approach on the part of Sanofizyme won’t work if they focus entirely on their own internal assets ONLY. What would be truly innovative and unique would be to create a hybrid approach, VC/incubator (hopefully Gregory Huang isn’t reading this), in which the parent Sanofizyme contributes the core $200M, which is then leveraged with some type of regional (state or country — I’m ambivalent) matching funds. Frankly, if that doesn’t work in Boston, take it somewhere that will match that $200M, or at least part of it. There are plenty of examples of groups (Korea, Singapore, China, etc etc) outside Boston and even the US that are interested in getting in on this specific type of action. Then, let this hybrid Pharma-Regional-VC-ubator utilize the R&D experts from the seed partner, in combination with a serious business development/VC due diligence team, in order to bring in a variety of external technologies (hopefully to some extent from smaller innovative start-up companies that are in such dire need of funding) that would create winning companies with broad pipelines and solid technology.