Latest / BioSpace / The Italian inflection point: Clinical strength, culture and capital
Transcript
- speaker-0: My name is Jennifer Smith Parker, Director of Insights at Biospace, and you're listening to Denishured. In this episode, you'll hear from Diana Saraceni, founder and managing partner of Banacis Partners, and Fabrizio Calisti, Medical Director at Angelini Ventures. We discuss Italy's life sciences landscape and how a country long known for world-class science is finally beginning to convert that strength into a more durable engine for company creation. Thank you so much, Diana and Fabrizio, for joining this episode of The Nature to discuss the Italian biotech and pharma landscape, ⁓ especially for one of my favorite countries and one I've been to many, many times. So, Diana and Fabrizio, how about we introduce yourselves? Diana, why don't we start with you? speaker-1: Sure. Thank you for hosting me, Jan. very glad to have this conversation and this chat with Fabrizio. ⁓ Tiana Saraceni, I'm co-founder of Panacas, a venture capital firm based out of Italy and investing in a pan-European level in life science. I've been twenty-five years in venture capital, co-founding another investment firm called 360 Capital, and invested a number of fund in a number of companies across the globe. speaker-0: ⁓ yeah. Fabrizio, take it away. speaker-2: Hi Jennifer, thank you for having us. It's great to have a chat with Diana. And ⁓ my name is Fabrizio, I'm senior medical director at Angelini Ventures. I'm a psychiatrist. I spent more than twenty-five years now in healthcare, including hospitals, industry, and now VC. Angelini Ventures is a corporate venture capital firm, part of an industrial group called Angelini Industries, and we do invest in life sciences, both biotech and health tech. speaker-0: Brilliant. Okay, so let's go ahead and start. So Italy has long been known for strong science, but less consistently for company creation. So what has changed most in the ecosystem over the past five to ten years? speaker-1: Yeah, allow me to say ten to fifteen because that's when the change started. And there was a consistent action from I should say the government, but the real arm is CDP, which is the ⁓ sort of government back company to support ⁓ the funding of not only startups but more in general industrial ecosystem at Italian level. And basically this consistent activity in supporting creation of incubators and f all the way supporting the financial needs of companies to final development, not only in life science by the way, but more in general in BC, has sort of by backing a number of VCs like like ours, for example, has created an ecosystem. And so just being consistent over the years, ⁓ as of fundamental backer of companies. And this this was also like promoting the sector to more private investors. And so a number of private investors, institutional private investors, bank, pension fund and and the like have found the the ecosystem, the and the capabilities basically to to invest and deploy some capital in the sector. I mean you need capital to support ⁓ company creation. and alike. So that's what happened in the last fifteen years. speaker-2: Yes, sure. I agree, of course. And I think there are two main points. One is more about ⁓ the gap that there is between an excellent research that we really have and easily across different therapeutic areas in life sciences, right? And then and then company creation. And then the other point I think is more about what the Italian ecosystem can do in terms to retain startups through the scale up phase. So what I think happens between seed and series A rounds and then the scale up rounds where typically foreign investors ⁓ step in, right? And so I think we need to still close that gap in a way. But those are the two elements that I think a lot of good things happened in the last ⁓ ten, fifteen years, as ⁓ Diana said, in both fields. Still I think there is room for improvement. And I think the growth of the ecosystem from an investment perspective is ⁓ key, but there are also other elements, including mindset and ⁓ including policy, which now I think really needs to keep up and ⁓ and ⁓ catch up with ⁓ with ⁓ with the growth of the investment ecosystem that we have seen in the last 10, 15 years. speaker-0: Okay. Interesting. Now you've both touched on where Italy has strengths. So let's talk about that a bit. Where do you see the biggest strengths in Italy today? Whether that's biotech, med tech, clinical research or manufacturing? speaker-1: would say it's a little bit of all right and it depends on the sector. I mean biotech and med tech are very different. Clinical research historically has always been an asset for the country because I mean we've seen for decades many international big pharma being active in the country with their ⁓ clinical trials because the quality and the initiative and the expertise of the physician as a class is very, very high. So that in some areas like for example, oncology, cardiovascular, and a few other, you have you have many internationally recognized leaders that would embrace clinical research in their field of expertise. So that's that's a good good and positive attitude and has always been been the case. So that's true not only for for startup as I mentioned, but historically it's been true for for big pharma. Then science, engineering, ⁓ manufacturing, everything you need on the metach and the biotech side. You have areas of excellence. I wouldn't say there's there's one main. It's less structured than you think probably. And it's more kind of occasionally you find some some excellence in an area or two because that some of the many university centers or or even private research centers, you would find some very, very skilled scientists. It's not huge. I would say still growing and also in particular as Fabrizio said, like the technology transfer role model, this mindset of making a startup out of science, which means making money out of science, is still not very popular in the vast majority of the scientific Italian ecosystem from an ethical standpoint, it is sometimes considered as not the way to go. And researchers tend to like keep researching for the sake of it. Which in the end I don't know. I mean, I'm if I'm allowed to say, but I don't know how ethical it is that the innovation is not taken to the patient. So speaker-0: That's interesting. Yeah, it's an interesting perspective. ⁓ and I know we talked about that for our first conversation and I'm curious on that. Does that compare with other European countries or when you look at the UK, Germany or France, is there that different mindset from investigators? speaker-2: I think probably yes. I think ⁓ this is what we ⁓ see every day. I think ⁓ both Anakas ⁓ Angrien Ventures we invest globally, right? And then so we have a a goal which is larger than Italy. And then we had the chance to ⁓ see and ⁓ meet people from ⁓ other countries. We definitely see different attitude and different mindsets when we come to company, particularly when it comes to translating clinical research or research. into a commercial opportunity and so ⁓ generate value as as Diana rightly said. I think this is the most ethical thing that you can do from a research perspective to really translate your work into something which can be helpful to patients. And I think as VC ecosystem, this is also part large part of our motivation, but specifically my motivation as a as a medical doctor, I see this as a as maybe the most relevant impact that we can have as investors. But I think, you know, talking about strengths and Italy, I think another element which is very relevant, I think it's ⁓ more about manufacturing. ⁓ so we're also pretty strong from a manufacturing perspective. ⁓ and in Europe definitely. And ⁓ I think that could be one ⁓ important ⁓ element to keep some Italian routes for our ⁓ companies which can then expand and growth globally, right? And then which is another issue that in my experience as a as investors, when you invest in an Italian company that then needs to scale up and and to attract foreign capital, sometimes it that needs also relocation. And so we sometimes we lose some of the value for Italy, right? In terms of what that set up can do for our territory, right? And I think manufacturing could be one aspect to keep Italian roots and keep part of the value in the country without at the same time letting the company go and expand globally, which is definitely what all we all want to see, right, as an investor. So I think there are several elements. Science is definitely ⁓ let's say the highest value that we have here in Italy, but we also have other elements that are maybe less obvious but still valuable to investors and potentially acquirers. speaker-0: Interesting. So when you're talking about that venture environment, how much of the ecosystem in Italy is still dependent on public or state backed capital? speaker-1: No, I'm I'm happy you were asking this question because I may be too strong in stressing the role of s ⁓ C D P and and state owned intervention. It started from there and the fact that C D P is still con s constantly and consistently investing in all ⁓ in funds that do cover all stages and playing the role of anchor investor most of the time is what has sort of started, kicked it off. But I mean To date ninety percent of the capital is private. I I would say, or the vast majority is private, and it's coming from all sources, I mean, private investors recognizing that it's a great investment opportunity, just as so not only to build up the system, the ecosystem in the country, which might be the role of a state-owned player, but to just invest produce return, to produce financial return. Just as a reminder, venture capital funds are financial product to that are supposed to generate return for investors and it works pretty nicely. It's kind of a an illiquid product, but if you're patient, the return usually is above any other asset class. speaker-2: Yeah, no, another another interesting aspect of our ecosystem and generally speaking, VC ecosystem is the interplay between corporate VC and independent VC, right? I think we today we have two people with different ⁓ with these two different ⁓ perspectives, but ⁓ they're so very complementary when it comes to investment opportunity. Just curious to hear from Diana what do you think about the interplay between corporate VC and ⁓ independent capital when it comes to life sciences investments. speaker-1: Yeah. No, thanks Abriza. It as y you might remember that we also raise capital with ⁓ strategics with corporate. So our funds are backed by lots of ⁓ pure financial investors and a number of corporate. We have more than ten small, medium, just a couple of large ⁓ corporate investors in in our fund. So we're a bit of an hybrid because we do have that ⁓ network capabilities coming out of the our collaboration with corporates. But obviously we are completely independent just by the fact that we have ten, we secure we ensure that our full independence and mainly financial return as as a mission is the only one, basically, is the only mission we have. So but to your point, collaboration with corporate venture capital is a fantastic play. I mean independent VC tend to be more active when it is about defending financial return. So in any transaction, in any capital transaction, any setting the valuation of firms, setting the terms that are protecting the financial return above all. We normally when we coinvest with corporate venture, we normally take the lead on all these aspects. financial transaction like taking debt on the balance sheet or convertible or war issuer and all of that. All of these topics are more led by independent VC when there is a syndicate, while on the corporate side, a lot of value, tremendous value comes from the continuous interaction with all operation operational aspect of the company, which can be regulatory, clinical. or ⁓ reimbursement, knowledge, I mean access to the knowledge and the expertise of the company when it is available and most of the time it is, produces tremendous value ⁓ to set the strategy, the the the correct strategy for for the asset. So I mean s syndicating deals between independent VC and corporate venture capital is is really the getting the best of two worlds, I would say. It's really good for us. No speaker-0: curious where we talk about this the ecosystem growing. I mean you made a a very good point, Wabdito, kind of about the the strong manufacturing aspect and they had it kind of going back to the the 10 to 15 years with with the CDP kickstarting. So I'm curious, is the ecosystem becoming more attractive for founders, scientists and returning talent generally? But what still needs to happen to keep that momentum going? So it's actually a two-part question. speaker-2: Yeah, I think this is d probably the question, right? What we need to do as as an investment ecosystem to attract also capital from other countries. And ⁓ this was ⁓ this element I was referring to, right, when I mentioned about ⁓ transitioning from a seed series A and then ⁓ growth scale up rounds. ⁓ I think I think you know, in terms of credibility, we really took giant steps compared to ⁓ some years ago as an investment ecosystem. And ⁓ And the science, as we already said, is already there. So I think it's it's really more about how to help our companies grow and at the same time maintaining the Italian footprint and some value for Italy as an ecosystem but also as a country as overall. So I think that's what we need to to find because I I think relocation is ⁓ is perfectly fine and I think it's also very ⁓ healthy. ⁓ since there are just a few hubs in the world when you when a startup can really scale up, you know, Boston, Basel, ⁓ California, and so on so forth. And so I think we don't we don't really need to get in the way of that, but we really need to make sure that our companies can grow and scale up by maintaining some value for for the ecosystem. And I think, you know, also from a perspective of a corporate venture capital firm like Angelini Ventures with strong industrial links to the group. What we can provide is also that kind of industry ex expertise which can really help companies scale up and also maintaining that Italian identity if if you will, right? But at the same time we need to protect founders and we need to protect also the financial return, right? So I think that's That's a delicate balance that we need to find. But I think that Italy overall is is ready, right, to sustain its startups in the whole process, not only at the very beginning of the very early stage, but also in the scale up. But curious to hear what Adriana thinks about it. speaker-1: I am I'm very positive about how the country is developing. Again, it's not it's not huge yet. It has grown tremendously. If I'm not mistaken, in life science we have a few hundred, couple of hundred million invested. If you include everything, if you include health tech and biotech, that's that's about every year a few hundreds million per per year invested. ⁓ so there's there's a lot more that probably we could we could grow. It's all down to the role model ⁓ and the ⁓ liquidity availability. I like the idea of becoming ⁓ growing companies that are in the end more global. We have done ⁓ this a number of times with our portfolio companies because I mean we need to soon start speaking soon about European company, no matter where the country, the foundation country is from and ⁓ even more international companies. But at least European European should be the basis for any discussion very soon. speaker-0: Well, thank you so much, Fabrizio and Diana. It's been a great discussion about Italy and its challenges, but also the incredible opportunities that we have here and connecting it to the broader European financing landscape. So thank you again. And if you'd like to listen to more episodes of Denatured, please turn to biospace dot com or feel free to shoot me a pitch idea at jennifer.smith hyphenparker at biospace dot com. Thank you very much.