Latest / BioSpace / Funding the Future of European Biotech
Transcript
- speaker-0: Hi, my name is Jennifer Smith-Parker, Director of Insights at Biospace, and you're listening to Denatured. In this episode, I'm joined by Naveed Taddeke, Senior Partner, Venture Investments at Nova Holdings, and Eduardo Negroni, Co-Founder and Managing Partner at Aurora TT. We debate whether Europe's world-class science can be matched by a truly integrated venture ecosystem, and what it would take in practice to get there. Hello, Navid and Eduardo. Thank you so much for joining this episode of Denatured. If you can please start off, Navid, that would be great. speaker-1: Great. Well, thanks Jennifer for having me on board. very excited to be here. ⁓ So Navish Stikia, I'm senior partner at Novo Holdings. So in the nineties, I was an MD, but also did a little bit of ⁓ private equity and investment banking. And since 2000, I've been a VC, a biotech VC. So that's now 26 years and that's across three different firms. The last six years here with Novo Holdings, leading the team here for the ventures group in Europe. speaker-0: Perfect. Eduardo, if you can continue on that. speaker-2: Hi Jennifer, also excited to be here. I'm managing partner of a small fund supported by two pharma companies in Italy. I am also entrepreneur in residence in different initiatives across Spain and Italy, as well as a pharma partnering advisor in ⁓ late stage and early stage also in areas like ⁓ open innovation. Furthermore, I do a lot of coaching ⁓ and mentoring across Europe. Having fun with biotech assets. speaker-0: Perfect. Perfect. Well, that is a great introduction to this episode talking about pan-European financing and investment and what the landscape looks like. So Europe clearly has world-class science, but does remain fragmented. So what would a truly integrated European venture system look like in practice and who needs to lead that effort? Navita, I we talked about that quite a bit in our initial conversation, so maybe we can start off with that. speaker-1: Yeah, no, sure. So yes, the ecosystem is very fragmented. How many countries have we got in Europe? Quite a few. And many countries have their own initiatives on life sciences as a key sector. Having said that, there are parts of it which are integrated and work well, parts of it which can be more integrated. So it's good to think about what a system might look like, which was perfect, I guess. A perfect system, I guess, is When we think about a perfect system, we think one that has very few fractions is seamless, right? So on that, think it starts with the science. think, you know, we have some excellent ⁓ academic centers in Europe. And I think that's the strength that those are there and world-class that have a long history and that really created great science. But I think the funding of that science, we could have that even more stronger than we have, than the Horizon. system, et cetera, trying to fund that across Europe in even a stronger way, I think would be something to think about. I think the other thing that is important is that the venture ecosystem, which is so important to kind of taking those early stage projects and starting to build them. At the moment, you know, raising funds across the border is not seamless. There's a lot of friction, know, that the funding markets are quite local. There are some European sort of efforts, pan-European efforts like the EIS that allow that, but it is very heavily dependent on kind of local support. So creating sort of vehicles that can invest across border easily, you can raise money easily across borders without being marred in regulation and red tape. think these are sort of things that we could improve here in Europe. And then talent, right? So I think... The idea of kind of talent being able to move across ⁓ Europe, so important that we make that seamless as possible. We do have the single market in the EU, which is fabulous, which allows that. Unfortunately, we've had Brexit as well. So that's made a bit of a challenge for the UK. ⁓ But having said that, I think the UK has been trying to address, make sure that the sort of talent can come across as needed from Europe, the UK ecosystem. ⁓ ease of moving taxation, think still a very complex factor for individuals because taxation is at national level, ⁓ in Europe. So that's a, that's a challenge. I think the Europe's been trying to address some of these issues through, ⁓ what's the 28th regime, which prior to the idea of kind of a, I mean, with Delaware Corp for your U S audience, that sort of concept, ⁓ having at the top, ⁓ like a, a single, ⁓ legislative framework, which a company can opt into. And I think that's an exciting development and one that think should be supported. And then really ultimately it's about kind of getting things into the clinic from that early science and their regulations, I think at the moment are still too fragmented. The clinical trial networks in the support system are still too fragmented. I think a single clinical trial authorization across Europe that I include that with the UK and EEA, wouldn't that be amazing, right? speaker-0: Yeah, that's a fantastic summary to highlight as you're saying the challenges, but also the great opportunities as well. Now, how about yourself, Eduardo? speaker-2: Yeah, I love how Navid has put it, especially on the regulator side, because there is need for single regulation in Europe and the 28th country in Europe. ⁓ Regulation is really, it could make things more efficient. Now let's see what the deployment looks like. My point is especially that Europe needs a lot of... integration, especially for the creation of the venture building ecosystem to have more, more startups, a better deal flow, to have more opportunities to invest. First of all, there's need to have champions in a technology transfer office level. There are a few examples here in Europe across Spain, Denmark, France, but definitely there is need to have a technology transfer. culture in Europe and this is a science itself that needs to be educated. A lot of effort has been done in the UK, especially in Oxford, but there's a lot to be done here. Second, that there's need for a more integrated incubator system. Now there is, we all know that the gold standard here in Europe is the Bioinnovation Institute in Copenhagen. There has been ⁓ a lot of traction there with a very structured investment approach. There are other incubators that could also lead in other countries like Basel launch by Parisa Clay, ⁓ the ecosystem in the Golden Triangle with Oxford and Cambridge leading and also in other countries. also among the incubators also banking foundations could play a very important role like LaCaixa. or the Volkswagen Stiftung in German. Technology transfer funds as well. Could they play a role? There are very few funds still, technology transfer funds, and there is a lot to be done there. The focus there is productivity rather than return on capital, which is the main focus on later stage funds. Venture studios as well could definitely be... play a role. We have a few very good examples, but they need to be faster. In the end, the pharma, corporate pharma could play a distinctive role as an ecosystem builder. Again, Novo is a leading example, but we have excellent examples with J &J Innovation, with Eli Lilly, ⁓ Sanofi Roche and AstraZeneca, but definitely also Amgen. So ⁓ playing a role at early stage with no fringes attached could help a better integration of the ecosystem and orient the scattered research approach in Europe in a better way to reach faster exits. speaker-0: that does make a lot of sense to me. Since we're talking about the different regions or hubs that have very particularly these aspects that make them very strong. So I'm wondering if there is a lack of a single dominant hub in the US like Boston or the Bay Area where it's particularly concentrated. Is that a weakness for Europe or can actually be a competitive advantage here? speaker-1: think it's a super interesting question. I guess, what does one need for a great hub? need great research, great teaching hospitals, clinical research, you need a regulator, you need the pharma and biotech, small players and the big players around. So I think, and then you need the money, right? The venture firms there as well, right? And the venture builders as Eduardo was pointing out too. So these are all sort of the key systems. think, yeah, in Europe, I think what's happening is what we're seeing is that certain centers, we're getting several centers growing, right? I think we talked about the sort of what's called the golden triangle in the UK, which is probably the most mature of the systems that are out there, hubs that are out there between Oxford, Cambridge and London. But I think we're seeing a hub growing in Denmark. You know, we have that. Also around the Zurich area in Switzerland and the Basel area with a base launch as an incubator there and then the big farmers there. But I would say that all of these ecosystems are somewhat ⁓ missing many key elements, for example, or the key elements are weakish. a reality of the fact that we're still in that sort of growth phase here. And it does create some complexity, right? Because I think each region, while it's great that they have the local champions, who are really trying to push for their particular ecosystem to grow, I think the reality is that it's quite a challenging task to have all of the elements in place within that ecosystem. And I think often the critical missing part is money can be missing local money, not enough pan-European money. There's also very small local funds, but difficulty in scaling that and maybe not as well connected outside the local ecosystems with US money or pan-European money. So there's a friction can occur there. I think also the other friction that can occur, that you can might be missing a key element of the ecosystem teaching hospitals, right? Maybe they're not enough of those. For example, in Denmark, what we have is, you know, there are teaching hospitals out there, but they're not sort of as connected with the ecosystem, the way that they are in the UK. And I think that's, you know, that can be a missing piece. Then sometimes pharma is missing, right? So you don't have the big anchor players. Like I think, if I think about the Barcelona ecosystem, we don't have a Roshan of artists there, right? Or ⁓ in the Golden Triangle, Astrazelico, GSK, but a very exciting early stage system. And I think... You know, Eduardo can talk to Italy and what that looks like. But that's been some of the challenges, not having all the key components in the local system. But having said that, there is a vitality for that local aspect, right? Which kind of creates that energy and the ability to move things forward and kind of make sure that the local science is being put on the map. But in order for this to work well, I think there needs to be more links. And the UK has shown that even Oxford, Cambridge and London were pretty much silos. And there's been a big effort to try to join these systems up through policy in the UK, creating better transport links, et cetera, better connectivity. So I think it's very important that within Europe, if we continue to have that sort of fragmented model, we still create better links between all the different hubs that we have here. speaker-0: Yeah, that's a very interesting approach to you to look at it. The fragmentation in some ways can be a benefit to nurturing a local environment, but at the same point, you're saying it's not having necessarily those pan-European connections. I'd want to though, I'd love to get your perspective on this too, to bounce off what Navita said. speaker-2: Yes, definitely. Naveed has made great points about the connection between the centers of the clinic, the research in the clinic, and the need to have a better integrated ecosystem at incubation level. terms of the distributed model, see it is not a bug. It is really a feature in terms of research, academia research. needs to be scattered to have better productivity by definition. better integration is not desirable. the ⁓ each state, ⁓ each country has got different priorities like ⁓ there are world-class structures, clusters like genomics and synthetic biology in the UK, immunocology in the Netherlands and Switzerland, rare diseases with France and Italy and infectious disease in Scandinavia. ⁓ it's good to have specialization. It is a different point for venture capital ecosystem. Diversity is, is definitely an asset, but in VC it is a liability. ⁓ we need to have definitely champions in technology transfer. ⁓ So these have to be priorities, local priorities, ⁓ at national level to have a better productivity. But on the other hand, we need to leave VCs to invest in a true. European ecosystem. I was at SOX Forum, assisting a conference where ⁓ the head of the Rardis Venture Fund also was advocating for a better integration for, let's say, early and later stage funds, because the local deep flow is not enough to make a return on capital. And big LPs, private investors, they need to have return on capital. They cannot. region like a public entity. So we need to have champions like the Forbians, the Sofinovas, Gilders, EQTs, and also in Southern Europe, in Switzerland, and the system is still very much scattered. we are assisting now. Let's say we see that the scenario is evolving, but definitely in 10 years from now, there is a lot to be done. speaker-0: So a lot of challenges are ahead, but there's so much opportunity here too. So let me ask you as well, when it comes between the late stage and the growth equity gap in Europe, and how do structures like pan-European funds or public private initiatives, how can they help? speaker-1: Look, we've made a lot of progress. Just, I think it was last week, Jato announced a billion dollar fund, right? And I think that's the journey that Europe's been on. It's certainly, I've been doing this for 26 years now. And if you would talk that about a billion dollar funds, know, 20 years ago, people would have been saying, what in Europe? Impossible, it never happened. Right? So I think we have several examples with large funds being raised. So I think that's really, really. a positive for Europe that we have the capital here that can help scale companies. Now, a lot more is needed, but we have some bellwethers now, our own bellwethers here. So think that's really, really good. We are still lacking at the early stage in terms of pan-European strategies. And I think the effort there, think Sofya Novo stands out as a key player with kind of a pan-European ⁓ series A strategy. But really, I think a lot of funds are very quite local. And I think that's been ⁓ a little bit of a challenge to kind of for the early stage ecosystem and because early stage ecosystem is vital because there's no point in having that later stage without the early stage being vibrant and well-funded and ability to grow. So I think much more work needs to be done. to increase the size of these funds, increase the geographic reach of these funds. A lot of these are funded by often local initiatives, which want the money for good reason to be invested locally. But this needs to be complemented with other money, other sources of capital, which enable that those funds and that competence to be invested wherever the best opportunities are across Europe as well. And there to be more robust teams, better funded, can take it longer down the road. So I think this is... There's work to do on the earlier stage in particular for a pan-European approach. speaker-0: ⁓ Eduardo, thoughts, comments. speaker-2: Yes. Not much to say. You have taken my words because something like that is a great example. 165 million raised. And by the way, it was born in Italy. Let's not forget. if the bottle was tested in Italy and now it became a European model, there are other good examples like Argo Bias to do ⁓ that again is a French, is a French fun, but with the support of, ⁓ by Angelini. Angelini also struck a deal with the INF to, to foster, ⁓ this early stage area, but there is a lot to be done. We see funds popping here and there. think that for the BC ecosystem is good to have local players because, you know, there's need to be a proxies to have proximity with research centers. ⁓ but on the other hand, there's need to have a better collaboration with, ⁓ with later stage funds. had discussions, for example, with larger funds for the setup of startups. when, for example, with equity, the goal there was to plan not only the seed stage, but also the series A and the series B to forecast, to have ⁓ the scenario when the big funds would step in. So when it is time to set up a startup, It is good to have a good planification of all the steps across the whole drug development chain until the exit. again, the example of Jato with 1 million rates is a very good one. Forbion did that ⁓ in the past as well. We need more. ⁓ In Spain, just the big funds, we have two funds that are 400 million each and they need to grow. And in Italy, again, it's true. The question there is lack of confidence and talent mobility can play a role there. Navid, would you like to move to Italy? speaker-1: I hear London is better than London, so it sounds like we're going to deal. ⁓ speaker-0: Well, on that end, gents, we could talk about this for another hour, but thank you so much for joining this episode of DINNATURE. It's really been a pleasure. And if you'd like to listen to more episodes, please turn into biospace.com. Thank you very much.