Ambros treats fourfold increase in assets with equanimity.
Seven years ago, Reinhard Ambros became global head of Novartis Venture Funds for the Switzerland-based pharmaceutical company, when it had $175m under management.
Today, it has more than $800m in funds under management. Ambros said: “Novartis Ventures was a small unit, making small investments and had never led a round.
“It was more a follower than a leader. I said: ‘I will build it into the largest corporate venture biotech group in the world.’ People said: ‘That is a good ambition.’ But they were not really convinced it could be done.
“Now we are the largest biotech corporate venture unit in the world, making the highest number of new deals and are considered the most influential group by your publication.”
Novartis appears to be coming into its own. Ambros added: “We made seven new investments this year – a large number. We also had the most successful year financially since we set up the fund.”
Of the portfolio exits this year have been Celgene acquiring Avila Therapeutics for $350m upfront, which could potentially rise to $925m, and Intellikine’s sale to Takeda for up to $310m.
Novartis Venture Funds has more than 60 portfolio companies and an average ownership stake in individual portfolio companies of 20% to 25%. Ambros is on the board of Cylene Pharmaceuticals, Forma Therapeutics, Genedata, Tokai and Symetis and also a director of the Novartis Option Fund, an innovative $200m programme to support early-stage healthcare companies.
Ambros was trained as a banker and scientist with a PhD in medicinal chemistry and pharmacology in German and a post-doctorate in the US. He said: “I found a very interesting job at Roche in Basel [Switzerland] where I was involved in a number of their development projects. At that time project management was one of the hottest jobs around. I was one of the few lucky people to see programmes move to approval and discussed with the FDA [the US Food and Drug Administration] multiple times in different therapeutic areas.”
He added: “I then moved to Novartis, to manage a key oncology project but got quickly interested in business development and licensing. From there I went to the mergers and acquisition group for a period working on
acquisitions, before I was offered the position of head of Novartis strategic planning. After four years I became tired of predicting the future of pharma and wanted to be again much more hands on science and business [and became managing director of the Novartis BioVenture Fund in the US].”
Lessons from the top: Ambros argues corporate venturing groups should think independently rather than relying on advice from members of the corporate parent.
He said: “In general most corporate venture groups suffer from the fact that they go to their research and development and business development people with no independent thinking. If you don’t have independent thinking you won’t be able to do anything really new.”
Ambros said it is wise to look into early-stage investing, but to do so requires discipline. He said: “We continue to be early-stage investors. I personally love to see early-stage companies, especially as I believe the risk-value ratio is more attractive there, especially when you are a long-term investor and have money to support and develop the company.
“But one also needs to have the discipline to pull the plug early if the programmes do not achieve the desired milestones. It saves you money in the longer term although at the time of a full write-off it is never a nice event. ”
He also thinks it is sensible to put pressure on entrepreneurs to perform, at an intensity large corporates do not face to the same degree. Ambros said: “We had difficult situations in companies when I said to people: ‘You have two more weeks to be successful.’
“If you cannot solve this problem it is over, we run out of money and have to close the business. It is amazing what people in a biotechnology setting are able to achieve even under resource scarcity and time pressure – the effectiveness is outstanding. If you work in a larger organisation with many other programmes and resources the pressure is different.”
