Big deal: Anaveon proves UZH fund model works

There is a great interest among tech transfer leaders in connecting to corporate venture capital funds to benefit their spinouts – corporations do not simply provide capital but also offer industry expertise and potentially access to a vast clientbase. But convincing corporate venturers to invest in spinouts at launch can be tricky because technologies are often too early for businesses yet have matured beyond the point where a tech transfer office can offer more resources.
That does not mean those deals never happen. Global University Venturing, together with our sister publication Global Corporate Venturing, has increasingly been taking steps to help foster connections at its GUV: Fusion conference, which brings together speakers and delegates from both worlds, and some fascinating deals have come together thanks to this effort.
Some universities take a more direct approach and launch university venture funds in partnership with corporates – perhaps the most renowned example of such an initiative is Oxford Sciences Innovation, the $800m behemoth formed by University of Oxford with the support of backers including diversified conglomerate Fosun International, internet group Tencent and GV, an early-stage investment subsidiary of technology conglomerate Alphabet.
Another such program is the UZH Life Sciences Fund, launched by University of Zurich’s endowment UZH Foundation and Novartis Venture Fund, the pharmaceutical firm’s corporate venturing division, in 2016. Each contributed $3m, with an eventual target size of $20m.
UZH Life Sciences Fund was set up as an evergreen vehicle and made its first investment in 2017 when it supplied $1m in convertible note financing to Cutiss, a skin graft technology spinout.
Michael Hengartner, president of Universiy of Zurich (UZH) and a member of the UZH Life Sciences Fund board, remarked at the time: “It takes a long time to develop marketable applications, especially in the life sciences, and clinical trials are expensive. The UZH Life Sciences Fund accelerates the transfer of research findings from UZH into clinical practice, which ultimately benefits patients and the public at large.”
Then, in June 2018, UZH Life Sciences Fund returned to help launch Anaveon, an immuno-oncology spinout based on research by co-founders Onur Boyman, professor and chair in the department of immunology, and Andreas Katopodis, previously director of autoimmunity, transplantation and inflammation work for Novartis Institutes for BioMedical Research, the corporate’s internal R&D division.
Healthcare-focused accelerator BaseLaunch also contributed to the seed round, though a figure was not revealed.
Anaveon develops cancer treatments that exploit a signalling protein called interleukin-2 (IL-2) to stimulate the immune system and allow it to detect and kill cancer cells. IL-2 treatments have already been approved for metastatic melanoma and renal cancer, so while the approach is not new, Anaveon is working to address certain drawbacks such as toxicity and reduced effectiveness during repeat doses.
Cutiss raised about $7.3m in series A funding in June 2018 led by private investor Giammaria Giuliani, with participation from Yellowstone Holding, a local affiliate of diversified holding group Chailease, financial services firm Zürcher Kantonalbank and assorted angel investors.
UZH Life Sciences converted its loan as part of the series A round and ensured Cutiss’s second venture round was early proof that the fund’s model of focusing on spinouts getting off the ground was working. And the initial success was surpassed at the end of last month by Anaveon’s $35.1m series A.
Again, the fund converted its notes as part of the series A round, but more importantly, Novartis Venture Fund also invested separately in the company.
Herbert Reutimann, chief executive of Zurich’s tech transfer office Unitectra, told Global University Venturing: “The UZH Life Sciences Fund was established jointly by UZH and the Novartis Venture Fund to get promising high-quality life sciences spinoff companies off the ground professionally and as quickly as possible, avoiding unnecessary loss of precious time or mistakes which could later be damaging for the business.
“At the same time, it ensures that seed financing is made at fair terms. In addition, seed financing by the fund is intended to increase the credibility of the supported companies for other investors because they know that the businesses have already been scrutinised.
“I think Anaveon is a good and early example where the concept worked exactly as intended in all aspects. Thus it is definitely also a success for the UZH Life Sciences Fund.”
Anja König is the global head of Novartis Venture Fund and a board member at the UZH Life Science Fund. She said: “Such a strong series A financing, by an international syndicate, of a company spun out of University of Zurich was for me personally a great validation of the principles behind the UZH spinout fund to support Swiss innovation.”
Why did Novartis invest separately? It is safe to assume that through the UZH Life Sciences Fund, the corporate has given itself an insight into Zurich’s innovation ecosystem at a reduced risk – sharing the investment burden as it does with the endowment – and using it as a pipeline for big bets that could net it substantial profits and access to cutting-edge academic expertise in the long run.
The round was led by Syncona, the life sciences investment trust backed by research charities Wellcome Trust and Cancer Research UK, which has been spreading its wings into continental Europe. It put in $28m and owns a 47% stake in Anaveon following the deal.
Syncona, in fact, is no stranger to spinouts in the UK and several of its bets have paid off already – most recently there was the $800m acquisition of Nightstar Therapeutics, a spinout of Oxford focused on therapies for inherited eye diseases, by biotech developer Biogen.
Another Syncona portfolio company, Autolus, a cancer-focused biopharmaceutical spinout from University College London, floated on Nasdaq in June last year after collecting $150m in its initial public offering.
UZH Life Sciences Fund may not have the fire power of Oxford Sciences Innovation, but its approach is promising, and with two interesting spinouts now under its belt, it is a vehicle that Global University Venturing will continue to observe closely.
If you want to learn more about how corporate and university venturers can collaborate, and make those all-important connections with your peers, you have until April 1 to buy tickets to GUV: Fusion at a 23% discount. The conference will take place at London’s County Hall – which boasts gorgeous views from the networking area over the River Thames to Big Ben and the Houses of Parliament – on May 22 and 23. The event is likely to sell out again, so get in quick.