BioWorld International Correspondent

Index Ventures added a new €400 million (US$583 million) growth fund to the €350 million venture capital fund it raised 12 months ago, and it has hired Guido Magni, a senior scientist from F. Hoffmann-La Roche Ltd., to lead the investment team.

Magni, global head of medical science in the pharmaceutical division at Basel, Switzerland-based Roche, is joining Index, of Geneva, Switzerland, and of London, at the beginning of February. "Europe has matured a lot," he told BioWorld International. "In Europe, there is a set of opportunities that are clearly of interest." The fund also is open to opportunities in the U.S., Eastern Europe and in emerging markets such as Russia and India.

About 40 percent of the growth fund - called Index Ventures Growth I LP - will be invested in life sciences companies, Magni said, although no formal allocation to the sector has been defined. "It will depend on the deal flow."

IT is the other main focus, while the fund also may do occasional deals in areas such as media, retail and green technology.

The fund will undertake a relatively small number of large-scale transactions - ranging from €10 million to €50 million - in firms with a favorable risk profile. "This will have to be companies with a compound - or preferably compounds - in Phase II," Magni said. "This is an important inflection point in terms of risk reduction."

Depending on the specific circumstances - and indications involved - that could involve Phase IIa data or, in the case of riskier areas, such as central nervous system indications, Phase IIb data.

The likely investors "probably reside in three different pockets," Magni said. The growth fund will target late-stage private companies that are close to an IPO; small-cap public companies with valuations in the €75 million to €200 million range; and new spinouts from big pharma companies.

"This has traditionally been a very successful area in Europe. I think this will continue," Magni said. Index may invest on a solo basis or as part of a syndicate. "I don't think there is a rule," he said.

Magni has occupied his present position at Roche since 1995 and is involved in the managing the development of the company's pipeline and in managing the lifecycle of its portfolio of marketed products. During that time he has worked with many new molecular entities and new biologics that have gained regulatory approval. "I've also seen hundreds of compounds not making it," he added. That experience will be part of the offering that Index can offer potential investors.

The growth fund will work in an integrated fashion with the venture capital fund, which is focused on more early stage opportunities. "It is quite logical that some of the [growth fund investment] opportunities could arise from the venture fund investments," Magni said, although no formal allocations have been made for the existing portfolio. He already is scouting for potential investments. "I'm hopeful and I'm quite confident that we'll have at least one deal this year," he said. The growth fund will seek an exit from its investments within two to four years.