By Nuala Moran
BioWorld International Correspondent
LONDON The venture capital fund manager MVM Ltd. raised $56 million in a first closing of its second fund, the MVM International Life Sciences Fund II, and extended the agreement giving it exclusive rights of first refusal to commercialize biomedical research funded by the UK Medical Research Council.
Most investors in the first fund have re-invested in the second, including 3i, Friends Provident, Shell Pension Fund, Mitsubishi Corp. and Pfizer Inc.
CEO Stephen Reeders told BioWorld International, We are very pleased, especially given the general turbulence in the financial markets.
MVM is in discussions with a number of new institutional investors and aims to have a second closing in December or January of more than $85 million.
Reeders added that although the current state of the markets is limiting the exit routes, investors are not being put off. Biotechnology is quite attractive to large investors at the moment. For the first time it is seen as more stable than other sectors [such as IT and telecoms] and this will benefit biotechnology in the long run, when the markets reopen.
MVM was established in 1998 by the Medical Research Council, a government-funded body, to commercialize MRC research. An agreement giving MVM a six-month period of exclusivity to negotiate an investment in respect of any MRC technology has been extended for 10 years, covering the life of the second fund. The MRC has an annual budget of 350 million (US$510 million) and supports 2,200 scientists in 40 research units.
Reeders said, We are very pleased that participants in our first fund have supported the second so fully. Institutional investors recognize the advantages that the MRC relationship offers us.
There is one more investment to make from the first fund, which Reeders said will be announced before the end of 2001. He also expects the first two or three investments by the second fund to be agreed to by the end of the year. To date MVM has set up five companies based on MRC technologies, including Diversys Ltd., an antibody and protein engineering company; Oxxon Pharmaccines Ltd., a vaccines specialist; Ardana Bioscience Ltd., which is working on reproductive health products; and Gendaq Ltd., a gene engineering company that merged with Sangamo Biosciences Inc., of Point Richmond, Calif., earlier this year.
Overall, the first fund has invested in 12 companies, of which nine were start-ups. Four that have so far gone public, merged or been sold are: New Chemical Entities Inc., sold to Albany Molecular for $22.4 million; Third Wave Technologies Inc., which had an IPO on Nasdaq in February 2001 valuing it at $421 million; Gendaq, which merged with Sangamo; and Cambridge Drug Discovery Holdings Ltd., which merged with Biofocus plc in a transaction that valued it at 27.5 million.