A new partnership managed by a venture capital group has closed on$52.5 million that it intends to invest in neuroscience companies,particularly those in Canada.Neuroscience Partners Ltd. Partnership, based in Montreal, already hasanother $22.5 million committed if it is able to raise another $52.5million. The partnership is managed by MDS Health Ventures Inc., ofToronto, an affiliate of MDS Health Group Ltd. The lead investor wasthe Royal Bank of Canada, which committed up to $25 million.A feature of the fund is its relationship with the Neuroscience Network,one of 12 scientific networks funded by the Canadian government. TheNeuroscience Network consists of about 14 universities, four researchinstitutions, 120 neuroscientists and 70 graduate students and post-doctoral fellows."One thing that makes this [fund] different is that it's the first one tofocus specifically on neuroscience," Edward Rygiel, president of MDSHealth Ventures, told BioWorld. "The second is its link with thenetwork. I don't know of any venture capital group with that affiliation.It's important in that it gives us access to the science being developedin Canada, but it also will help provide direction as to wheredevelopments are going in the neuroscience area, and direct us to thebest neuroscience opportunities."And, he said, "It's a particularly large amount to raise today, biotechmarkets being what they are."Rygiel said Canada doesn't have a leading-edge neurosciencecompany, and the fund will look closely at science in the country tobuild companies around. But, he said, the fund's goal is an equitablerate of return, and companies in the U.S. and elsewhere also will beeligible for financing.Other investors in the partnership include the Caisse de depot etplacement du Quebec, The Manufacturers Life Insurance Company,Ontario Hydro Pension Fund and Manitoba Teachers' Retirement Fundand Societe Innovatech du Grand Montreal.Brad Wait, vice president, finance and administration and chieffinancial officer for Neurex Corp., of Menlo Park, Calif., said the newfund is a positive for the biotechnology industry, and for theneuroscience sector in particular."It's terrific," Wait said. "Neuroscience is an untapped frontier, andwe're pleased they recognize the potential."Harry Penner Jr., president and CEO of Branford, Conn.-basedNeurogen Corp., said the news is exciting for an industry that's beencriticized of late, and one which is having some trouble gettingfinanced."We're delighted that that the sector's being singled out for aninvestment of this kind," Penner told BioWorld. "There's probablymore safety in this end of the business than in certain others. News likethis is extremely gratifying."Allan Taylor, chairman and CEO of the Royal Bank Group, starteddiscussions that led to the partnership."For some time now I have been concerned about the exodus of ourworld-class scientific research to other countries," Taylor said. "Thishas been due in great measure to the lack of infrastructure for thedevelopment and commercialization of health-related products inCanada. This partnership will provide much needed capital for earlystage product development and commercialization."Rygiel said the management group of the Neuroscience Network willhelp MDS determine what science is worth funding, but "our job as aventure capital group will be to make our own assessment."He said the partnership may look to fund new companies resultingfrom research at institutions, other early stage companies or evencompanies far along in their development programs."We're looking at transactions right now," Rygiel said. "We wouldexpect the money will be invested within the next two to three years."Regeneron Pharmaceuticals Inc. president and CEO Leonard Schleifersaid the Tarrytown, N.Y., company "collaborates with a number ofCanadian neuroscientists. The neuroscience community in Canada isabsolutely first-rate."The enormous amount of basic science that's been put into theneuroscience area has put it a position where it's well poised to havenew, rapid insights into neurological diseases." n

-- Jim Shrine

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