Novartis Option Fund Managing Director Says First Responsibility is to Portfolio Companies, Dislikes “Corporate VC” Moniker

10/31/08

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Adenosine Therapeutics — Charlottesville, VA

Adenosine was acquired this summer by Newton, MA-based biotech firm Clinical Data (NASDAQ:[[ticker: CLDA]]) for $11 million in cash and additional fees linked to development milestones. Novartis has an option to develop one of the firm’s molecules in pre-clinical studies to treat asthma and diabetes, according to Clinical Data.

Ascent Therapeutics — Cambridge, MA

Ascent is developing a therapeutic platform discovered at Tufts Medical Center with applications in treating inflammation, cardiovascular conditions, and cancer. Novartis Option Fund invested in the startup’s $19 million Series A round, and Silverman serves on the board of directors there.

Cequent Pharmaceuticals — Cambridge, MA

Cequent was spun out of Beth Israel Deaconess Medical Center to advance TransKingdom RNA-interference to treat such things as inflammation and cancer. Steven Tregay, a managing director of the Novartis Option Fund, is on the board of directors at Cequent.

Forma Therapeutics — Cambridge, MA

Forma is a stealthy startup founded by Novartis Option Fund managing director Tregay with the help of scientists at the Broad Institute of Harvard and MIT in Kendall Square. Silverman declined to discuss details of the startup, yet she confirmed that the firm aims to commercialize science from the Broad. (I wrote this story about Forma when the firm was just getting off the ground earlier this year.)

Proteostasis — Cambridge, MA

As its name suggests, Proteostasis has set out to commercialize discoveries related to protein homeostasis to treat neurodegenerative diseases such as Alzheimer’s and Huntington’s, as well as genetic disorders. (Luke wrote about the firm’s science and founders in this recent post.) Novartis Option Fund invested in the startup’s $45 million Series A round this summer.

Silverman declined to discuss the specific options her fund has arranged between Novartis and its portfolio companies, yet she did note that Novartis itself pays cash for the options. And though she would not specify how much Novartis typically dishes out for the options, she said that it’s “real money” and more than a low six-figure sum.

Still, some entrepreneurs worry that taking investments from corporate VC firms could hamper negotiations with potential buyers (although this didn’t appear to hinder pharma giant GlaxoSmithKline (NYSE:GSK) from buying Cambridge-based biotech Sirtris, which had taken investments from Novartis and large biotech Genzyme (NASDAQ:GENZ)). To put such worries to rest, Silverman says: “…I have to show at every board meeting that my first fiduciary responsibility” is to the portfolio company.

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