How Sanofi Could Start Off on the Right Foot in Cambridge

2/7/11

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honor the employment contracts of those working at Genzyme. But think about how much more motivating it would be for those who are leaving to be given a chance to participate in the next generation of biotech innovation without leaving Boston.

2. Such a fund would put Sanofi back on the map in terms of corporate venture capital. Yes, we know that you chose to shut down Aventis Ventures rather than continue those efforts. And Sanofi does not have a very extensive track record at externally funding venture-type companies. But look at your competition: Lilly, Johnson & Johnson, SmithKline Beecham (now GlaxoSmithKline) and Novartis started very early with venture funds (respectively, Lilly Ventures, JJDC, SROne, and Novartis Venture Funds) and some of these have arguably made quite a bit of money for their balance sheets from savvy venture investing. Pfizer, Merck Serono and Boehringer Ingelheim have recently entered the venture game with funds of their own. Corporate VCs stand at a position of great influence at the heart of the life science innovation world now. Establishing a fund could rapidly advance Sanofi to the head of the pack in terms of learning about and managing innovation in a way that helps corporate R&D efforts. This is an opportunity. Why wait?

3. Setting up the fund in Cambridge or Boston could put Sanofi’s team at the forefront of the fervent deal activity taking place among the many financial investors in the area that are doing healthcare deals. Sanofi has already expressed several strong votes of confidence in the Cambridge-Boston area with its corporate deals with Merrimack Pharmaceuticals and Avila Therapeutics as well as with the June 2010 announcement of its decision to locate an oncology division here. Having a venture presence would deepen and broaden that commitment. The list of active life sciences funds in Boston is long, even after several years of downward momentum in the overall VC sector. These are the survivors and they are good people to get to know.

In order for this to work, Sanofi would have to have serious “skin in the game.” We’re thinking on the order of at least $150 million to $200 million. Assuming that the new fund worked with the typical venture syndicates, this range could provide enough “dry powder” to fund about six to eight preclinical deals through early clinical development or three or four deals to proof-of-concept.

Rather than creating the fund in the way the Ciba-Sandoz fund was created—as an extended “make-work” runway for researchers that had to be reorganized into the current Novartis Venture Fund structure when the money ran out—instead, learn from the past fifteen years of venture experience and … Next Page »

Steve Dickman is a former venture capitalist and the CEO of boutique consulting firm CBT Advisors as well as the author of the blog Boston Biotech Watch. Follow @

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