Google creates $300 million fund for late stage funding for European biotech firms

The new fund will provide funding to both public and private firms for products that have already reached mid-stage Phase II clinical development, providing them with a new source of growth capital.

In a move that underscores the wide net Google has cast across industries, the search engine giant has sunk in $300 million in Medicxi’s life sciences investment firm, betting that European biotech companies will be able to deliver life-changing drugs and in the process become its core long-term healthcare business.

On Thursday, Medicxi revealed that Novartis and Verily, a unit of Alphabet Inc, are cornerstone investors in the new fund, along with the European Investment Fund.

Verily has existing agreements with Novartis, GlaxoSmithKline, Johnson & Johnson and Sanofi to apply novel technological approaches in areas ranging from robotic surgery to diabetes management. Last month, former U.S. FDA head Robert Califf joined its team.

Calico, another Google offshoot, is working on treatments to fight ageing while its arms-length GV venture capital operation has invested in dozens of healthcare start-ups, mostly in the U.S.

This latest development sees its involvement delving deeper into drug development by investing in late-stage European biotech companies.

The new fund will provide funding to both public and private firms for products that have already reached mid-stage Phase II clinical development, providing them with a new source of growth capital.

“There is a funding gap because there is a maturing class of biotechnology companies now in Europe,” said Francesco De Rubertis, co-founder and partner at Medicxi.

This fund is a first for Medicxi, which has so far invested in early-stage biotech.

The development reflects the redrawing of traditional of borders as tech companies take on a more hands-on approach to healthcare innovation.

Tech companies, including Microsoft and Apple are also investing in healthcare with the belief that modern computing capabilities and miniaturization can help accelerate advances in medical treatment.

Although the EU boasts world-class scientists and universities, its biotechnology industry however has not been able to access deeper capital pools as has its peers in the U.S.

With EU biotech firms getting access to funds for late-stage drug development, Google is hoping that they will be able to survive independent rather than sell them prematurely to large players.

Much of the funds is likely to be channelled to companies spanning across the Paris-Brussels-Amsterdam, Switzerland and Britain.

As per EY, a consultancy firm, the total turnover of the European biotechnology sector was $25 billion in 2015 compared to $108 billion in the U.S.

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