Daiichi Sankyo Taps Japan Government Capital For New Seed Fund

Daiichi Sankyo and Mitsubishi UFJ – with ¥450 million in government backing – launched a fund to develop university venture technology for Daiichi Sankyo’s pipeline.

TOKYO – Daiichi Sankyo Co. Ltd. is stepping up its presence in backing startups with the launch of a partnership with Mitsubishi UFJ Capital for project support research seeds that can be brought into Daiichi Sankyo’s portfolio.

The Japanese pharma and Mitsubishi UFJ Capital, one of Japan’s largest venture capital firms, announced the launch of OiDE Fund Investment Limited Partnership (Open innovation for the Development of Emerging technologies), which is intended to “establish venture businesses that fund entire projects for promising seeds and fully assist in seed development,” Daiichi Sankyo said in a statement.

Because the project funds the seed entirely, it prevents investments from multiple pharma companies. Daiichi Sankyo has rights to purchase all of the venture’s stock or intellectual property at a price agreed upon in advance.

In March, Daiichi Sankyo announced the creation of an internal corporate venture arm called Venture Science Laboratories. The corporate venture is to be overseen directly by Global R&D Head Glenn Gormley, but the company did not disclose the capital committed to the project, and its scale is unknown (Also see "Daiichi Sankyo Reshuffles Biologics R&D, Adds Corporate Venture Arm" - Scrip, 4 Mar, 2013.).

“While the OiDE fund does fall under the large umbrella of ‘open innovation,’ it is not specifically connected to any previously announced scheme,” Daiichi Sankyo told PharmAsia News.

For the new fund, Daiichi Sankyo will chip in ¥100 million, while Mitsubishi UFJ will contribute up to ¥200 million. But more substantially, the whole project is backed by the Ministry of Economy, Trade and Industry’s Organization for Small & Medium Enterprises and Regional Innovation, which earmarked ¥450 million ($4.5 million) for the program.

Bridging University Inventions Top Goal

Life science technology sourced from Japan’s universities has been one of the recent focuses of Prime Minister Shinzo Abe’s economic revitalization program. Hoping to support a bridge from academia to marketable products, Abe has called for the creation of a Japanese version of the U.S. National Institutes of Health, to help get new technology into clinical research programs (Also see "Japan’s PMDA To Roll Out New Safety Infrastructure And Drug Development Support" - Scrip, 13 Sep, 2013.).

The mission of the fund supported by METI, Daiichi Sankyo and Mitsubishi UFJ is to target venture companies established out of Japanese university research, targeting research before the platform technology or the disease mechanism is understood through non-clinical studies.

Japan’s top pharma have come under criticism in the past for an ineffective approach to singling out early-stage projects (Also see "Cash-rich Japanese Pharma Now In A Position To Snatch Up Compounds, But Many Face Decision-making Bottlenecks - BIO Japan" - Scrip, 13 Oct, 2011.).

With a total fund of ¥1 billion, Daiichi Sankyo told PharmAsia News most seeds will receive up to ¥100 million, with a maximum contribution of ¥200 million.

Both Daiichi Sankyo and Mitsubishi UFJ will seek out seeds, and the final decision will be made by OiDE’s selection committee, but Daiichi Sankyo would not disclose the committee members. Daiichi Sankyo will take over development from ventures if they reach predefined targets.

“Daiichi Sankyo is incorporated into the decision process from a very early stage,” the company said.

The Japanese company has had a much harder week on the generics side of its business. The acquired Indian generics manufacturer Ranbaxy Laboratories Ltd. once again received a U.S. FDA Import Alert for its Mohali manufacturing site, which is expected to add to the delay of its launch of generic Diovan (valsartan) from Novartis AG (Also see "EXCLUSIVE: U.S. FDA Posts Import Alert For Ranbaxy’s Mohali Site; Adds Mohali To Consent Decree" - Scrip, 15 Sep, 2013.).

Jefferies analyst Naomi Kumagai noted in a Sept. 17 report to investors that Daiichi Sankyo’s Benicar (olmesartan medoxomil) benefits from a delayed launch of generic valsartan since it is a competing product. Daiichi Sankyo forecasts a decline in FY2014 sales to $905 million for Benicar, down from $1.14 billion in FY 2013 due to generic valsartan’s entry. Kumagai believes valsartan will actually bring Benicar sales down to $862.8 million.