In the beginning of April, Maxwell Biotech Venture Fund created with participation of PVC announced its cooperation with the large German fund for seed investments High-Tech Gründerfonds. Dmitry Popov Managing Partner of Maxwell Biotech Venture Fund, has told VBN what it gives to both companies.
Maxwell Biotech Venture Fund has been cooperating with High-Tech Gründerfonds for half a year now, why do you need an agreement on the official partnership?
First, it increases considerably the flow of interesting projects to be reviewed by our team that have passed the expert filter of the German fund.
Second, such partnership expands significantly a network of international scientific experts whom we can engage in work on the projects. The more they are, the better and in more detail we can discuss the scientific and technological basis of a project and its prospects for successful development. For example, while working on the project of our portfolio company Hepatera, we have interacted with both the leading Russian specialist, Pavel Bogomolov chief hepatologist of the Moscow Region, and foreign experts — a specialist from San-Diego and a professor from a German university.
Third, this is an opportunity for us for co-investment. We can use financial resources of our funds and partners for joint investments that will back up significantly our investment risks.
And, finally, our portfolio companies will be able to attract experience of international investment managers that will be useful not only at the development stage but when organizing a financial exit as well.
That is, now Maxwell Biotech will invest into Germany?
Not exactly. We are investing only in Russian companies but the origin of intellectual property may be international. The IP rights are regulated by a license agreement. The project development – pre-clinical and clinical trials – is conducted in Russia in accordance with the international standards. It goes in line with the philosophy of our company – Russian patients should get access to the best innovative drugs not later than the residents of other countries.
What do you think why the German fund needs this cooperation? It is well known that the Rothschild family fund co-invests with them, and you are a young Russian fund.
I think they are interested in us not only for co-investments, another reason is that Russia has a well-developed clinical trial industry that meets all the international standards: qualified researchers, medical centers. The possibility to share financial risks and at the same time to get access to an advanced infrastructure for clinical development is a serious basis for our collaboration.
Your fund has been active for 4 years now, and in total 7 projects have been invested. Why not more?
Our fund was formed at the end of December 2008; that is why actually we started working only in 2009. About a year was spent on organizational issues: office, team formation, beginning of an active search for projects in Russia and abroad. In summer 2010, we signed the first deal. Thus, within incomplete two years of active investments, we’ve made seven deals and are planning to announce the eighth one in May. By the end of year 2013 — the fifth year of the fund’s existence — we are to double the number of invested projects, increasing it to 14. Taking into account the duration of expert examination of biotech projects and complexity of deal structure — the result is far from being poor.
Experts say that 40% of the drugs that patients take do not help. Is your fund planning to invest in any project that would increase drug efficiency?
Every drug has its individual effect, there are many projects aimed at the improvement of drug delivery, changing its pharmacokinetics and pharmacodynamics. We review such projects but they are not our investment priority at the moment.
What diseases do the Russians suffer from?
The main reasons for mortality in Russia remain oncology and cardiovascular diseases. This is precisely why our three projects — OncoMax, MetaMax and CardioNova — are focused on these areas. Infectious diseases also remain an important problem, therefore Infectex and Hepatera are dealing with its solution (drug candidates against tuberculosis and chronic viral hepatitis respectively). Diabetes and its complications are also a special concern and NeuroMax is working in this direction.
There are so many smokers among us, do you think it’s possible to create a universal pill that would help to stop smoking for good?
As for me, I don’t smoke and it seems to me that it would be extremely difficult to create such a drug. If a person lacks will power and determination to get rid of the bad habit, then neither therapy patch nor electronic cigarette nor any drug will help him.
Which of your products are closest to the market?
The most advanced projects — NeuroMax, Infectex, Hepatera, their drugs are under the clinical trials. MetaMax and CardioNova are also close to this stage. The clinical trials last from 2 to 5 years, and another year will be needed for all the registration procedures. In case of successful clinical results, we’ll see these drugs in the market in 3-6 years.
Do you receive many applications for investments?
For the period of our fund’s activity, we have received about a thousand projects. But the majority of them do not meet our investment criteria. In Russia, there are quite a lot scientific activities but not many of them can become the basis for a business project. Apart from the development itself, the business project should have a clear IP position, an estimated market volume and an adequately determined need for the product. And of course the project team is also very important.
And how do you organize the work in your office in Boston?
The choice of Boston as a location for our international office was not ad hoc; this is the largest biotechnical cluster of the world with research centers of large pharmaceutical companies, seven large universities, world-level clinical centers and about 300 biotech companies operating there. Institutional investors and venture funds, that we have arranged effective communication also have their offices there. Our team in Boston has up to ten meetings with startup companies and projects authors a week. We are planning to expand our international presence in USA, on the western coast, and in Europe as well.