May 20, 2024

Japan’s development bank makes first UK life sciences investment

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Japan’s sovereign development bank is investing in UK life sciences for the first time with funding for 4Bio Capital, a UK venture fund that backs advanced treatments such as cell and gene therapies. 

The Development Bank of Japan is investing in 4Bio, which funds companies in the UK and Europe, alongside the Japanese pharma group Kyowa Kirin, and US healthcare provider, Children’s Minnesota. 

4Bio aims to raise $200mn to $300mn for its third fund — about twice as much as its last one — to invest in early stage private biotech companies, despite depressed share prices for listed biotechs. The S&P biotech index is trading about 50 per cent below its peak in February 2021.

Dmitry Kuzmin, managing partner of 4Bio Capital, said the past year had brought a “peculiar disconnect” between public markets and appetite for private life sciences investments. 

He said that about a third of all approvals by the US drugs regulator were for advanced therapies, including the recent approval of the first treatment that uses Crispr gene-editing, for sickle cell disease. 

Large pharmaceutical companies were sitting on significant cash piles and wanted to invest to fill drug pipelines before patents on some major blockbusters expired by the end of the decade, he added. 

“We see this as an excellent time to continue backing early stage innovation, especially in Europe, and especially in the UK, given both the collapsing valuations and the continued [scientific] progress,” he said. 

4Bio is already investing from its third fund, including co-leading a series A round for ViaNautis, which was spun out of University College London, and is developing genetic therapies for diseases of the lung and central nervous system. 

The Development Bank of Japan said it wanted to connect the country’s start-ups with others across the world. Mami Matsunaga, vice-president at the DBJ, said 4Bio’s “network and knowledge of the advanced therapies sector in the UK, Japan and globally makes them the perfect partner”. 

She added that the bank believed there was “significant untapped potential” in life sciences in the UK, Japan, and around the world and that it hoped the collaboration would support its “efforts to revitalise Japan’s life science ecosystem”.

While the UK government has said it wants the country to become a ‘life sciences superpower’, many smaller companies struggle to access funding from UK investors, whom they see as unwilling to take risks. 

Kuzmin said the DBJ investment was a sign that private UK investors needed to think about “stepping up their game” and that global capital was investing more in UK-based venture firms than local pension funds. 4Bio is primarily backed by US and Japanese investors. 

“[Biotech] is a very important [industry] and it’s one where the continent has an edge, but we’re not really using that edge, because we’re lacking the financial firepower the US funds have,” he said.

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