Domain Associates/ Rusnano announcement
March 2012
Clips Compilation
Xconomy
Bruce V. Bigelow 3/7/1
The Thinking Behind Domain’s $760M Life
Sciences Deal in Russia
The partnership that the life sciences venture firm Domain Associates and the
Russian state technology firm Rusnano disclosed yesterday began almost two years
ago, at a time when the U.S. financial crisis was especially bleak.
Domain partner Brian Dovey says he initially conceived of the alliance as a way to
tap a new and substantial source of capital for the firm’s portfolio of life sciences
companies. “In the beginning, that was kind of the driving force,” Dovey told me last
night. “But the more I’ve gotten into it, the more I see the opportunities in developing
a medical products company in Russia.”
Domain, which maintains offices in San Diego and Princeton, NJ, and Rusnano, a
Moscow-based nanotechnology firm owned by the Government of the Russian
Federation, agreed to work together to invest as much as $760 million on both sides
of the globe. The deal is intended to provide additional capital for Domain-backed
startups in the United States, and to jointly establish a drug and medical device
manufacturing facility in Russia.
The agreement calls for Rusnano to invest on a 50-50 basis with Domain and its
venture partners in roughly 20 U.S. life sciences companies developing a host of
new drugs, medical devices, and diagnostic technologies. Most of the investments
would provide crucial late-stage funding for companies already in Domain’s portfolio,
although Domain would present Rusnano with investment opportunities in a few
early stage deals as well. Either way, Rusnano has agreed to match the amount
invested by Domain and its VC partners.
Under a separate-but-related agreement, the startups backed by Domain and
Rusnano would grant technology licenses to a manufacturing facility the partners
plan to jointly establish somewhere in Russia. The Rusnano plant will make and sell
“advanced therapeutic products,” focused chiefly on heart disease, cancer, infectious
diseases, wound treatment, and eye disease and target markets throughout Russia,
the Ukraine, Belarus, and other members of Russia’s Commonwealth of
Independent States.
Russia doesn’t currently have much indigenous pharmaceutical capability, and
Dovey estimates Russia now imports … Page 2 of 2)
about 80 percent of its prescription drugs. So he views the partnership as an
opportunity to help the Russians develop a new domestic drug pipeline, more or less
from scratch, to produce drugs and other products developed by U.S. companies.
No decisions have been made on which companies would be selected, but Dovey
says most of them want to do it. Other VCs that have invested with Domain also
support the idea.
“Clearly we’ve had discussions with our co-investors,” Dovey says. “They recognize
that this is a whole new source of capital to fund our companies at a time when the
IPO market is problematic and a lot of the late-stage funding has been difficult
because of the economic crisis. So it’s a way to fund the companies to the next
stage, which I think will generate significant additional value.”
Brian Dovey
In addition, the joint venture will manage late-stage clinical trials of new
pharmaceuticals and other products in Russia, with a goal of winning regulatory
approval in Russia, the United States, and other potential markets. Under their
agreement, Rusnano is limited to investing in Domain-backed life sciences
companies. But Dovey says it doesn’t preclude the U.S. startups from negotiating
exclusive licensing agreements with Big Pharma partners in Europe, the United
States, and other markets, nor does it preclude Rusnano from investing in other U.S.
life sciences startups.
Dovey says the genesis of the deal “was almost serendipitous,” and began almost
two years ago when he was invited with other venture capitalists to meet with
Russian officials in Moscow. “They had made a decision at the highest levels to go
into high tech, based on the quality of their engineering and educational
background,” Dovey says. “It was not just life sciences, but almost everything. They
realize, of course, that the co-founder of Google is Russian and they have 20,000 to
30,000 of their people in Silicon Valley.”
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The Rusnano/Domain deal comes just a few months after two Boston biotechs—
BIND Biosciences and Selecta Biosciences were awarded $25 million apiece by
Rusnano.
In the week he was in Russia, Dovey says the American venture capitalists met with
a lot of people at different levels, including the Moscow school superintendent. Their
meetings culminated in an hour-long session with Russian President Dmitry
Medvedev. He came away impressed.
Afterward, Dovey says he began to see the possibilities of a deal as he
contemplated how the economic crisis had made late-stage equity funding
problematic—and life sciences VCs “were having to sell our companies earlier than
maybe we’d like.” With funding from Russia, “It struck me that we could move
products farther along in development, and we could generate a lot of additional latestage value.”
The ensuing negotiations took nearly a year and a half to work out. “If you think
about it, the development of any drugs is going to be done by the portfolio
companies, by the funders,” Dovey says. “The Russian company is going to be the
recipient of the successful programs and the intellectual property, so they’ll be
leveraging those nickels. Net-net, I’m pretty excited about it.”
Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at
bbigelow@xconomy.com or call (619) 669-8788
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socaltech.com
Tuesday, March 6, 2012
Domain Associates Inks $760M Deal With
Russian Fund
San Diego-based life sciences investor Domain Associates has inked a unique lifeline for the later stage
life sciences companies its its portfolio: it's brokered a deal worth more than $760M, to help fund its portfolio
firms from the Russian government. According to Domain and Russian, government-backed venture capital
firm RUSNANO, the two have inked a partnership where they will jointly invest in emerging life sciences
technology companies, foster transfer of technology into Russia, and establish manufacturing companies in
Russia.
According to the two companies, the deal includes establishing a pharmaceutical and medical device
manufacturing facility in Russia that meets GMP standards, which will go to produce products for treatment
of medical conditions including viral infections, cardiovascular diseases, cancer, and others. The deal helps
solve a big issue for Domain and other venture firms, which is accessibility to later stage investments for life
sciences companies, who often require very large investments to complete clinical trials and to receive FDA
approval. The Government of the Russian Federation owns 100 percent of the shares in RUSNANO.
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RUSNANO and Domain to Collaborate on
Investments in Health Sciences Projects
TOOLS
Posted March 6, 2012
RUSNANO and Domain to Collaborate on Investments in Health Sciences Projects
(Nanowerk News) RUSNANO and Domain Associates, a U.S. venture capital firm specializing in
leading-edge life sciences technologies, today announced a partnership that will spur modernization
of the Russian healthcare market by bringing next-generation pharmaceuticals, medical devices and
diagnostics to Russia.
RUSNANO and Domain have signed an investment agreement under which they will jointly invest in
emerging life sciences technology companies, foster transfer of technology into Russia, and
establish manufacturing facilities in Russia for production of advanced therapeutic products for the
treatment of medical conditions including viral infections, cardiovascular diseases, cancer, and
others.
RUSNANO and Domain's venture capital funds will co-invest in approximately 20 US-based
healthcare technology companies. Target companies will include groups developing innovative
products in the fields of pharmaceuticals, biotechnology, medical devices and other areas of life
sciences, that have significant applications for patient populations in Russia, and that complement
RUSNANO's focus on nanotechnology-based innovation.
RUSNANO and Domain will jointly establish a pharmaceutical and medical device manufacturing
facility in Russia that meets GMP standards. The joint venture will leverage the innovations created
by Domain and RUSNANO's investment portfolio companies, and will obtain exclusive rights to
manufacture and market products based on these innovations in Russia and the CIS.
RUSNANO and Domain's venture capital funds, together with other co-investors, are expected to
invest approximately $760 million into portfolio companies and the manufacturing facility in Russia.
The joint venture will manage advanced-stage clinical trials in Russia of new pharmaceuticals and
other products that will support regulatory approval of these products in Russia, the United States
and other markets.
"Life sciences portfolio companies constitute approximately 20 percent of RUSNANO actual
investments. We are working hard to spur development of innovative technologies in the Russian
healthcare industry," said Anatoly Chubais, Chief Executive Officer of RUSNANO. "I am confident
5
that this partnership will make a strong contribution toward driving innovation in the domestic
pharmaceutical industry."
"We expect Domain's collaboration with RUSNANO to provide a significant boost to the
modernization efforts of the Russian pharmaceutical and medical technology industry," said Brian
Dovey, Partner at Domain. "For our portfolio companies, this strategic relationship opens up new
attractive avenues for financing. Finally, we are excited about the commercial potential of
establishing a cutting-edge production facility in Russia."
The partners have engaged Team Drive, a management company led by former Sistema and MTS
CEO Leonid Melamed, to develop the project.
"RUSNANO's realization of this project will expedite the arrival of next-generation medicines to the
Russian market, providing Russian patients with access to the most modern pharmaceuticals at the
same time as other patients around the world, and in some cases earlier. In addition, this
partnership is a big step forward for the Russian venture capital industry in the healthcare market.
We are delighted that RUSNANO has selected our team to drive this promising initiative forward,"
commented Leonid Melamed, Chairman of Team Drive.
RUSNANO was founded in March 2011 as an open joint stock company through reorganization of
state corporation Russian Corporation of Nanotechnologies. RUSNANO's mission is to develop the
Russian nanotechnology industry through co-investment in nanotechnology projects with substantial
economic potential or social benefit. The Government of the Russian Federation owns 100 percent of
the shares in RUSNANO. Anatoly Chubais is CEO and chairman of the Executive Board of RUSNANO.
Work to establish nanotechnology infrastructure and training for nanotechnology specialists,
formerly conducted by the Russian Corporation of Nanotechnologies, has been entrusted to the
Fund for Infrastructure and Educational Programs, a non-commercial fund also established through
reorganization of the Russian Corporation of Nanotechnologies. Domain was founded in 1985,
Domain Associates, L.L.C. is a venture capital firm with an exclusive focus on life sciences. With
$2.4 billion of capital under management, Domain is headquartered in Princeton, NJ with a second
office in San Diego, CA.
Domain's three major investment segments are pharmaceuticals, specialty pharmaceuticals, and
medical devices, while additional areas of interest include biomaterials, bioinstrumentation, and
diagnostics. The Partners of Domain have a total of close to 200 person-years of experience among
them in the healthcare/venture capital industries and have been involved in the formation and
growth of more than 235 life-sciences companies. The highly focused network, experience, and
reputation of this team have made it one of the top private-equity groups participating in the
healthcare field. For more information, please visit www.domainvc.com
Team Drive was founded in 2011 by the team of professional managers who have high-profile
prosperous experience in governing large corporations. Leonid Melamed (former president of JSFC
"Sistema", CEO of OJSC "MTS") and Vladimir Gurdus (former CEO of CJSC "Medsi Group") are the
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founders of the company. Main competence of "Team Drive" is to implement progressive
management strategies to maximize client's business value in dynamic, efficient and transparent
manner, as well as creating maximum value for start-ups.
Source: RUSNANO (press release)
Read more: RUSNANO and Domain to Collaborate on Investments in Health Sciences Projects FierceBiotech http://www.fiercebiotech.com/press-releases/rusnano-and-domain-collaborateinvestments-health-sciences-projects#ixzz1p1hVYLpp
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Rusnano Teams With Domain Associates To Co-Fund Life
Sciences Companies And Establish Pharma JV In Russia
By
Joseph Haas /
“The Pink Sheet” DAILY Mar. 6, 2012
Word Count: 1170 / Article # 14120306005
-------------------------------------------------------------------------Executive Summary
Russian sovereign fund is co-investing with Domain in the VC’s portfolio
life sciences companies, and the pair also will fund a manufacturing
facility in Russia.
-------------------------------------------------------------------------Rusnano, the Russian sovereign nanotechnology investment fund, and U.S.based venture capital firm Domain Associates LLC are expanding a
previously announced partnership to invest up $660 million in Domain’s
portfolio life sciences companies and up to $190 million to build a
manufacturing facility in Russia for the products that would be sold in
Eastern Europe out of the Domain portfolio companies.
Announced March 6, the companies said the agreement would “spur
modernization of the Russian health care market” by providing that
country, along with Eastern Europe and the former Soviet Commonwealth of
Independent States, with next-generation pharmaceuticals, medical devices
and diagnostic products.
Under the agreement, Rusnano and Domain and its syndicate of investors
each will invest up to $330 million in roughly 20 existing and potentially
new U.S.-based Domain portfolio companies – the joint effort also could
involve co-investment in third-party technology, Rusnano USA CEO Dmitry
Akhanov said in an interview. Rusnano has begun its review of the Domain
7
portfolio, but neither party would identify any of the companies that the
joint venture would be investing in.
“The initial aim is to build a kind of consortium of intellectual property
from Domain’s portfolio companies and on that basis establish a recognized
regional pharmaceutical company which will develop, conduct clinical
trials, manufacture and sell a spectrum of innovative products,” in the
specified markets, Akhanov explained.
Last year, Rusnano and Domain had announced a $300 million effort to build
from scratch a Russia-based pharmaceutical company from Domain’s portfolio
companies ("Rusnano’s Grand Ambitions In Biotech" — START-UP, February
2012). This latest announcement expands on that strategy, adding medtech
products and the construction of a GMP-compliant manufacturing facility
for drugs and devices to the plan while increasing each partner’s proposed
investment.
Backed by $10 billion in government funding, the four-and-a-half-year-old
Rusnano is a key piece of the Russian Federation’s effort to build a
domestic innovative biopharma industry, in part by investing abroad and
bringing other nations’ technology and know-how to Russia. The nanotechfocused fund has planted a flag in the U.S., both through direct
investments in life sciences firms and in partnership with Domain. NonRussian firms Rusnano backs must in turn establish subsidiaries in Russia.
Although nanotechnology-focused, Akhanov clarified that the collaboration
with Domain will not be devoted entirely to nanotech investments – the
fund defines nanotech broadly as any technology in the range of 100 nm or
below. “The aim is that the majority of products should have some form of
nanotechnology or a significant potential for benefit from enabling a
nanotechnology, either now or in the future,” Akhanov said.
Rusnano Investments Complement Pharma 2020 Goals
To date, roughly one-fifth to one-quarter of Rusnano’s investments have
been in life sciences, representing about 14% of its $7 billion in
committed capital. The fund’s efforts complement, but are not formally
part of, Russia’s Pharma 2020 initiative, which has set a goal that 50% of
drugs sold in Russia be produced domestically by 2020. Rusnano opened a
U.S. branch, headed by Akhanov, last year in Silicon Valley.
The Russia-headquartered company and facility that will result from the
joint venture will leverage innovations created by the Domain portfolio
firms and will obtain exclusive rights to manufacture and market products
based on these innovations in Russia, Eastern Europe and the CIS. The JV
also will manage late-stage clinical trials in Russia that will support
regulatory approval in Russia, the U.S. and other nations.
“The idea would be to do some clinical trials there – it is less expensive
to do them there but that’s not the driving force,” said Domain Partner
Brian Dovey. “The driving force is really to include the Russians in the
worldwide clinical program, so the products would be [approvable] in
Russia. We do have experience with some of our companies doing clinical
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trials in Russia, and by and large, it’s been a good experience. It’s a
pretty well established industry there.”
A press release outlining the agreement states that the JV will focus on
life sciences investments offering significant application for patient
populations in Russia. Both Akhanov and Dovey, however, said that the
collaboration’s main purpose is not to identify and address diseases or
unmet medical needs particular to Russia and/or the other markets to be
served.
“Taking into account that the structure of morbidity in Russia is in
general the same as in the Western world, medicines for the
cardiovascular, oncology-related, neurodegenerative and infectious
diseases would prevail,” Akhanov said.
New Source Of Capital For Biotechs Moving Into Later-Stage Development
Particularly important to Domain, Dovey said, is that Rusnano’s
involvement opens up a whole new realm of investment for its portfolio
companies, particularly those in range of moving into later-stage testing
of their technology.
“Access to capital at the end of Phase II has become increasingly
difficult,” he said. “The IPO market has been mostly closed, private
equity has become more difficult subsequent to the economic crisis, so
this enables us to take companies further instead of looking for an M&A
transaction. If we can take [one of our portfolio companies] further in
the development path, I think the value increases dramatically. There’s a
significant opportunity to move these assets to a later stage, through
Phase III. And that’s the real benefit.
“The other real benefit to Domain is that we’ll be a big owner in this new
Russian medical products company,” Dovey continued. “The bad news is this
has taken almost a year and a half to get done, but the good news is it’s
taken a year and a half – we’ve really gotten to know the people, we know
the market better, we see the opportunity as a lot more significant than
we initially thought.”
Rusnano made its first investment in a U.S. life sciences firm last year
by leading a $9 million Series B round for BiOptix Inc., a Colorado-based
drug discovery analytics tool maker. It has committed up to $26 million
over four years to Panacea Labs Inc., a subsidiary of Cleveland BioLabs
Inc. that is working in cancer therapies.
And it has invested $25 million apiece in a pair of Boston-area biotechs,
Bind Biosciences Inc. and Selecta Biosciences Inc. ("To Russia, With Love:
Selecta, BIND To Create Subsidiaries In Financing Deals With Rusnano" —
"The Pink Sheet" DAILY, Oct. 27, 2011). Each firm’s Russian subsidiary
will perform discovery research in Russia, as well as clinical
development, manufacturing and sales.
Rusnano also is the principal investor, with a holding of more than 40%,
in SynBio, a $110 million joint venture to develop bio-betters and
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innovative medicines for the Russian and international markets ("Russia's
First BioPharma Public-Private Partnership Eyes Bio-Betters, Attracts $110
million" — "The Pink Sheet," Aug. 29, 2011). It pledged $200 million to
Burrill & Co.’s fourth general fund, which began investing in late 2011
with $313 million in commitments.
And with Celtic Therapeutics Holdings LP, Rusnano is backing Pro Bono Bio,
a humanitarian-directed maker of drugs and medical devices that will focus
on free product donations in Africa. With a €300 million ($474 million)
investment in Pro Bono, Rusnano owns roughly 40% of the venture ("Celtic
Pharma And Russia's Rusnano Set Up Pro Bono Bio, A New Firm With
Philanthropic Objectives" — "The Pink Sheet" DAILY, Sep. 12, 2011).
Joseph Haas
Senior Writer
Elsevier Business Intelligence - Publisher of "The Pink Sheet," "The Pink
Sheet" DAILY, Start-Up and In Vivo
Phone: 240/221-4438
E-mail: j.haas@elsevier.com
Address: 5635 Fishers Lane
Suite 6000
Rockville, MD 20852
10
.
The Deal Pipeline
March 6
Domain Associates forms $760M partnership with Russian fund
By Ben Fidler Updated 03:46 PM, Mar-06-2012 ET
Rusnano, an investment fund run by the Russian government, has teamed with a U.S.based venture capital firm to form a $760 million partnership to invest in North American
life-science companies.
Rusnano and life-science VC investor Domain Associates LLC have signed an
investment agreement through which the two entities will co-invest the funds in about 20
U.S.-based healthcare technology companies and a pharmaceutical and medical device
manufacturing facility to be built in Russia.
The joint venture will use the facility to manage clinical trials and produce drugs and
other products that it will ultimately have Russian rights to. As such, the facility will give
Russia — which largely imports its pharmaceuticals — a way to produce drugs
domestically, and at the same time give Domain's portfolio companies and those the JV
chooses to invest in an avenue for financing. The facility will be used to produce
treatments for viral infections, cardiovascular diseases, cancer and other indications.
Indeed, the two said in a statement that the partnership will "spur modernization of the
Russian healthcare market" by bringing medical devices, next-generation
pharmaceuticals and diagnostics to Russia.
"They've really made a commitment to high tech," said Brian Dovey, a partner at
Domain, in an interview Tuesday with The Daily Deal.
Domain has $2.4 billion in capital under management and active investments in the
pharmaceuticals, specialty pharmaceuticals and medical devices spaces. Rusnano and
Domain will each contribute up to $330 million toward investments, with the remainder
going toward the facility. Rusnano has also agreed not to do a similar arrangement with
any other venture firm in life science, he added.
Rusnano was created just a year ago by the Russian government to develop the Russian
nanotechnology industry through various investments. While Rusnano has made a
number of investments in nanotechnology, it has made a push in healthcare as well. For
example, it poured $47.25 million in funding into Selecta Biosciences Inc. and Bind
Biosciences Inc. in October. Selecta is a preclinical company developing vaccines and
immunotherapies, among them products for treating HPV, cancer, diabetes and malaria.
Bind has a proprietary therapeutic process called Accurins that targets specific proteins
and binds to them, delivering a drug. The company is also developing cancer compounds.
Rusnano CEO Anatoly Chubais said in the statement that about 20% of Rusnano's
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holdings are "projects in medicine."
As for Domain, the deal will give its portfolio companies — largely startup life-science
companies — "an additional source of capital" to push their products through
development amidst a tough financing market," according to Dovey.
Dovey recalled that the genesis of the deal came through discussions with people at
Rusnano through which he saw a way to solve both Russia's desire to improve its hightech capabilities and the difficult time biotechs have been having getting off the ground
due to little access to private capital and an IPO market that was "kind of shut down."
"It seemed to me there could be some real synergy if we could get funding for later-stage
companies and move them along the development path, and in return provide [Rusnano]
with Russian rights [to the drugs] and help them build a pharmaceutical and medical
products company in Russia," he explained.
Dovey said the theory was that the two would co-invest "side by side" in enough entities
that enough products could be created to form a company.
"It would be good for us and good for Rusnano — they'd get a return on their investment
and a pharma company," he said.
Michael Sanders, Ramsey Hanna, Casper Fox, Ruth Holzman, Melinda Rudolph,
Thomas Suddath and Svetlana Attestatova of Reed Smith LLP represented Domain.
Baker & McKenzie provided Rusnano with legal advice.
Read more:
http://pipeline.thedeal.com/tdd/ViewArticle.dl?id=10005681098#ixzz1p5rspfYv
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March 7, 2012, 10:30 AM
The Daily Start-Up: Meeting New People? It’s Kismet
Venture firm Domain Associates has entered a joint venture with a Russian
government fund that will see hundreds of millions of dollars put into Domain
portfolio companies and the construction of a manufacturing plant to bolster
Russia’s anemic pharmaceutical- and medical-device industries. The deal with
Rusnano will help further fund 20 or so medical-technology companies in the
Domain portfolio, and then bring their products to the Russian market.
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REUTERS
UPDATE 1-Rusnano, US fund to invest $760 mln in
pharma venture
Tue Mar 6, 2012 7:03pm IST
Rusnano, Domain to invest up to $760 million
* Investment to go into U.S. drug firms, Russian facility
* To establish manufacturing facility in Russia
* Deal to boost development of pharmaceuticals in Russia
By Megan Davies
MOSCOW March 6 (Reuters) - Russian state technology firm Rusnano is teaming up with a
U.S. venture fund to invest around $760 million in a number of U.S. healthcare and
pharmaceuticals firms, establish a manufacturing facility in Russia and bring new drugs to
the Russian market.
As part of the deal, Rusnano and life sciences technologies investor Domain Associates are
planning to each invest $330 million in about 20 US-based healthcare technology companies.
Rusnano, a $10 billion technology fund, and Domain, with 2.4 billion of capital under
management, will also fund a pharmaceutical and medical device manufacturing facility in
Russia.
"Russia has a commitment from the top down to pharmaceuticals and hi-tech," said Brian
Dovey, partner at Domain Associates, adding that he was attracted to Russia because it is
one of the fastest-growing pharmaceutical markets in the world.
Rusnano and Domain will target U.S.-based healthcare firms that develop products in areas
that could have applications for patients in Russia. They did not disclose a list of target firms.
The new manufacturing facility in Russia will seek exclusive rights to make and market
products created by the U.S. portfolio companies in Russia and the former Soviet Union.
They are still considering where to site the plant, Domain's Dovey said.
Russian patients will benefit from access to new medicines as a result of the partnership,
Domain's Dovey said.
The groups of drugs which will be produced will be mainly in the sphere of oncology,
cardiology, wound treatment and ophthalmology, also infectious diseases, said Leonid
Melamed, former head of oil-to-telecoms group Sistema and mobile phone firm MTS, who
will develop the project.
"The deal will allow access to the most requested drugs from Russian patients, by investing,
and getting the ability to get the rights to manufacture, sell and distribute the drugs in Russia
and the CIS (a grouping of former Soviet Union states)," Melamed said. "It is based on the
requirements of the Russian healthcare system."
The drugs will come from Domain's portfolio and have been patented and are in late trials,
Melamed said.
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Dovey said that around 80 percent of pharmaceutical products in Russia are currently
imported.
"Most countries go from a cycle of importing products, to buying generic products, to creating
unique products," he said. This deal leap-frogs that cycle and means Russia goes straight
from importing to creating unique products, he said.
MODERNIZATION DRIVE
Rusnano's Chief Executive, Anatoly Chubais, the architect of Russia's post-Soviet
privatizations, said in a statement that the partnership would make a "strong contribution
toward driving innovation" in the Russian pharmaceutical industry.
"At present Rusnano's portfolio has approximately 20 percent of its holdings in projects in
medicine," Chubais said. "We are working hard to spur development of innovative
technologies in the Russian medical industry."
Rusnano aims to invest in promising hi-tech companies and help the Russian economy
diversify from its energy-heavy base. The state owns 100 percent but aims to sell 10 percent
of that.
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Reed Smith Guides Domain In $760M Venture With
Rusnano
By Kelly Rizzetta
Law360, New York (March 06, 2012, 4:08 PM ET) -- Russian nanotech investor
Rusnano signed a $760 million health care technology investment agreement
Tuesday with venture capital firm Domain Associates LLC, marking the largest
international joint venture among venture capital investors to date.
New Jersey-based Domain and Rusnano will form venture capital funds to invest in
approximately 20 of Domain's U.S.-based life sciences companies that are
developing pharmaceuticals, biotechnology and medical devices with significant
applications for Russian patients, according to Reed Smith LLP, which advised
Domain on the joint venture.
The state-owned Rusnano, formerly Russian Corp. of Nanotechnologies, is an open
joint stock company focused on investing in nanotech with the potential to make a
positive economic or social impact on Russia's population. Twenty percent of the
firm's holdings are currently in medical projects, according to Rusnano CEO Anatoly
Chubais.
“We are working hard to spur development of innovative technologies in the Russian
health care industry," Chubais said in a statement Tuesday. "I am confident that this
partnership will make a strong contribution toward driving innovation in the domestic
pharmaceutical industry.”
The joint venture's investments will complement Rusnano's nanotech holdings,
according to Reed Smith.
Domain currently has $2.4 billion of capital under management, which it exclusively
invests in life sciences. The firm's three major investment segments are
pharmaceuticals, specialty pharmaceuticals and medical devices, while additional
areas of interest include biomaterials, bioinstrumentation and diagnostics, Reed
Smith said.
"This is a tremendous opportunity for everybody involved," Reed Smith's Michael
Sanders told Law360 Tuesday. "Not just for Domain and Rusnano ... but for
Domain's portfolio companies. It has become more and more difficult over the years
for later-stage life sciences companies to raise that last round of financing to get
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them across the finish line."
Now, those companies will have access to a $330 million investment from Rusnano
and a like amount from Domain and other investors to fund the types of late-stage
trials and regulatory reviews that can often be prohibitively expensive, Sanders said.
The Rusnano collaboration should also provide a significant boost to the movement
to modernize Russia's pharmaceutical and medical technology industries, according
to Domain partner Brian Dovey.
Together with Rusnano, Domain will target emerging life sciences technology
companies that can transfer medical technology into Russia. The joint venture will
also invest $100 million to establish a pharmaceutical and medical device
manufacturing facility in Russia to produce advanced therapeutic products for the
treatment of a variety of medical conditions ranging from viral infections to
cardiovascular disease and cancer, according to Reed Smith.
"For our portfolio companies, this strategic relationship opens up new attractive
avenues for financing,” Dovey said. “Finally, we are excited about the commercial
potential of establishing a cutting-edge production facility in Russia.”
The partners have engaged management company Team Drive to develop the
project. Team Drive is led by Leonid Melamed, the former head of Russian cellular
provider Mobile TeleSystems OJSC and AFK Sistema, the largest public diversified
financial corporation in Russia.
The Rusnano-Domain funds will leverage the output of their portfolio companies,
according to Reed Smith. The joint venture will have exclusive rights to manufacture
and market portfolio company products in Russia, Belarus, Kazakhstan, Ukraine and
other members of the Commonwealth of Independent States.
The joint venture will also manage advanced-stage Russian clinical trials of new
pharmaceuticals and other products headed for regulatory approval in Russia, the
U.S. and other markets, according to Reed Smith.
The venture is unique not only for its size and scope, but for its complexity, Sanders
said. The attorneys and executives who collaborated on the deal needed to work
around language and cultural barriers, time differences and a plethora of
international and sovereign tax and regulatory issues, making this the most unique
case Sanders has seen in his 35-year career.
"I really think it was a very exciting and significant transaction," Sanders said. "I think
the exciting part is that we've built this platform and this framework that are going to
let Domain and Rusnano work together in the next five, seven, nine years, and to do
what hopefully will be some pretty exciting and ultimately rewarding things together."
Domain is represented by Michael Sanders and Ramsey Hanna of Reed Smith LLP.
Rusnano is represented by Baker & McKenzie LLP.
--Editing by Andrew Park.
17
Rusnano Joins Forces with US Venture Fund
Posted on: March 06, 2012
Russian state technology firm Rusnano is teaming up with a US venture fund, writes Reuters. Rusnano and
life sciences technologies investor Domain Associates are planning to co-invest in about 20 US-based
healthcare technology companies. Rusnano will invest up to $330 million and Domain’s venture capital
funds and other investors will invest a like amount, according to Reuters.
Reuters – Russian state technology firm Rusnano is teaming up with a U.S. venture fund in a deal to invest
around $760 million in a number of U.S. healthcare technology companies, establish a manufacturing facility
in Russia and bring new drugs to the Russian market.
As part of the deal, Rusnano and life sciences technologies investor Domain Associates are planning to coinvest in about 20 US-based healthcare technology companies. Rusnano will invest up to $330 million while
Domain’s venture capital funds and other investors will invest a like amount, the companies said.
The remainder of the money will be used to establish a pharmaceutical and medical device manufacturing
facility in Russia. At this facility, products will be manufactured that have been created by the companies the
pair invest in.
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Thepharmaletter
Domain partners with RusNano on drug
production in Russia
Article | 7 March 2012
Russian state nanotechnology corporation RusNano and Domain Associates, a US venture fund, are
to invest $380 million each in the development and production of next-generation medicines in
Russia in 2012-2015, said RusNano, reported by RIA Novosti.
The two companies – which last year announced plans for a joint venture for the production of innovative
drugs in Russia (The Pharma Letter July 25, 2011) - will invest in about 20 firms that develop drugs to fight
cancer, heart and infectious diseases, including hepatitis and HIV.
The partners will also build a $190 million production facility in Russia and plan to launch it in 2015. The
plant will produce over 200 million pills or 20 million packages per year.
"The life sciences portfolio of companies makes up approximately 20 percent of RusNano's actual
investments. We are working hard to spur the development of innovative technologies in the Russian
healthcare industry," said RusNano chief executive Anatoly Chubais.
RusNano is a $10 billion technology fund, and Domain has $2.4 billion of capital under management.
19
Silicon Valley/San Jose
BUSINESS JOURNAL
Rusnano, Domain Associates sign investment
agreement
Silicon Valley / San Jose Business Journal
Date: Wednesday, March 7, 2012, 7:11am PST - Last Modified: Wednesday, March 7,
2012, 10:21am PST
Rusnano and Domain Associates LLC Domain Associates LLC Latest from The
Business Journals Follow this company said Tuesday they have signed a
partnership to spur modernization in the Russian health care market. The intent is to
bring cutting-edge pharmaceuticals, medical devices and diagnostics to Russia.
Rusnano, which has an office in Menlo Park, is a Russian venture capital fund with
$10 billion under management aimed at commercializing developments in
nanotechnology.
Princeton, New Jersey-based Domain is a venture capital firm focused on the life
sciences with $2.4 billion under management.
The two companies plan to jointly invest in approximately 20 U.S. emerging life
science and health care companies and help transfer technology and innovation into
Russia. The partnership includes establishing manufacturing facilities in Russia to
produce advanced therapeutic products for treating viral infections, cardiovascular
diseases and cancer, among others.
The total investment, including a manufacturing facility and investments in the
companies, is expected to be around $760 million. It will include other co-investors.
Click here to read the press release.
Written by Lisa Sibley. She can be reached at 408.299.1830 or
lsibley@bizjournals.com.
20
Forbes.com
The Business Review - Albany 6 days ago
Rusnano, Domain Associates sign investment agreement
Rusnano and Domain Associates LLC Domain Associates LLC Latest from The Business
Journals Follow this company said Tuesday they have signed a partnership to spur
modernization in the Russian health care market. The intent is to bring cutting edge
21
The Russians Are Coming To the Life Science Scene
TECHNOLOGY: VC Deal Is Expected to Benefit Local Firms
By Kelly Quigley Monday, March 12, 2012
It’s an unconventional partnership that observers say will energize the San Diego
biotechnology sector: Venture capital firm Domain Associates LLC has joined
with Russian government-owned technology fund Rusnano to invest a combined
$760 million in U.S. health care technology companies.
Domain, with West Coast headquarters near Del Mar, has an active portfolio of
life science companies that include San Diego’s Astute Medical Inc., CoDa
Therapeutics Inc., Meritage Pharma Inc., Orexigen Therapeutics Inc., SkinMedica
Inc., Tandem Diabetes Care Inc. and Zogenix Inc., among others. In fact, Domain
was the most active venture capital firm in San Diego last year, with 20 deals
closed, according to PricewaterhouseCoopers’ MoneyTree Report.
Now, even more money may flow into local companies thanks to a complex
investment agreement 18 months in the making.
Under terms of the deal, Domain and Rusnano will jointly invest in 20 of
Domain’s portfolio companies and establish a drug-production facility in Russia.
They’ll also manage advanced-stage clinical trials and obtain exclusive rights to
bring new drugs and devices to market in Russia, the Ukraine, Belarus,
Kazakhstan and other former Soviet Republic states.
Domain and Rusnano haven’t yet determined which of Domain’s portfolio
companies will get funding through the joint venture. Partner Brian Dovey, who
orchestrated the deal, said money will go mainly to late-stage companies with
products geared toward Russian patient populations. Key investment areas
include oncology, cardiology, wound treatment, ophthalmology and infectious
diseases.
“I think it’s a very smart move,” said David Titus, president of San Diego
Venture Group and managing director of Windward Ventures. “A lot of people
talk about how difficult financing is for biotech, but Domain has gone out and
done something.”
22
‘A Longer Runway’
Later-stage biotech companies typically require larger sums of money than fresh
startups because they must conduct expensive phase 3 clinical trials and usher
their product through the Food and Drug Administration’s approval process,
Dovey said.
Without a source for funding, drug developers usually seek a buyer long before
the company has reached its peak purchase price. “This deal will give companies
a longer runway to remain private and not sell out to Big Pharma,” Titus said.
“They can move their drugs further down the development path. And that
means potentially bigger returns for investors.”
Big returns are often reinvested back into the same industry in early-stage
companies, fostering a healthy venture cycle, Titus explained.
“This is part of a bigger picture,” Titus said. “As the pharmaceutical world
changes, I expect to see a number of different types of approaches to funding.
This is certainly an interesting approach.”
And how did such an interesting deal come about? Dovey credits serendipity. It
started in May 2010, when Rusnano executives invited about a dozen
representatives from U.S. and European venture firms to Moscow for a week of
discussions centered on how to spur economic development through strategic
investments.
“I was intrigued and flattered to be invited,” Dovey said. The event culminated
with a meeting at the home of Russian President Dmitry Medvedev, he said.
Rusnano —100 percent owned by the government of the Russian Federation —
made clear that it wanted to invest more in high-tech and medicine, Dovey said.
“When I came back, I started thinking about the issues we have here in funding
our late-stage companies due to the weak IPO and capital markets,” he said. “I
saw a way for Rusnano to get involved.”
Dovey estimates that the Russian pharmaceutical market comprises a slim 2
percent of the world market, with about 80 percent of its products imported from
other countries. “That was really the opportunity that we were offering to them
— to start a new industry,” he said.
A Complex Transaction
23
Lawyer Michael Sanders, who advised Domain, said he never before worked
on such a complex transaction encompassing everything from international tax
issues to intellectual property transfer — not to mention a huge sum of money.
“There have not been similar deals done, and certainly not with entities
formed by the Russian government,” said Sanders, a partner with Reed Smith
LLP in Century City.
Domain and Rusnano patiently worked through language barriers and
differing business customs, as well as a 12-hour time difference, he said.
Conference calls would routinely begin 11 p.m. and last into early morning
hours.
“Oftentimes when a deal is announced, it’s done,” he said. “Here, we’ve put in
place a framework for Domain and Rusnano to begin their work together.”
Daily Journal
Dealmakers
MERGERS & ACQUISITIONS
Tuesday, March 13, 2012
Reed Smith advises in venture capital deal
Reed Smith LLP helped New Jersey-based venture capital
firm Domain Associates LLC join forces with Rusnano, a
Russian state-owned investment fund in an agreement that
will result in up to $760 million venture dollars making their
way to U.S. biotech startups. Partner Michael Sanders led
the deal with partner Ramsey Hanna out of the Century
City office. Rusnano will invest in up to 20 of Domain
Associates' U.S.-based Bookmark Reprints portfolio
companies. Other Reed Smith lawyers on the deal included
24
Ruth N. Holzman in Century City and Svetlana G.
Attestatova in San Francisco as well as attorneys in London
and Philadelphia. Baker & McKenzie advised Rusnano out
of the Moscow office.
BioCentury, THE BERNSTEIN REPORT ON BIOBUSINESS MARCH 19, 2012 PAGE A18 OF 23
Ebb & Flow
Russian refresher
By Stacy Lawrence
& Jon Wolleben
Russian nanotechnology fund Rusnano has closely tied its life
sciences strategy to Domain Associates by allocating $330
million to invest in the firm’s new and existing portfolio companies.
The pair also are forming a JV that will in-license rights in the
Commonwealth of Independent States (CIS) to molecules being
developed by Domain companies.
Every Rusnano dollar will be matched by Domain and its
syndicate partners.
“Rusnano doesn’t have a lot of capability in assessing life
sciences pro-jects and that’s all we do. They will rely on our due
diligence and we will invest 50/50,” said Domain’s Brian Dovey.
To fund the deal, Dovey said Domain will use money from its
fifth, sixth, seventh and eighth funds, which it is still investing. He
said Rusnano could act as a co-investor in investments into portfolio
companies from any of these funds. In addition to the investment matching,
Domain and Rusnano each are contributing $95 million to the Russiabased
JV that will inlicense Russian rights to medical device and biopharmaceutical
products from Domain’s companies and other sources.
The JV will conduct late-stage clinical development, manufacturing
and marketing and will help support Russia’s goal of having an
indigenous pharmaceutical industry by 2020, Dovey said.
State-funded Rusnano has $10 billion under management, while
Domain has $2.4 billion. Domain’s most recent fund closed at $500
million in 2009 (See BioCentury, Aug. 17, 2009).
25
“Rusnano doesn’t have a
lot of capability in assessing
life sciences projects and
that’s all we do. They will
rely on our due diligence
and we will invest 50/50.”
Brian Dovey, Domain Associates
http://www.nj.com/business/index.ssf/2012/03/princeton_v
enture_capital_firm.html
Princeton venture capital firm and Russians collaborate
on life sciences
Published: Sunday, March 18, 2012, 7:20 AM
By Susan Todd/The Star-Ledger
The agreement between Rusnano and Domain Associates includes the creation
of a new company that will be located in Russia.
Domain Associates’ latest investment is as much a bet on Russia as it is
on the potential of new medicines.
The Princeton-based venture capital firm is teaming up with the Russian
government-backed investment group Rusnano in an ambitious deal to bring
new medicines and medical devices to Russia’s emerging healthcare market.
“It’s very daunting and it’s very exciting,’’ said Brian Dovey, a partner
at Domain. “The Russian government is very committed to establishing a
regional pharmaceutical industry.’’
The agreement calls for Rusnano and Domain to co-invest in as many as 20
U.S. life science companies with products in advanced stages of
development. The joint investment will provide up to $660 million over a
26
three-year period to the companies — all of which will be selected from
Domain’s existing portfolio.
And there’s more to the deal — a specialty pharmaceutical company will be
created in Russia and through a combination of technology transfer
agreements and licensing arrangements, the new company will have rights to
manufacture and sell products resulting from the joint venture. In that
way, Russia will gain a local pharmaceutical company with a variety of
products in a few years — far quicker than if the business was started
from scratch. Forming the new company will be funded with an additional
$190 million, according to the agreement.
Domain, which has $2.4 billion of capital under management, is known
throughout the country for its investments in the life science industry.
Nearly 25 years ago, it provided early financing to Amgen and helped the
company grow into a biotech giant. Its portfolio also includes such names
as Align Technology, which makes clear braces and Cardiac Science, a
defibrillator maker.
The collaboration with Rusnano represents its first venture in Russia.
It’s not such an unusual bet though. With the market for initial public
offerings withered by the wobbly world economy and many early-stage
companies considered too risky, venture capitalists are putting their
money on the promise of emerging markets.
In addition to Russia, venture capitalist firms are pouring money into
China and India.
For Russia, the partnership provides a leveraging of Domain’s life
sciences expertise and for Domain, the partnership is strengthened by
Rusnano’s knowledge of Russia and neigboring markets in Ukraine, Belarus
and Kazakhstan.
Pavel Rodyukov, Rusnano’s senior investment manager, said the group will
invest in products that are in the later stages of development, enabling
them to go to market within about four years. “This will be one of the
first big players in a regional pharmaceutical industry,’’ Rodyukov said.
It is also the country’s first brush with innovation in the pharmaceutical
area.
“New original products,’’ he said, “are not a regular thing for Russia.’’
Russia currently imports nearly 80 percent of its medicines and many of
those are generic drugs. The fast-growing Russian market for
pharmaceuticals is forecast to reach $19 billion by 2014, according to
Decision Resources. That’s still a sliver of the U.S. market which is
expected to be worth $368 billion in another two years.
“What these deals are
entrepreneurship, and
analyst with Decision
you don’t have any of
saying is, yes, we need manufacturing, we need
we need innovation,’’ said Lulu Pickering, an
Resources who follows the emerging markets. “When
that in place, this is how you do it.’’
27
Dovey said the collaboration took about 18 months to negotiate. “I would
like to be able to say it was well-planned,’’ he said, “but it was a
little more serendipitous.’’
Domain’s Dovey was part of a delegation of U.S. venture capitalists who
traveled to Russia at the invitation of the government in mid 2010. For
many of the venture capitalists, it was their first glimpse into Russia’s
ambitious investment and economic development plans.
The visit included a series of meetings and a dinner at the home of thenPresident Dmitry Medvedev, who seemed eager to receive advice from the
group of venture capitalists from the U.S. “He had a meeting in a very
substantive way with us,’’ Dovey said.
Tatiana Saribekian, who led Domain’s effort to forge the collaboration
with Rusnano, said many of the meetings leading up to the deal continued
into the early morning hours. It was not unsual for meetings among
business people and lawyers to last as long as 16 hours, hammering out
complicated legal issues.
“When we started, we had only a concept,’’ she said. “We had no idea how
it all might work.’’
Russia’s commitment to creating a local pharmaceutical industry is
reflected in a two-year-old government policy referred to as Pharma 2020.
The policy is considered a driving force behind the effort to establish
drug research facilities and pharmaceutical manufacturing operations
inside Russia.
“The idea is to bring drugs of higher social importance, for cancer and
infectious disease are our preference,’’ Rodyukov said. The Russians also
hope to obtain healthcare technology — including equipment that uses
nanotechnology — as part of its deal with Domain, he said.
The partners have already chosen Russian executive Leonid Melamed, the
head of Russia’s largest mobile phone company, to lead their specialty
drug company. Neither Domain or Rusnano have disclosed the companies they
intend to include in the investment. The deal provides for a transfer of
technology to occur, so any products produced as a result of the
collaboration can be made and sold in Russia and neighboring markets.
“Most countries go from a cycle of importing products to buying generics
to creating new products,’’ Dovey said. “We said, let’s leapfrog the
classic path and go right to making unique products.’’
Susan Todd:
(973) 392-4125
or stodd@starledger.com.
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