Mubadala cements cautious life sciences approach with $235m Evotec investment

Mubadala Investment Company agreed to acquire €200 million (US$235 million) worth of Hamburg-based Evotec shares in a private placement, giving the United Arab Emirates sovereign wealth fund a 5.6% stake in one of Germany's top life sciences firms. Novo Holdings kicked in an additional €50 million (US$58.8 million) in the offering. But Novo is a longtime Evotec investor that brought its stake in the company up to 11% with the transaction, so the headline news here is Mubadala's increasing eagerness to play the biotech trade. Mubadala CEO Khaldoon Al Mubarak signaled that interest back in June, saying at the Bloomberg Invest Global virtual conference that the medical technology, life sciences and artificial intelligence segments are “the place to go.” Mubadala made its first foray in the biotech arena in June by jumping into the extension of Owkin’s Series A round with an $18 million investment, bringing the total amount raised to $70 million. The New York-based startup plans to use the funding to advance its Owkin Studio, an AI-enabled software platform that allows medical researchers and data scientists to collaborate on biology discovery and development projects. "Owkin is creating an efficient, global network to connect the medical research ecosystem, enabling pharmaceutical companies to access research-quality datasets in order to improve their R&D processes," said Mubadala Head of Ventures Ibrahim Ajami at the time. "Owkin has everything we look for in a company, including a strong team solving a large and complex problem and pioneering technology at the core of the solution." Mubadala was at it again in August, kicking in an undisclosed amount to an oversubscribed $40 million funding round for Los Angeles-based Science 37, another startup providing a technology platform for drug research -- specifically, one that enables patients to participate in clinical trials remotely. And the list of existing investors Mubadala joined on the round includes biopharma giants Novartis, Amgen and Sanofi (via its Sanofi Ventures arm). The new investment in Evotec is a step up for Mubadala in the life sciences arena -- not only is it a much larger sum, but the firm also played the lead investor role in this segment for the first time. The move is consistent with Mubadala's previous life sciences plays in a way that suggests the fund is taking a conservative approach to the trade. Neither of the life sciences firms previously backed by the fund is a drug developer; instead they provide the backbone for other companies' development efforts. Evotec follows the same strategy, to a degree, by acting as a contract research organization -- essentially, getting paid to conduct outsourced research. Evotec does conduct its own research and development efforts, which have given it an extensive pipeline of drug candidates, but instead of undertaking the pricey work of taking these assets to the finish line on its own, Evotec partners with pharma/biotech companies in exchange for future royalties on marketed products, racking upfront payments, ongoing research fees and payments for reaching agreed-upon milestones along the way. In other words, Evotec gets paid whether or not their research leads to approved products. And the firm also maximize is chances of success by taking a "modality-agnostic" approach rather than focusing on a particular industry segment like, say, oncology or rare diseases. All in all, Mubadala seems to be bucking the trend that has seen Blackstone and other investors betting on drugmakers that spend hundreds of millions on in-house research efforts that will either lead to innovative, high-cost therapeutics -- or to expensive, high-profile failures.

Mubadala cements cautious life sciences approach with $235m Evotec investment

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Sergio Barreto

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Sergio Barreto

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