New academic fund to support research startups with more than 45 million euros
In September 2021, activities commenced at the i&i Biotech Fund (i&i Bio), which specializes in investments in academic spinoffs devoted to drug discovery, diagnostics, and medical devices, among other areas. The new fund was established in cooperation with the European Investment Fund (EIF) and i&i Prague, a subsidiary of the Institute of Organic Chemistry and Biochemistry of the CAS (IOCB Prague). Currently in preparation to join the fund is Charles University Innovation Prague (CUIP), a subsidiary of Charles University. This is the very first project of its kind in Central and Eastern Europe, a region that until now has lacked this type of financing opportunity.
At present, the fund manages more than 45 million EUR (~1.1 billion CZK). It plans to divide the money among more than 20 innovative projects over the next five years, and new investors can increase the total amount even further. The investment strategy of the fund targets the area of natural sciences with special focus on drug discovery, innovative diagnostics, medical devices, and other biotechnologies. Financing is intended for Czech entities, however, other European projects may also be eligible.
“By launching the new fund, we’ve gained the opportunity to finance the most promising technologies much more effectively and often without having to spend considerable time looking for other coinvestors,” says Jaromír Zahrádka, the fund’s director and one of the founders of i&i Prague. “In our region, it’ll now be possible to support more challenging projects focusing, for example, on the development of novel drugs and diagnostic methods, which until now had had great difficulty looking for investors,” adds Zahrádka.
The newly established fund is an extension of the successful pursuits of i&i Prague, a company that supports the transfer of new technologies from the laboratory to practice. It focuses on the areas of drugs and diagnostic methods, among others, and to date its activities have supported the creation and development of fifteen spinoffs from five countries. Currently, i&i Prague holds an interest in ten of them and has invested more 70 million CZK. In its first four years, i&i Prague also helped other academic institutions sell at least ten licenses to entities around the world. Following the establishment of the new fund, i&i Prague will continue to provide support for the creation and development of biotechnology spinoffs, but funding will now come from i&i Bio.
Money from the fund is primarily intended for support of discoveries that have already been validated in the laboratory but have yet to set off down the path to development for commercial use. That is the responsibility of the spinoffs, companies that help take a discovery from the lab to practice. The fund is prepared to invest an average of 2 million EUR (more than 50 million CZK) in a specific project, but in exceptional cases the amount may grow to as much as 4.5 million EUR for a single project. The fund’s main investors thus far are the EIF and i&i Prague.
“Czech science is proud of outstanding basic research in a number of fields, but it can’t get by without the active transfer of results to practice. We know it pays off thanks to the extraordinary example of Antonín Holý and the company Gilead Sciences, whose drugs changed the treatment of AIDS throughout the world, saved millions of patients, and not only turned a small business into one of the biggest pharma companies in the world but also transformed our institute into a thriving research center,” explains IOCB Prague director Zdeněk Hostomský. In speaking of the impetus behind the fund, he says: “If we want to have more stories like that, we must constantly develop tools to promote tech transfer and facilitate the founding of new companies capable of seeing the development of groundbreaking discoveries and technologies through to completion and making headway in competitive international markets. That’s something our institute has been working on for a long time, and by establishing this fund we want to motivate others to do the same.”
Up to 60 million euros for innovative projects
In the coming months, other private investors are planning to join the fund who can increase its total capital to some 50 or 60 million EUR. One of the first to do so will be Charles University.
“Charles University is the first university in the Czech Republic to engage in this type of cooperation with the European Investment Fund. The university is represented by its subsidiary company CUIP, which is responsible for managing the technology transfer portfolio as well as the establishment of and investment in startups. The synergy of this joint venture gives researchers at the university the opportunity to secure financing for the development of innovative technologies and thus build on their collaboration with the Czech Academy of Sciences, which is an important partner for the university,” says Tomáš Zima, rector of Charles University.
“In the Czech Republic, there’s still a shortage of investment sources, and this is a vehicle that can help get the top technologies all the way to patients. The fact that the European Investment Fund has chosen an institute of the Czech Academy of Sciences for cooperation shows that for some time now the quality of our research has been catching up with the most advanced countries in Europe, and of course we’re very happy about that,” says Eva Zažímalová, president of the Czech Academy of Sciences.
“This financing is an important step towards strengthening Europe’s biomedical research and seeking new competencies in health. The i&i Biotech Fund is accelerating the proof-of-concept stage of projects in the fields of Medtech, Diagnostics and Drug discovery. I am therefore very pleased that European Commission is backing the newly established fund i&i Bio showing the EU commitment in science innovation across Europe,” says Marija Gabriel, European Commissioner for Innovation, Research, Culture, Education and Youth.
With support from the EIF, a number of distinguished European research institutions have already established their own funds. Among them are the VIB (Belgium), KU Leuven (Belgium), Chalmers University of Technology in Gothenburg (Sweden), The University of Manchester (Great Britain), and the Karolinska Institute in Solna (Sweden). In terms of Central and Eastern Europe, however, the formation of i&i Bio is a unique occurrence, one that affirms the excellence and remarkable commercial potential of Czech science and research and firmly establishes IOCB Prague, the Czech Academy of Sciences, and Charles University as important pioneers responding to European and global trends.
“At EIF, we are very proud of our latest investment and contribution to European research, innovation and competitiveness in the field of biomedicine. We are happy to support biomedical scientists in Central Europe commercialize their research, create new biomedical companies and products and ensure the entire humanity can benefit from their ground-breaking research. With our investment in I&I Biotech Fund we are investing in an improved quality of life thanks to scientific breakthroughs in biomedicine, but also in green, modern economy, job creation and global competitiveness of the European Union,” says Alain Godard, Chief Executive of the EIF.
IOCB Prague is a leading internationally recognized research institute whose primary mission is basic research in the areas of chemical biology and medicinal chemistry, organic and materials chemistry, natural products chemistry, biochemistry and molecular biology, physical chemistry, theoretical chemistry, and analytical chemistry. One of the institute’s strategic goals, therefore, is the systematic commercialization of and transformation of the results of basic research into products designed to make life better. Since 2010, all activities relating to the transfer of results to practice, applications, and intellectual property have been coordinated by the institute’s subsidiary IOCB TECH. Since 2017, the institute launched another subsidiary called i&i Prague, which provides financial backing for the early stages of promising projects developed at the institute and other research and academic centers.
The company i&i Prague specializes in the transfer of new technologies to practice. It was established as a subsidiary of the Institute of Organic Chemistry and Biochemistry of the Czech Academy of Sciences and primarily focuses on innovations in the areas of drug discovery, diagnostics, and medical devices developed by academic institutions. It supports the creation of spinoffs and the sale of licenses. To date, the company has helped create or otherwise supported some fifteen spinoffs from five countries and holds an interest in ten of them with investments totaling more than 70 million CZK; however, other investors have provided the spinoffs in the i&i Prague portfolio with more than 1 billion CZK. In addition to direct financial investments, i&i Prague also assists in the commercialization of the innovative technologies of more than fifteen research institutions and universities in the Czech Republic and abroad. Among other things, it has coordinated the sale of more than ten licenses valued at over 5 million CZK.
The broader i&i Prague portfolio currently includes the following companies: Dracen Pharmaceuticals, XENO Cell Innovations, Riocath, Elphohene, LAM-X, PeriTrap, CasInvent Pharma, Diana Biotechnologies, Sulfotools, PEP-Therapy, and Enantis. At present, the company is evaluating many other projects and considering establishing cooperation. In addition to Czech and Slovak projects, cooperation with i&i Prague is being pursued by projects and spinoffs from Germany, Austria, Poland, Hungary, France, the Netherlands, and other countries.
i&i Biotech Fund
The i&i Biotech Fund (i&i Bio) is an investment fund that has met the exacting criteria of the European Investment Fund (EIF) to become one of the more than 500 funds supported by the EIF. The fund was established with substantial involvement from i&i Prague, which in addition to financial backing will also be providing unique know-how and expertise. The goal is to build on the results and experience of i&i Prague and increase the value of the fund’s assets by investing primarily in Czech and European biotechnology spinoffs. The fund makes significant contributions to the development and commercialization of original and quality projects in the areas of biotechnology and the natural sciences, namely those producing novel drugs, diagnostic methods, and medical devices.
i&i Bio is supported by lnnovFin Equity, with the financial backing of the European Union under Horizon 2020 Financial Instruments and the European Fund for Strategic Investments (EFSI) set up under the Investment Plan for Europe. The purpose of EFSI is to help support financing and implementing productive investments in the European Union and to ensure increased access to financing. The Fund also benefits from the support by the Pan-European Guarantee Fund (EGF), implemented by the EIF with the financial support of the Participating Member States.
Charles University Innovations Prague
Founded in June 2018, CUIP is a wholly owned subsidiary of Charles University. The company specializes in research and the spread of knowledge, the primary aim of which is to facilitate the spread of research findings from Charles University and ensure the applicability of the university’s intellectual property in the areas of research and development and its use for business, industrial, and similar purposes, i.e. its commercialization. CUIP can enter spinoff companies with the goal of establishing the commercial application of intellectual property of Charles University. In doing so, it works with the Centre for Knowledge and Technology Transfer, an independent department of Charles University providing services and information in support of knowledge and technology transfer.
In 2020, CUIP founded three spinoffs: Charles Games s.r.o., which develops and sells computer games; LAM-X a.s., which specializes in nanomaterials providing active protection against a wide range of pathogens; and GeneSpector a.s., which produces comprehensive, safe, universal, and fast solutions for COVID-19 laboratory diagnostics. At the end of 2020, CUIP entered the company FlexiCare s.r.o., which in the future will offer various providers knowhow and licenses in the area of telemedicine technologies developed at the Albertov Research Center.
European Investment Fund
The European Investment Fund (EIF) is part of the European Investment Bank Group. Its central mission is to support Europe's micro, small and medium-sized businesses (SMEs) by helping them to access finance. The EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, the EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.
European Guarantee Fund
The European Guarantee Fund (EGF) was set up by the EIB Group with contributions from Finland and other EU Member States to shield companies suffering from the COVID-19 crisis. Using nearly EUR 25 billion in guarantees, the EGF allows the EIB and the EIF to quickly make loans, guarantees, asset-backed securities, equity and other financial instruments available to mostly small and medium-sized enterprises. The EGF is part of the European Union’s recovery package aiming to provide a total of EUR 540 billion boost those parts of the EU economy that have been hit the worst.
This investment is supported by InnovFin Equity with the financial backing of the European Union under Horizon 2020, the Framework Programme for Research and Innovation (2014–2020). Through or alongside selected Venture Capital (VC), Business Angels (BA), Technology Transfer funds and funds-of-funds, the EU provides risk capital financing to enterprises, research organisations, universities in their proof-of-concept, pre-seed, seed, start-up and other earlystage phases allowing them to set up or reach their next stage of development.
InnovFin Equity investments, deployed by the European Investment Fund (EIF), can represent up to 50% of the total commitment made by the financial intermediary, who shall demonstrate a high policy fit by targeting in its investment strategy sectors covered by Horizon 2020 including ICT, medical technologies, biotechnologies, green technologies, nanotechnologies, etc. In addition, the facility has been designed to support Horizon 2020 objectives addressing societal challenges such as those related to resource efficiency, bio-economy, health and demographics, and climate change.