When people think about experiments in Big Pharma, the image that comes to mind is probably that of a petri dish. But given the crisis state of pharma R&D and early-stage biotech investment, there are also a lot of experiments going on now to find ways to reform the way drug companies and venture capitalists work together. One of those experiments is gradually starting to take shape between Polaris Venture Partners and Johnson & Johnson.
Polaris, as readers in the Boston area know well, is one of the big fish in the life sciences innovation community, with $3 billion of capital under management and a big network of scientists and entrepreneurs who try to keep their fingers on the pulse of what’s new. New Brunswick, NJ-based J&J (NYSE: [[ticker:JNJ]]) naturally has the big name as the massive healthcare company that rakes in billions every year with its drugs, devices, and other health technologies.
Each organization has its issues. Polaris is one member of a rapidly shrinking industry of biotech venture capitalists, who are all groping for ways to deliver investment returns when there’s an anemic IPO market for biotech startups and slim opportunities to sell their companies to get acquired. J&J, like most every Big Pharma company, has to find a way to generate new revenue streams from new products as patents expire on its aging blockbusters. So these two groups announced a collaboration back in January at the JP Morgan Healthcare Conference, in which they will scout promising new investments together, look to co-invest, and hopefully serve the mutual needs for investment returns and valuable new products.
“As a company that’s dependent in part on external innovation, we want to make sure there’s a good healthy innovation ecosystem out there, and this is one way we can contribute to it,” says Michael Elliott, an entrepreneur-in-residence with Janssen Pharmaceuticals, the pharmaceutical group within J&J.
Detailed terms on how the Polaris/J&J relationship works aren’t being disclosed. But in broad terms, here’s how it works. J&J and Polaris are actively scouting for new investments in the Boston biotech hub, and the two organizations plan to co-invest capital in new companies, Elliott says. The companies may end up going into the Dogpatch Labs physical space that Polaris has established in Cambridge, not far from MIT. J&J is agreeing to chip in its industrial resources—things like small-molecule drug screening capability, drug testing facilities, and expertise in everything most startups lack, like commercial sensibility and regulatory affairs savvy.
Elliott is a key player in making this collaboration work, as the crucial liaison between the startup community and various units within Janssen. He says he’s spending roughly two days a week at Polaris’ Dogpatch Labs in Cambridge, and working closely with Polaris’s Kevin Bitterman and Paulina Hill.
For the past four months, Elliott and his Polaris colleagues have been making the rounds at campus tech transfer offices, and with top faculty. Elliott says he’s optimistic from this scouting effort that the partnership has a future. “We have a pretty unusual relationship, between Janssen and Polaris,” Elliott says. “Kevin and I often share a taxi when we visit folks at the universities, and I when sit I with Kevin and Paulina in a meeting to hear about the science, we often go away to discuss it later. The analysis is made together as a team.”
No actual investments have materialized yet
