SANDOZ "INNOVASCAN" BIOTECHNOLOGY DISCOVERY INITIATIVE

Executive Summary

SANDOZ "INNOVASCAN" BIOTECHNOLOGY DISCOVERY INITIATIVE will include investments of $ 150 mil. in 1991 and a total of $ 1 bil. over the next five years in biotechnology, both in-house and externally, the company announced Feb. 1. The direct investment program is described by Sandoz as a "corporate focus" designed "to spot and support biotechnology innovations" in the broad pharmaceutical field. The $ 150 mil. figure for 1991 includes funds already committed to joint ventures, as well as to internal discovery and R&D efforts. A ramp-up from the current $ 150 mil. annual level will occur over the next four years in order to meet the $ 1 bil. investment goal by 1995. Innovascan will look at "all different types of relationships" with biotech companies, Sandoz said. The investment effort will be international in scope as Sandoz seeks to develop relationships with "the broadest possible range" of companies in the biotech field. Sandoz research facilities (Switzerland, the U.S., U.K. and Austria) will provide input for investment opportunities and participate in the resulting programs. Innovascan also plans to invest in Japan. Sandoz has at least four biotechnology partners already. In September of 1989, Sandoz signed a $ 30 mil. five-year deal with La Jolla, California-based Cytel giving it marketing rights and an "under 20%" equity stake in the start-up ("The Pink Sheet" Sep. 25, 1989, T&G-9). Sandoz also has licensing agreements with Repligen and Genelabs for AIDS therapeutics, and with Genetics Institute for GM-CSF. Sandoz owns worldwide licensing rights to the granulocyte macrophage-colony stimulating factor. Sandoz and Schering-Plough have a joint development and co-marketing agreement for the blood cell growth factor. While Sandoz' biotech initiative is large at $ 1 bil., the company is not the first large pharmaceutical house to make an in- house commitment to investments in biotechnology. SmithKline Beckman in 1985 initiated SR-1, a direct-investment rolling fund capitalized at $ 50 mil. SR-1 is still active today under SmithKline leadership. There are currently 20 firms with which SKB has investments under the aegis of SR-1. These include an under-5% stake in Amgen, Applied bioTechnology, British Biotechnology, Quidel, Ribi Immunochem, Sepracor, as well as stakes in Sphinx Biotechnologies and Synbiotics, acquired in 1987 ("The Pink Sheet" Nov. 8, 1987, T&G-2).