SANDOZ AND AVALON VENTURES TO PROVIDE BIOTECH START-UP FUNDING

SANDOZ AND AVALON VENTURES TO PROVIDE BIOTECH START-UP FUNDING for new firms, the companies announced Aug. 12. Sandoz and Avalon have formed Avalon Medical Partners, a 10-year partnership "targeted at creating leading-edge biopharmaceutical companies which will focus on the treatment of life-threatening diseases, chronic disorders and the diseases of aging," the two firms said. Sandoz will be the banker to the deal and Avalon will provide the active management. The agreement calls for the Swiss pharmaceutical firm to provide the predominant share of capital for the partnership, Sandoz said, although Avalon will also provide some capital. Avalon will provide the management team. The three general partners for Avalon Medical will be Kevin Kinsella, founding chairman of Athena Neurosciences, Synaptics, and Vertex, and present chairman of NeoRx; Larry Bock, formerly a Genentech research scientist and a founder of Athena Neuroscienes, GenPharm, and Vertex; and John Hendrick, an accountant with experience in financial posts at a number of firms. At Sandoz, the partnership will be a component of the company's "Innovascan" biotechnology investment program, announced earlier this year ("The Pink Sheet" Feb. 11, T&G-7). The partnership will allow Sandoz to invest in the earliest stages of promising new technology with the benefit of Avalon's experience in founding new biotechs, Sandoz said. Sandoz expects to spend $ 1 bil. investing in start-up companies over the next five years through Innovascan, including $ 150 mil. this year. The company would not assign a dollar value to the Avalon partnership. Avalon said that the partnership's total funding will be in the tens of millions of dollars. In addition to establishing start-ups, the partnership will "continue with Sandoz to nurture these and other innovative technology companies as appropriate," the two firms said. Although Avalon has previously focused exclusively on forming new companies, the venture firm said that the new partnership may also invest in established start-ups. However, Avalon said, such investment, while possible, is not probable, and would only be done at the behest of Sandoz. The partnership will follow the modus operandi of Avalon, the venture capital firm said. When a promising technology is selected, the partnership will form the company, initiate a private financing round, and have one of its members serve as chairman of the board. Sandoz will have little role in the actual management of companies founded, Avalon said. Sandoz will be in a position to step in early as a corporate partner. Avalon Ventures is a privately held La Jolla, Calif. firm that focuses on high tech startups. It has participated in the start-up of a number of healthcare companies, including Amer Particle Technologies, Ariad Pharmaceuticals, Athena Neurosciences, GenPharm, NeoRx, and Vertex.