The Formation of Medicxi

Today we are thrilled to announce the formation of a new life sciences-dedicated venture firm, Medicxi (pronounced MEH-DEE-CHEE) (see here). Medicxi starts operations today as one of the largest dedicated life sciences venture firms in Europe and will be based in London, Geneva and Jersey. 

Medicxi is hardly a new venture firm, though, having been active for almost 20 years under the Index Ventures umbrella: with this launch, Index’ life sciences operation springs forth on its own as Medicxi, while Index remains an exclusively technology-focused venture firm. Despite being run separately from this point forward, the two firms will maintain geographic proximity as well as operational and financial links. Medicxi will be responsible for all of the existing life sciences assets and interests of Index, and former Index partners Francesco De Rubertis, David Grainger, Kevin Johnson, and Michèle Ollier will lead the new firm.

In addition, today Medicxi is announcing the closing of a new €210m early-stage venture fund, Medicxi 1 (MV1), the first fund raised under the new brand. 

Why the separation from Index? This clearly boils down to the natural evolution of a firm that started operations in 1996 with two key foci: technology and life sciences. While staying close over the years, the two teams started operating more and more independently from each other. Indeed, since 2011 the life sciences team has been operating independently from the technology team and has been investing exclusively in dedicated life sciences funds. 

In this context, there are two main drivers behind the formation of Medicxi  

  1. A top-down driver: many structural changes have occurred in the industry over the last 5-6 years, making us believe that this is a great moment to double down and invest more than ever before in the life sciences. Drug approval rates are running high, the regulatory process has improved thanks to the “breakthrough designation”, the pharmaceutical industry has restructured its fixed costs, thus potentially contributing to making the cost of drug discovery more sustainable, the IP-threat is looking milder than ever: in summary, the industry maybe maturing to the level where drug discovery may indeed become a sustainable useful long term business. 
  2. A bottom up driver: the sustained and repeated success of the medicxi “asset-centric” investing approach (read here and here), that we have been developing and refining over the last 10 years, demonstrates that this is the perfect moment to double down and expand its use, to execute highly-efficient pharma R&D and deliver relevant innovation. We reasoned that the best way to scale up the efforts is really out of a new independent fully dedicated life sciences firm: this is medicxi . We trust the medicxi approach will continue to be useful to pharmaceutical companies, and patients’ will be the ultimate beneficiaries. To date several drugs discovered by medicxi-backed companies have been taken up and pursued by leading pharmaceutical companies and marketing approvals have been secured for the most advanced ones. 

The purpose of this commentary is not to describe the asset-centric strategy, which has already been previously described by Michèle and other medicxi partners here, here and here.

Here we would only like to offer a couple of remarks: for many different reasons, this is a uniquely favorable moment in the industry for the implementation of an asset-centric strategy. One of the reasons has been brilliantly described by David Grainger in his “The zero person biotech company” July 2013 post, here, in which he reflects on the “virtual phenotype” of asset-centric companies, a key feature of Medicxi’s investing approach. The viability of such a strategy directly depends on the availability in the ecosystem of all key competences required to develop an early stage drug: the key insight, though, is the differentiation he makes between the role and availability of outsourced “builders” who bring to the table purely execution capabilities, and the role of outsourced “architects,” the true drug development strategists. While “builders” have been available for several years, mainly through traditional CROs, “architects” have only emerged over the last few years. David calls these external architects “Outsourced Drug Developers (ODDs)”. 

Over the last 10 years, the Medicxi team has designed and built its investing platform around ODDs and many of them are now an integral part of Medicxi’s asset-centric platform. David writes: 

…developing a novel drug candidate is rather like building a house – it's a long, complex task with lots of component steps. Faced with an empty plot, few would consider just employing a builder and asking them to build a house. Instead, they would first engage an architect to design the building, and to oversee the division of labour into manageable tasks. For sure, a high quality builder is necessary to deliver a good home, but it is not sufficient. Out-sourced drug developers, then, are the pharma equivalent of architects (just as CROs are the equivalent of builders). They design a bespoke development plan ideal for each new drug candidate, based on experience but not inflexibly following past examples. They divide up the whole complex development plan into manageable chunks, which can in turn be out-sourced to conventional CROs.

He concludes: “skill, flair and innovation in drug development are now widely available on a pay-to-play basis - if you know where to look.” 

This point is critical as it emphasizes the fact that the asset-centric approach is based on the key insights of individual scientists, entrepreneurs and developers. These are the key players whose insights and product visions we back. 

In summary, our strategy in launching medicxi is perfectly captured by Kevin in his April 2012 post, “There is something about entrepreneurs”. He writes: 

There’s just something about entrepreneurs. Irrespective of what business they’re in, there’s an energy and intensity about them that marks them out from others and makes them easy to spot. Of course if that fails, the big giveaway is that they’re the ones who aren’t in suits, but still step out of the restaurant to take a conference call at 10pm. The way I see it, anyone can be an entrepreneur, what marks out the real deal is the restless energy, constantly calculating angles and reassessing plans of attack. In fact a long time ago I came to the conclusion that this is a compulsion, not quite a disease, but with many signs and symptoms which sometimes make it look like one.

At Medicxi, we are always on the lookout for that unique individual that in the middle of dinner at a restaurant jumps on that 10pm conference call, which can’t possibly be held the day after. We are on the lookout for that individual that will be able to beat Kevin’s accomplishment and discover the drug that will surpass Humira, the world’s biggest drug, selling $12 billion yearly, that was discovered in Kevin’s lab many years back at Cambridge Antibody Technology. 

We are looking for truly extraordinary drug developers, we feel that the best is yet to come for the asset-centric model, and we couldn’t be more excited.  

Francesco, David, Kevin and Michèle