Biotech Startup Factory PureTech Nabs $55 Million
October 20, 2014
By Mark Terry, BioSpace.com Breaking News Staff
Boston-based PureTech announced today it has raised $55 million to help push life science startups.
PureTech describes itself as a science and technology development and commercialization company. It is not a venture fund, nor is it an accelerator. The firm generally starts companies from ground zero, which PureTech at first wholly owns.
Since its founding in 2001, PureTech has raised $87 million. British investment management firm Invesco Perpetual participated in the most recent funding round.
In an email to BostInno, PureTech founder and chief executive Daphne Zohar said, “Our focus is on developing new healthcare related products and technologies based on academic and PureTech-generated inventions. We develop those technologies in ‘programs’ that are set up as operating subsidiaries (companies). We structure them as companies so we can sufficiently compensate people who are involved with developing an idea or technology, and also to enable additional outside investment into those programs.”
The companies then eventually raise money from other investors. Several companies have grown out of PureTech’s efforts, including Gelesis, which is working on a pill to relieve the physiological symptoms of hunger; Akili Interactive Labs, which is focusing on the development of a telemedicine platform to treat cognitive disorders such as autism and Alzheimer’s; and Tal Medical, which is working on depression treatments.
In addition to generating the new fund, PureTech added three senior partners: Raju Kucherlapati, professor at Harvard Medical School and co-founder of Millennium Pharmaceuticals and Abgenix; Joi Ito, director of MIT media labs; and Robert Horvitz, MIT professor and Nobel laureate.
Although PureTech began making fairly traditional investments, such as in Mersana and the now-defunct Satori Pharmaceuticals, the company has moved toward more multi-functional cross-sciences companies.
Tal Medical’s approach to treating depression, for example, utilizes a device as opposed to a drug, to treat depression. Gelesis’s obesity treatment less of a pharmaceutical product than it is a medical device. Its pill is made up of minuscule hydrogel particles that swell in the stomach, causing the patient to feel full.
“In the past when we were getting things off the ground, we were putting in a seed investment, and we weren’t planning on putting any follow-ons,” Zohar said in an Xconomy article. “In some cases we did some follow-ons, but as part of a bigger round. Now we have the ability to put more money in to seed the companies, but also to drive those companies forward.”
The overall focus is long-term, with the companies PureTech creates or advances going on to generate revenue through the development and commercialization of products, not just generating income for PureTech through IPOs and sales of the companies. PureTech derives income through external partnership deals as well as early revenue.