BioWorld International Correspondent

LONDON - MVM Ltd. is raising a minimum of £40 million (US$57.8 million) for a second fund to invest in the start-up of life sciences companies in Europe and the U.S. It already received commitments of £22.5 million from the investors in its original fund, the UK Medical Ventures Fund, set up in April 1998.

David Brister, director of MVM, told BioWorld International, "We have talked to investors in the first fund, and are now talking more widely. We want to get a first closing of 40 million, which was the size of the original fund."

MVM was established by the Medical Research Council (MRC), a government-funded body, to commercialize MRC research. It has exclusive rights to MRC technology, giving it access to a broad range of high-quality intellectual property.

"The focus is on creating new biotechnology companies," said Brister.

"As with the first fund, we expect to find a number of good opportunities. There is a big demand for intelligent capital to help in doing start-ups. In general the big venture funds aren't interested because start ups don't need so much money and they take lots of time."

MVM's first fund has made 11 investments in total, including Ardana Bioscience Ltd., a specialist in women's health products; Oxxon Pharmaccines Ltd., which is developing vaccines for infectious diseases and cancer; and Diversys Ltd., which is developing tools for antibody and protein engineering.

In the U.S. MVM has already exited from its first investment, New Chemical Entities Inc., a drug discovery company that was sold to Albany Molecular Research Inc., of New York, earlier this year. Its second U.S. investment, Third Wave Technologies Inc., had its IPO on Nasdaq earlier in February, but to date MVM has retained its stake.

"There are good opportunities for the second fund in the U.S. and the UK," said Brister. The returns available to investors capable of evaluating early stage companies can be significantly better than those available to investors in late-stage companies. "Once you have a company up and running, the evidence is that there is an appetite from larger funds and among institutional investors for later-stage European biotechnology companies"

Five of MVM's current investments are in companies that are developing MRC technology. "As with the first fund, we expect to find a number of good opportunities within the MRC," he said. The MRC has an annual budget of £350 million, and supports 2,200 scientists in 40 research units.