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Exclusive Life Science Feature ments on monetary return. But given those ground rules, SR One pursues its larger vision of supporting potential leaps in healthcare, and thus the environment in which its parent, GSK, competes. SR One's patient-centric perspective also mirrors GSK's strategic commitment to developing drug therapies that improve the full range of outcomes in patient care, using any effective supporting technology as needed. "We want to address not only the maintenance of disease but also curative approaches. That is why we are going beyond just therapeutics. If we can find a new material or piece of electronics that could be curative, that is what interests us," Eckstein says. FROM INVESTMENT STRATEGY DOWN TO CANDIDATE CHOICES One principle that keeps SR One grounded in reality arises from the fundamental nature of venture funding — every investment candidate is unique and must undergo a critical evaluation based on its own merits. Philosophy becomes phylogeny as the evolutionary history of each candidate plays out in live-or-die tests of the proof of concept. The fund's investment analysts draw on experts not only in their own personal networks, as do their peers in other venture firms, but also in the vast GSK organization. In 2012, SR One invested in almost 20 different enterprises, covering not only pharma and biotherapeutics but many other, sometimes surprising, areas of healthcare. Individual cases are informative; they show how the group translates high-minded words about true innovation into financially sound deals. Funded companies represent a single-digit percentage of all the candidates sorted through or sought out by the investor team. Eckstein highlights three deals as examples of how the fund balances prudent financials with its "revolutionary" aims: • Auxogyn, the first deal of 2012 for SR One, is a small company developing clinical tools to improve fertility. Now in a collaboration with Merck-Serono, the company already markets the Eeva test, a visual algorithm to determine the fitness of fertilized eggs for in vitro fertilization (IVF), now available in the United States and soon in Europe. Embryo viability is the primary challenge in IVF, and a highly accurate way of measuring and boosting it could greatly raise the efficiency and effectiveness of the practice. • PsiOxus, an oncology company featured in our September 2012 issue's "Companies to Watch," is developing a "systemically available oncolytic vaccine" that kills cancer cells like a virus, selectively — thus combining targeted and immunotherapeutic strategies. Citing a recent success by Biovex with an earlier oncolytic vaccine, Eckstein depicts the PsiOxus product as a second-generation approach that addresses first-generation issues with side effects and local administration. "That would be a fantastic breakthrough." • IlluminOss Medical has a potentially groundbreaking bonefracture treatment in development, which Eckstein summarizes as "No more metal, no more big plates, no more big surgery." The 32 LifeScienceLeader.com April 2013 noninvasive procedure starts with a micro-incision and insertion of a balloon catheter that injects a monomer liquid inside the bone channel, and then a filamental light source in the catheter polymerizes the liquid into solid form inside the bone. With no cast or other supports needed, the stabilized bone retains enough flexibility to promote healing, yet patients may be load-bearing in a day, avoiding bed-ridden or hospital time and costs. Osteoporosis-related fractures may be the ideal area for such a treatment, reducing comorbidity such as with infection. One common and important thread through many of SR One's investments is a connection, however oblique, back to the business of therapeutic drugs, drug/device combinations, diagnostics, and other supporting technologies currently in the portfolios of many "pharma" companies — including, of course, GSK. Even the bone-fracture procedure would encourage greater, and presumably more effective, use of therapeutics: "If you can get patients walking again quickly and to keep using their medicines, you have a better outcome altogether. So that reflects our view of the world — that you manage the patient, not just a single condition," says Eckstein. PHARMA FUND PLUSES: STRATEGY, CONTINUITY, & LONGEVITY Venture funds that look beyond the short-term financials, adopting a more environmental view of investment, rightly deserve the adjective "strategic." On a continuum, then, the other end would be the "nonstrategic" VCs, somewhat infamous for their propensity to bolt and run long before the final verdict on a product's success in the real world comes. Eckstein observes that some institutional venture funds have pharma companies as limited partners where "strings" do exist and thus might be more affected by the pharma partner's strategy than are more independent VCs like SR One or the Novartis Venture Fund. "You have to look at the books these days to figure out what the strategy of a given venture fund really is. It's an interesting change in the world." Strategic funds will naturally be able to pursue opportunities the less-strategic ones overlook. Does a strategic approach therefore increase the risk of investment? "There is a general rule that, if you are the only one looking at a particular investment, you are either crazy or you're a genius! Maybe sometimes we're both," jokes Eckstein. "This is an interesting time; because of the scarcity of VC money, we have a huge smorgasbord of opportunities in front of us. I like finding ones that at first may look a little bit crazy, because you have to push the envelope to change something, and we have many changes under way." Perhaps balancing the risk of a more strategic approach is SR One's ability to rely on what Eckstein calls the "huge database" of expertise and experience in the worldwide GSK organization. "We have the freedom to pick up the phone anytime and call someone at GSK. We can conduct due diligence quickly and get a quick feel for the concept under consideration. It's all on a nonconfidential basis, of course. Collaborations and even acquisitions can and do arise for GSK from such interactions, though only incidentally to the SR One investment.