As US and European investor interest in Japanese biopharma startups spikes, the Belgian venture capital firm Newton Biocapital has launched a €150M fund to harness synergy between European and Japanese life sciences.

Japan boasts a world-class technology industry in addition to a thriving life sciences scene. The nation hosts large companies including Takeda, Eisai, and Astellas Pharma and, faced with a rapidly aging population, is placing emphasis on tackling chronic diseases including cardiovascular disease and type 2 diabetes.

While Japan’s biotech startup scene is less advanced than top US hubs such as Boston, it is attracting increasing investments from overseas. Last year, US and European venture investors partook in eight Japanese biopharma deals totaling €86.4M ($98M). This was almost triple the hauls from 2019 and 2020, and mirrored record venture capital fundraising across the global biotech industry in 2021.

One of the most prominent overseas investors in Japanese biotech startups is the Belgian venture capital (VC) firm Newton Biocapital, which has offices in Brussels and Tokyo. Newton Biocapital invests in European and Japanese companies tackling aging-related chronic diseases including cancer and metabolic diseases.

In 2017, Newton Biocapital launched its first VC fund, Newton Biocapital I (NBC I), worth €114M. The firm established startups including Epics Therapeutics and ChromaCure in Belgium, and invested in Japanese companies including EditForce and J-Pharma.

This week, Newton Biocapital established its second VC fund, NBC II, with a target of €150M. The fund follows a similar strategy to that of NBC I, and has raised €50M in commitments so far. The plan is to invest in around 15 Japanese and European startups, with each receiving between €5M and €10M.

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Belgium has world-class academic centers where research regularly leads to the creation of spin-off companies,” said a representative at Newton Biocapital. “In Japan, we are trying to be a catalyst for the creation of spin-off companies.

US investors are the most common foreign participants in Japanese biotech venture rounds, such as F-Prime Capital. The tech investor SoftBank Group’s Vision Fund made its first Japanese life sciences venture in October 2021 when it led a €53M ($59.7M) Series A round raised by Aculys Pharma. Aculys aims to bring sleep disorder treatments that are approved in the US and Europe to the Japanese market. 

European investors active in Japanese biotech venture rounds have included HBM Healthcare Investments in Switzerland and the UK firm Eight Road Ventures. Nonetheless, Newton Biocapital is one of the most prolific European investors in this space.

According to a public statement from Alain Parthoens, Managing Partner at Newton Biocapital, the firm’s links to European and Japanese life sciences unlock “unique opportunities for our portfolio companies through our connections with international investors and pharmaceutical companies

“By continuing to leverage the synergy between these two complementary regions with NBC II, we will keep supporting value creation for all.

Newton Biocapital uses its familiarity with clinicians and local industry players in both regions to make it easier for companies to cross the geographical divide and develop their treatments in the other region. Additionally, the VC fund will work to increase the number of international investor syndicates supporting its portfolio companies.

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Another European company exploiting its connections with Japan is the French biotech Poxel. In June 2021, the company’s type 2 diabetes drug imeglimin was greenlit in Japan with the help of its partner Sumitomo Dainippon Pharma. The Japanese approval was ahead of any US or EU regulatory decision and, as one of the world’s biggest markets for type 2 diabetes, Japan presents opportunities for companies aiming to tackle metabolic disorders.

Nevertheless, one of the biggest challenges to Japan’s drug development space is a lack of clarity around reimbursement, according to the World Economic Forum. Opaque drug pricing policies are causing uncertainty amongst investors and companies alike, leading to lower spending on research and development. If Japan makes its reimbursement decision-making more transparent, it could become a much bigger draw for life sciences investment.

Cover image via Elena Resko

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