Tokyo-based DCI Partners, a venture fund manager of Daiwa Securities Group, has announced the launch of Daiwa Taiwan-Japan BioVenture Investment Limited Partnership II, a $135 million (JPY 14 billion) investment fund intended for drug discovery.

The fund will pool money from government-affiliated entities in Japan and Taiwan for investment into medical startups in these countries. The fund will support efforts toward developing new technologies for the research and production of coronavirus drugs and for genome editing.

Research and clinical trials for developing drugs can take years to develop, as several trial phases need to be undertaken to ensure the safety and effectiveness of the drugs. Clinical trials in Japan typically cost $4.8 million to $14.5 million, as per report by Nikkei Asia. While public research institutes and government agencies typically fund drug research, most of this is for basic research only, leaving MedTech startups in need of funding support. Other means of fundraising for clinical trials and commercial introduction of the drugs are also limited.

The initial $135 million was raised by DCI Partners from Japan’s Organization for Small and Medium Enterprises and Regional Innovation (also known as SME Support), Taiwan’s National Development Fund, and other investors from Japan and overseas, including regional banks, corporate pension funds, and life insurance funds.

Yokogawa Electric Corporation has also announced that it will invest in the fund.

The fund will invest the equivalent of $9.67 million each into Japanese and Taiwanese companies for the development of advanced technologies for coronavirus drugs, regenerative medicine, and oligonucleotide therapeutics. Oligonucleotides are DNA- and RNA-based agents that can inhibit gene expression or impede protein function by binding into their specific sequence for highly-specific targeted drug delivery.

In addition to investing in existing BioTech venture companies, the fund is also adopting a venture creation model, in which it will take the lead in activities such as technology seed discovery, human resource acquisition, research and development, and support for company establishment. This means that the scope of investment can be expanded, and the number of investment opportunities can extend toward other BioTech needs.

The fund intends to recover its investment through intellectual property licensing and portfolio company IPOs.

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