Drug giant to invest $465M in local biotech startups

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SAN DIEGO — A pharmaceutical giant and a venture capital firm announced Tuesday that they’ve joined forces to create up to 10 life science firms in San Diego.

The collaboration between GlaxoSmithKline and San Diego-based-Avalon Ventures will focus on new technologies that are still early in the research stages, according to a statement from the companies.

GSK will put up as much as $465 million in funding and have an option to buy startups that bring products forward for clinical trials.

Avalon is set to contribute $30 million and provide its biotech executive management experience for the new companies.

Avalon will be free to enter into other transactions involving startups that GSK decides not to acquire, according to the statement.

“The collaboration between GSK and Avalon Ventures represents a new paradigm for funding early-stage life science companies in which Avalon can continue to pursue its validated approach to company formation and value creation while capitalizing on the drug discovery and development infrastructure of one of the worlds largest pharmaceutical companies,” said Jay Lichter, Avalon managing director of Avalon Ventures. “I believe that this partnership has the potential to drive the innovation ecosystem and economic growth in Southern California.”

Each of the startups will be located in San Diego.

Avalon Ventures said it has founded or funded more than 100 information technology and life sciences companies.

GSK products include the erectile dysfunction drug Levitra, the antidepressant Paxil and the histamine-2 blocker Zantac, used to treat heartburn and acid indigestion.