Home » News » Deerfield Management’s Jim Flynn on CRISPR, and that $550M new fund

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Deerfield Management recently announced a new, $550 million healthcare fund that’ll direct its profits to charity – certainly an unconventional, and marketable, route for a large venture capital firm.

I spoke with Jim Flynn, the firm’s president and managing partner, on how it plans to distribute its funding. The new fund – one of the largest healthcare-focused funds today – will focus on seed and early stage investment, and will largely go after therapies in genetic diseases, cancer and orphan conditions. Flynn highlighted, in particular, the growing promise of gene editing technologies like CRISPR/Cas9.

On Deerfield’s investment strategy

The venture firm’s been around since 1994, and has about $7 billion in assets. It invests pretty consistently across the healthcare board – in biotech, medical device, health services and healthcare IT.

It’s a 12-year fund, though Flynn expects it’ll be fully committed in three or four years. Being that it’s such a large fund, it’ll be a matter of funding a startup based on its needs – one might get a half million dollar investment, while another could net $50 million.

Historically, Deerfield has launched about two companies per year from the ground-up – choosing technology from academic centers and populating a startup with a management team and strategy. With this new fund, the firm wants to up its company creation arm significantly – launching between six and 10 new startups per year, Flynn said.

Deerfield has found that starting companies, as opposed to simply investing in them, takes a lot of commitment – but the payoff can be better. So with the new fund, the firm plans to work in startup creation on a broader scale – with more flexibility and funding options for the new companies.

“That’s why we opened this fund: To meaningfully increase the amount of companies we start,” Flynn said.

On the charity work

Deerfield will donate the fund’s profits that aren’t allocated to investors to the its Deerfield Partnership Foundation, which has thus far raised more than $25 million to advance children’s health in New York City. This time, the donations will advance care for underserved children, as well as research in orphan diseases and age-related conditions like Alzheimer’s.

The foundation work provides impetus for academic endowments to work with Deerfield, Flynn said.

“The not-for-profit element makes us a particularly interesting partner for academic institutions,” Flynn said.

Indeed, investors in this new fund include New York-Presbyterian Hospital, Memorial Sloan Kettering, Seattle Children’s Hospital, and philanthropies like the Robert Wood Johnson Foundation. Princeton University and Northwestern University are among the investors as well.


Deerfield Management is generally interested in startups that are involved in genomics – particularly gene editing technologies like CRISPR/Cas9, Flynn said. Despite looming ethical concerns around the ability to edit genes – as well as thoughts from detractors that such technology couldn’t have broad impact on therapeutics – Flynn is optimistic about CRISPR’s potential in the market. Because of this, the venture firm is interested in pursuing gene editing startups.

Deerfield Management has invested in about a half dozen gene therapy companies, and will likely be on the lookout for more, Flynn said. One gene therapy company it invested in this year, for instance, is AveXis – a biotech that is developing a treatment for spinal muscular atrophy. So far, it’s delivering a gene that could reverse the muscular degeneration associated with this disease in nin babies. So far, results have been encouraging in trials, Flynn said.

“What we’re seeing in that: You really do have the ability to take diseases where people either die or have very significant morbidity, and correct that,” Flynn said. “This will progress to things like gene editing – another area of tech that’s evolving extremely quickly right now.”

While CRISPR gene editing may have apparent application in correcting rare genetic disease, there’s widespread potential for the technology as well. Flynn cited HIV as an example – and that some people have a different receptor for the HIV virus that makes it more difficult to penetrate the cell. One could ostensibly edit people’s genetics, he said, so that everyone could have the receptor that makes the HIV virus hard to get in.

We’ve seen companies like Bluebird Bio, Kite Pharma and Juno Therapeutics begin incorporating gene editing into their technology – which shows wider potential for CRISPR in immunotherapy as well.

“These things are really exciting, and are going to start coming to market soon,” Flynn said. “In the next year or two, you’re going to see a much more visible role and profile for CRISPR products being developed.”


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