Gates Foundation Makes First Equity Investment in a Biotech Startup, Liquidia Technologies

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a successful new vaccine that can pass muster with regulatory bodies like the FDA. Unlike some nanotechnologies of the past, Liquidia has “exquisite control over the manufacturing process,” Holtzman says. “There’s tremendous promise here.”

Given Liquidia’s control over the nanoparticle shape and production, there are lots of different potential applications here for making vaccines for rich and poor countries. The foundation could have treated the company like a regular grant recipient, in which it could provide a specific amount of cash to support a distinct program—like, say, a flu vaccine—for a set amount of time.

Instead, the foundation wanted to provide more a more flexible, less-restricted form of financing to support a wider variety of applications of the Liquidia technology, Holtzman says. But Liquidia isn’t starting from scratch in the global health field. Before the Gates Foundation equity investment, Liquidia was moving ahead with a seasonal flu vaccine candidate—which could have an impact in fighting a global flu pandemic, Holtzman says. The company also has a collaborative agreement with the PATH Malaria Vaccine Initiative.

This new equity investment is set up a bit different than the usual venture deal. The Gates Foundation is taking a board seat in connection with its investment, although it will be through a board observer, Holtzman says. The observer won’t have a vote on the board, but will stay engaged through attending board meetings, and offering input, he says.

The agreement between the foundation includes language on specific programs the foundation wants the company to work on, for which there is no market. The foundation has said there is potential for Liquidia to receive further follow-on grant support, but there’s no obligation, Holtzman says.

The foundation, Holtzman says, also has the ability to “disengage” from Liquidia if it is unhappy with the direction of the program—like if the company decided to start making nanotech bullets instead of vaccines, Holtzman says. That would obviously be a pretty unhappy prospect for both the foundation and the company, and could have ramifications for whether the foundation seeks to build on this model or not. Investors in Liquidia had some “pointed questions,” Holtzman says, about how the foundation could withdraw from the company, how the global technology access provisions work, and what the foundation really wanted to accomplish. For now, anyway, Holtzman sounded optimistic the foundation won’t have to exercise its right to walk away.

“We’re very excited about this. It’s not going to replace grant-based support, we’re a grant-based organization,” Holtzman says. “But this is another tool we can use to provide resources to companies of specific interest, who have platform technologies with a wide variety of applications, where we can provide flexible support, and maintain deep engagement.”

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