Durham-based A.M. Pappas & Associates announced Tuesday that it has partnered with The Chiesi Group and will manage the Italian pharmaceutical company's new corporate venture fund.
The fund, Chiesi Ventures, will focus on early-stage rare and orphan disease investments in the United States and Europe. CEO Art Pappas said his company will be an investor and special limited partner in Chiesi Ventures as well as manage the fund.
The deal represents Pappas & Associates' first foray into what it hopes will be a growing part of its business - managing highly targeted venture funds that exist alongside the company's own Pappas Ventures-branded funds.
Chiesi and Pappas & Associates didn't disclose the size of the fund. But Pappas said "it's a large pool of money that reinforces the commitment that Chiesi's making to the space." Chiesi Ventures will have offices in Boston, Research Triangle Park and Parma, Italy.
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Pappas said his firm has known of Chiesi for years, but became more acquainted with the company after it acquired Cary-based Cornerstone Therapeutics earlier this year.
"We were encouraged by a couple of the Cornerstone board members to speak to Chiesi about some of their market expansion strategies," Pappas said.
That led to a meeting with Chiesi executives in San Francisco, and later a trip to Italy to meet with the company's board and the Chiesi family.
Pappas Ventures, which focuses on investing in life science companies, has a strong recent track record with its rare and orphan disease investments.
Lumena Pharmaceuticals, which it started from scratch, was sold to drugmaker Shire earlier this year for at least $260 million. Ultragenyx Pharmaceutical, another of Pappas' portfolio companies, raised $126 million in an initial public offering of stock in late January. The company's shares have since more than doubled.
"We've got a good history in the rare and orphan disease area and so it all worked out quite well," Pappas said.
Pappas & Associates also disclosed Tuesday that it is launching another initiative targeting very early stage research discoveries that historically have not attracted much venture capital.
The firm plans to establish relationships with universities and research institutes to focus on taking discoveries from the lab to the point where they are ready to be presented to investors. That means helping to identify business opportunities, craft a business plan and help with issues such as intellectual property.
Pappas & Associates plans to manage such investments on behalf of universities or institutes. Pappas & Associates doesn't plan to take an initial investment stake in the discoveries. Rather, it would use the relationships to help it identify potential future investments for its funds.
Pappas said the firm expects to announce its first relationship related to the initiative by the end of the year.