The Top 25: Tom Heyman, Johnson & Johnson Innovation–JJDC
US-based healthcare company Johnson & Johnson (J&J) had been making venture investments since the 1960s, Johnson & Johnson Innovation–JJDC was created only in 1973 and it has been taking minority equity stakes in third-party entrepreneurs since, making it one of the oldest and most consistent investors.
Tom Heyman, leader of Johnson & Johnson Innovation–JJDC (JJDC) when he replaced Brad Vale in 2015, has pledged to continue the group’s legacy. Having celebrated its 45th anniversary last year, it has continued to be one of the largest and most dynamic groups, investing more than $400m in more than 40 investments last year.
Heyman was quoted as saying in JJDC’s newsletter in December last year: “This year marks an important milestone for JJDC as we celebrate our 45th anniversary as strategic investors for the Johnson & Johnson Family of Companies. Today, most major companies embrace corporate venture investment as a means to fuel innovation. However, 45 years ago, this was not the case. When Johnson & Johnson launched JJDC in 1973, we became the first dedicated corporate venture arm in healthcare — and among the first of any industry. JJDC set the stage for this increasingly vital source of funding to help advance innovation.
“It has been a humbling journey to say the least and an incredibly uplifting experience to be able to support and nurture potentially transformative companies and products that may go on to make important differences in the lives of patients and consumers. I encourage us all to take a step back to remember why we are here and why it matters. Amidst even our busiest days, we must never lose sight of the contributions by the global entrepreneurial community which is bolstered by venture investing.
“In fact, this year brought its share of record setting in venture capital healthcare investing, with unprecedented investment in biotech companies and the most funding ever for digital health startups. I am personally excited to share with you in this newsletter a snapshot of just some of the strategic investments JJDC made this year across pharmaceutical, medical device and consumer health sectors. Our investments represent a flexibility and openness to new ideas and business models and, through our resulting portfolio, we gain visibility to some of the most innovative solutions poised to positively impact a diverse healthcare ecosystem.
“As we close 2018, I applaud the entire JJDC team and our growing family of portfolio companies as they produce truly transformative solutions. Let us keep making history together in the year ahead. Patients are counting on us. And I have no question we will deliver.”
JJDC’s newest area of investment is in consumer, such as its Memebox deal. Originally founded in South Korea in 2012, Memebox is a US-based beauty and cosmetics retailer which operates an online platform that sells cosmetics products from Korea – such as lip gloss and balm, make-up and facemasks – to customers in the west, China and Taiwan. JJDC led a $35m series D round for the company in January this year.
Marian Nakada, vice-president of venture investments at Johnson & Johnson Innovation–JJDC and GCV Rising Star 2019, for her profile this year said: “JJDC makes lasting commitments to its portfolio companies, ensuring stability, determination and ample support to help entrepreneurs and their companies achieve their greatest potential.”
JJDC launched its consumer investment practice six years ago but keeps the majority of its consumer portfolio confidential. Vice-president of consumer venture investments and external innovation Stacy Feld, GCV Rising Star in 2018, did disclose at the time in her profile that the organisation had eight companies in the portfolio, including two successful exits, across a range of segments.
JJDC is one of the first corporate investors in the consumer market and one of the challenges it has faced is ensuring there is a clear firewall in place to prevent spillover of sensitive information from companies it is investing in to J&J and its consumer products divisions.
“As consumer investing expands, it will be important for newcomers to similarly demonstrate to entrepreneurs their process for managing confidential information – it is critical in gaining trust. Trust is essential to an effective board, building a strong management team and growing the company to reach its full potential,” Feld said.
In October last year, the unit led a $25m funding round for US-based digital health technology developer Carrot and a representative from JJDC was said to have joined the company’s board of directors as part of the deal. This round followed $5.8m of funding in August 2017 according to a securities filing. JJDC’s investment was carried out subsequent to years of communication from Carrot’s developmental phases. Feld was quoted as saying in JJDC’s newsletter in December 2018: “Deals like this do not just happen overnight. Persistence and relationship-building are so critically important.”
Heyman has done much to encourage the ethic Feld mentioned. Heyman has kept his ties with Belgium as since April 2012 he has been a member of the board of directors and the general assembly of innovation and research hub IMEC.
From 2008 until November 2016, Heyman was chief executive of Belgium-based J&J pharmaceutical research subsidiary Janssen Pharmaceutical, responsible for its Beerse campus, which is one of eight research centres in Europe spending an aggregate €1.5bn-plus ($1.7bn) in research and development each year.
Beerse is also the site of J&J’s only incubator – called JLabs – in Europe after the company decided not to set one up in the UK as planned. Called JLABS @ BE, Belgium, therefore, was the location of its 10th JLabs, which can house up to 30 life sciences startups focused on innovations across the entire healthcare spectrum, including biotech, pharmaceuticals, medical devices, consumer and healthtech sectors.
From 2017 to February 2019, JLABS @ BE received €2.1m ($2.5m) of financial support bestowed by the European Regional Development Fund and the government agency Flanders Innovation & Entrepreneurship (VLAIO –Hermesfonds).
At its longest-established JLabs, on the west coast of the US, it has 51 companies and 36 alumni.
Further down the coast, and J&J has 42 companies in JLabs San Diego – of which 11% are consumer. However, one of the interesting outcomes from its facility has been the number of partnerships between portfolio companies, not just to J&J itself. For example, Abilta Bio and Primordial Genetics, Amplyx and Linnaeus, and Xycrobe Therapeutics and Kode Biotech have all partnered each other.
In Europe and more broadly, J&J has had an excellent record of co-investing and working with partners, its leading syndicate corporate venturing peer is Switzerland-based Novartis, according to GCV Analytics, which reflects back to the experience and trust its approach has generated under Heyman and his predecessors.
Heyman was also responsible for acquiring companies for J&J, including Tibotec, Centocor, Cougar Pharmaceuticals, Aragon Pharmaceuticals, Covagen and Alios Biopharma, and “hundreds of transactions for both early and late-stage pharmaceutical products and technologies”, according to his J&J profile. So after 25 years in business development, adding corporate venturing leadership might seem almost straightforward, even in what was a record four years since he took over.
Heyman started at Johnson & Johnson in 1982 in its law department of the Janssen affiliate back in Belgium. Then in 1990, he was asked to come to the US as vice-president of corporate development for Ortho, which was one of the other pharmaceutical companies within the Johnson & Johnson family of companies. Then in 1992, he was then asked to lead the business development group of the pharmaceutical group of Johnson & Johnson.
Born in the Congo and graduating with a master of law from the KU Leuven in Belgium, Heyman started out hoping to have a “real impact” on his country through foreign policy.
In a 2013 interview with PharmaBoardroom, Heyman said: “I am a lawyer by training. My dream was to enter the diplomatic service of Belgium, but I quickly came to the conclusion that Belgium is too small a country to have a real impact on foreign policy. I, therefore, started to get more and more interested in international law and economics.”