Corvinus Venture Capital Fund, which is run by the state-owned Hungarian Development Bank Rt (MFB), is to invest Ft 640 million in two steps in N-Gene Kft, a biotechnology company which is developing an insulin-sensitive molecule to treat people with type II diabetes, Minister of Economy and Transport János Kóka and Health Minister Jenő Rácz announced on Thursday.
With the investment, the fund will acquire a 42.62% stake in the company. The fund will exit the company in four years.
Kóka said it is the government's greatest responsibility to recognize the areas that could elevate Hungary's place in the region, and one of these areas is biotechnology.
Viktor Déri, who heads Corvinus, said N-Gene will first receive Ft 335 million, then Ft 305 million later, depending on the results of the company's research. Both injections are expected to take place before the end of 2006. If the research fails to prove a success, the fund will still receive a 20.6% return on the investment, as stipulated in the contract. But if research is successful, the fund can expect a hundredfold return, Déri said.
N-Gene was set up in the US by Hungarian researchers and operates a wholly-owned subsidiary in Hungary. N-Gene says it is Hungary's biggest biotechnology company, worth $36 million, including $13 million already spent on the insulin-sensitive molecule. Already, 60% of the research on the molecule has been completed, according to N-Gene CEO Gábor Kálmán. If a success, the molecule could be used in drugs that could generate billions of dollars of revenue.