Celiac disease specialist Sitari was the first company formed under the six-year collaboration. Three were shut down and Avalon controls the other four, which aren't compatible with GSK's new R&D focus.

The partnership between GSK and Avalon has now launched six new biotechs in just over two years, each housed at Avalon’s incubator space in San Diego.

VCs and big pharma execs, speaking at CALBIO, said that even in today’s freer economic climate, investing early in startups, with an option to buy when the time is right, is still a viable business strategy.

Start-ups raised $1.19 billion in Q3 2014, 33% more than last quarter. Several reverse licensing alliances were penned; five acquisitions were signed, four in biopharma and one in the device sector.