BioWorld International Correspondent

ZICHRON YAAKOV, Israel - "Despite the near freeze in hi-tech investment worldwide and the on-again, off-again heating up of the geopolitical conflict here in the Middle East, the world-class achievements in Israeli biotech have made this a great year," said Yaffa Beck, president and CEO of VentuRx Holdings, an Israeli biotech consultancy firm located in Tel Aviv.

Beck, chairwoman of Bio-Tech Israel 2003, told BioWorld International that the meeting, scheduled for May 13-15 in Tel Aviv, is structured like biotech development itself, an "ongoing internal dialogue among scientists, business executives, financiers and government," so the meeting is "multifocused and multitracked to showcase the many stars and start-ups, which grew out of the nearly unparalleled concentration of Israeli life science knowledge capital fostered by government backing" mainly from the Ministry of Industry and Trade's Office of the Chief Scientist, she said.

One without the other has no impact. "Following the global trend, start-up venture funding declined, but not as steeply in Israel as in the U.S. or Europe," said Zeev Holtzman, chairman and CEO of Giza Venture Capital, heading the IVC organization, "indicating that there is still substantial interest in Israeli companies."

Efrat Zakai, IVC director of research, told BioWorld International that during 2002 private Israeli high-tech companies raised US$1.14 billion from local and foreign venture investors, a 43 percent drop from the $2 billion raised in 2001. Zakai added that life science investments attracted an actual $171 million in 2002 compared to $310 million the year earlier, with biotechnology attracting 11 percent of that, diagnostics 10 percent and medical devices 78 percent.

In the first quarter of 2003, the life sciences sector jumped to an unprecedented 33 percent of the deals, or $27 million (19 percent of the total sum of investments), but biotechnology brought in just 2 percent while medical devices took the remaining 17 percent - 10 deals totaling $24 million (including one $13 million transaction), said Joseph Fellus, senior partner of Tel Aviv-based Kesselman & Kesselman PricewaterhouseCoopers, quoting from the Money Tree survey.

Hagit Messer-Yaron, outgoing chief scientist of the Ministry of Science, pointed out that venture funding is a limited measure of the success of a biotechnology endeavor.

"The balance between the interests of the investors, industry and academia should be controlled by the government to maximize the public good," said Messer-Yaron, speaking to BioWorld International from her office in the department of electrical engineering systems at Tel Aviv University.

How? Back to money. During the last decade, more than 40 percent of the Israeli government's support as R&D grants, industry incubators and tax holidays went to the life sciences, Beck said. The beginning of biotech as a serious endeavor was almost entirely funded by YOZMA, a government funding initiative that jump-started Israel's entire venture capital industry in the 1990s, she said, followed by technological incubators, and since March 2001, with the publication of the Monitor report on biotechnology, the government has kept its long-term perspective, keeping the sector vibrant and focused.

Among the outstanding achievements Beck mentioned were Can-Fite BioPharma Ltd. in Petach Tikva, for its oral anticancer and autoimmune drug; Palo Alto, Calif.-based Medgenics Inc. and its wholly owned subsidiary, Biogenics Ltd., in Misgav, for its millimeter-sized, tissue-based, protein-drug delivery BioPump; Raanana-based BrainsGate Ltd., for its core technology to pass drugs into the CNS; and Ashdod-based Procognia Ltd. (formerly Glycodata) for its technology platform to classify and deliver glycomolecule-based drug targets and lead compounds.