BioWorld International Correspondent

ZICHRON YAAKOV, Israel - The last act of Carmel Vernia, outgoing chief scientist of the Ministry of Industry and Trade, was the announcement late last month of the winners of the February tender for the Israel's first two privatized biotech incubators: the Einav group, headed by the Ofer Brothers, and the RAD Bioscience incubator group, headed by brothers Yehuda and Zohar Zisapel.

The Einav group bid, organized through Ofer Technologies Ltd. in Tel Aviv, includes its Yozma Venture Capital Funds in Ramat Aviv; Israeli biotechnology pioneer Bio-Technology General, with headquarters in Iselin, N.J., and R&D and manufacturing in Rehovot; Genzyme Corp. in Cambridge, Mass.; MPM Capital in Boston; The Frankel Group Inc. in Cambridge, Mass., and its Swiss affiliate, Equity4Life in Zurich; Medica VC in Tel Aviv; and the contract research companies Harlan Biotech Israel Ltd. in Rehovot, Analyst Research Laboratories Ltd. in Rehovot and IMI (TAMI) Institute for Research and Development Ltd. in Haifa.

"We are thrilled that these leading American and European companies are collaborating in this endeavor because it is crucial for the success of Israeli biotechnology to involve the interests of multinational firms. That so many major firms signed up is a good omen for our industry," said molecular biologist Nurit Eyal, in charge of life science investments of Yozma VC Fund.

Eyal and Lihu Avitov, CEO of Naiot Technological Center in Nazareth-Illit, a private incubator within the Ofer Brothers group, will co-manage the Einav incubator, to be established in Rehovot, close to the Weizmann Institute of Science - the root source of numerous biotechnology start-ups, which was a strategic consideration in the site selection, Eyal told BioWorld International.

Yael Weiss, medical and business development manager at Genzyme Israel, said, "Genzyme Corp. will put all of its experts to the service of the incubator. Our interest will grow with the projects. At the beginning we will be actively involved in due diligence regarding which projects to choose. We will also assist in the investigation of patent and intellectual property issues, and give regulatory assistance, when the time comes."

The RAD Bioscience incubator group includes Merck KgaA in Darmstadt, Germany; Star Ventures Managementgesell-schaft MBH in Munich, Germany; TVM Techno Venture Management in Boston; investment banks Piper Jaffray and Unterberg in Minneapolis, and C.E Unterberg Towbin in New York; and Scientia Health Group Ltd., a U.S. incubator of biotechnology firms in New York. The new incubator will be established in RAD's Har Hotzvim offices in Jerusalem.

Rina Pridor, veteran head of the Technologial Incubator Program in the Office of the Chief Scientist of the Ministry of Industry and Trade, which placed the tender, emphasized that "unlike the other technological incubators, involvement of non-Israeli industry and service partners was built into the consortium, as a means to help the projects succeed to application in the global marketplace."

Governing rules were also fit to biotechnology, which needs longer time to develop and larger investments, as well as greater flexibility and cooperative interaction, Pridor said. So instead of two years and $400,000 in the high-tech incubators, projects in the new privatized biotechnology incubators can get support for three years with $1.8 million.

Each of the four finalist consortia put up $20 million in equity, gave at least six years of funding commitment to operate the incubator (with government loans at "very generous terms"), and demonstrated proven managerial and scientific capability. Foreign interests can hold up to 20 percent of equity.

Included is a loan up to 50 percent of total cost to build a central laboratory and service center for each incubator, with the government promising $200,000 per year for six years for equipment. "The hope is that the incubator projects will be so successful that the industry partners will pay back the loans and take over after the government support ends," Pridor told BioWorld International.

Vicki Rabenou-Gura, who will manage the RAD Bioscience incubator, said it is "natural that partners who invest their own money would be more proactive and work harder to select the best projects and see them through to succeed."