JERUSALEM - Israelis have been lamenting their limited role in the Human Genome Project, but Geller Ehud, general partner in Tel Aviv-based Medica Venture Partners Ltd., the original investment fund dedicated solely to biotechnology and biomedicine, told BioWorld International that Israeli companies have been "instrumental in creating the genomics, proteonomics, cell system analyses and bioinformatics tools that are critical to further advances."

"These virtual biotechnologies focus and shorten drug discovery and development," he said. "Many more tools will be required to fully exploit the genetic revolution" and "indeed local Israeli industry is going in that direction."

Companies such as Jerusalem-based Synergix Ltd. and Tel Aviv-based Compugen Ltd. are able to virtually shuffle nucleotide blocks and pieces to virtually generate polypeptide chains. Only those protein molecules that fold into the appropriate shape, that are effective in the computer models, are actually synthesized for the usual biological laboratory testing, "saving an enormity of time and cost," Geller said.

"At present we have only a draft gene map, which means we still cannot start making progress in developing drugs in a systematic fashion, or even in development based on trial and error. So, a most promising area is development of biotechnological tools as a business in itself" which is "especially suitable for Israel, since toolbox companies can grow using less capital than drug companies, and without the need for regulatory processes," Geller told BioWorld International.

Geller also said other Israeli companies in the bioinformatics toolbox field, such as Tel Aviv University-based IDG Ltd. and BioIT Ltd., start and grow with knowledge in academia, an essential partner, but these start-ups can proceed more rapidly than drug development companies to commercial application, incorporation and business development, because drug development companies must traverse all stages of proving a safe and effective product.

Biotechnology in Israel still only captures just 7% of all venture investments, but one by one, the established "old economy" veteran Israeli concerns are beginning to invest in biotechnology and life sciences. The investment structure, activities and management style of Tel Aviv-based Clal Biotechnology Industries (CBI), under the management of David Haselkorn, is a model for consortium investment that many have emulated since CBI was founded in mid-1998 with $100 million of smart money through the direct involvement of Clal Biotechnology's management system.

CBI's investment policy is to make investments of $10 million and more in a limited number of companies at various stages of relative maturity, in Israel or overseas, in private or public companies. CBI has invested in Rehovot-based DPharm Ltd., Compugen Ltd., Petah Tikva-based NST Ltd. and Haifa-based Polyheal Ltd.

Supplementing investments and arranging for strategic partnering is the U.S.-Israel BIRD Foundation (BIRD-F), which this year supported 11 American-Israeli projects worth $31 million.

Dov Hershberg, BIRD-F executive director, is "committed to give a boost to biotechnology" in the same way that it did for e-tech in the formative years of the information technology sector.

This week, David Kimbrell, CEO of Lawrence, Kansas-based contract pharmaceutical company Oread Inc., visited Israel as a guest of BIRD-F "to locate Israeli biotechnology companies seeking to conduct initial stage R&D on an outsourcing basis," said Kimbrell. Until four years ago, when Harlan Biotech Israel Ltd. was established in Israel and set up toxicological laboratories in Rehovot, there were no Israeli laboratory facilities qualified to conduct such studies.

"The lack of facilities in Israel for new drug testing is one of the main bottlenecks in the local biotech industry, and the motivating reason for inviting Oread," Hershberg said.

Nati Ezov, a veterinarian by training and general manager of Harlan Biotech Israel Ltd. (HBI), said that is why Harlan Israel Ltd. in Jerusalem - an independent 8-year-old company affiliated with Indianapolis-based Harlan International Inc. - established the Rehovot-based biotech subsidiary four years ago.

"We are still the only toxicological laboratory in Israel that has received GLP [good laboratory practice] accreditation by the OECD [Organization for Economic Cooperation and Development] to comply with the U.S. FDA and Environmental Protection Agency standards. This new area in Israel could really nurture biotech and biopharma development here," Ezov said.

A joint project of the privately owned Oread and Jerusalem-based start-up Mindset Biopharmaceuticals Ltd. to develop treatment for Alzheimer's disease was just approved by BIRD-F. Hershberg told BioWorld International "the visit of Oread is intended to be the first of many" as everyone involved was enthusiastic about the possibilities.

These investments and meetings have been occurring on the backdrop of an amendment to the pharmacy regulation that was passed by the Knesset 18 months ago to allow parallel drug imports and signed into law last week by Minister of Health Shlomo Benizri. The revision will throw the current controlled pharmaceuticals market open to competition, overturning monopolies that have governed the biopharma sector since the country's founding.

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