By Rachelle H.B. Fishman
BioWorld International Correspondent
TEL AVIV, Israel - Nature abhors a vacuum. While the biotechnology industry sector attracted just a few percent of the multibillion-dollar investment spree in technology during these past few years in Israel, a few local wise men have seen this as a void to be filled and an opportunity not to be missed.
Most recently, Koor Industries, Ltd., based in Jerusalem, announced that it will invest $10 million in early stage biotechnology and life science companies in cooperation with Medabiotech of Geneva, Switzerland. Koor General Manager Jonathan Kolber said this is part of "Koor's expanding fields of activity," including $35 million in the new Polaris III venture capital fund.
Rather than being deterred by long-term delay between investment in a start-up and its realization, at least twice the five-year estimate for hoped-for big money return from investing in computers and communications, Kolber sees the "long-term perspective" and the "early initiative advantage."
Just a little over two weeks ago, the Ofer Brothers Group, of Tel Aviv, set aside $20 million and another $30 million from independent private investors for a new company called (for the time being) Ofer-Biotechnology. The forerunner of the head-first leap into biotechnology with a full heart and a full pocket was Tel Aviv-based Clal Industries, Ltd., by establishing Clal Biotechnology Industries, Ltd. which set up a $100 million investment company in July 1998, using an investment model developed under the direction of CEO David Haselkorn.
That model involved a consortium comprised of four firms committed to furnishing an investment sum over a predetermined period with the long-term view in mind. The capital is invested ad hoc in projects chosen by the consortium following an in-depth review by Haselkorn and his team.
This is smart money in a smart industry, described by Orna Berry, outgoing chief scientist of the Ministry of Industry and Trade, as an "apt business approach and infrastructure model for the field," structured to "assist at all stages through the long transition from laboratory development to industrial development."
But Haselkorn believes the government is doing too little to buoy up the approximately 130 fledgling and veteran biotech start-ups. He sees it as too little, too late, and not trusting local industry and investment leaders for advice.
Haselkorn made his displeasure public in a recent interview in the Hebrew daily Ha'aretz, and told BioWorld International that the government is "taking baby steps and avoiding the bigger moves needed to invigorate the industry," while Israeli and international private venture capitalists and investment companies are flowing into the opportunities opening up.
Haselkorn opposed the Ministry of Industry and Trade hiring the U.S. consulting firm Monitor to make a large-scale survey of the biotechnology sector with the mandate to "determine the state of biotechnology in Israel in order to assist the government to determine how to allocate funds to boost this sector's development," saying that "the $400,000 fee could have been far better invested in doing just that. The government should invest in setting up and providing the essential services and infrastructure, such as GMP-manufacturing facilities, to serve the practical needs of young companies."
Monitor began working last month, selected by a ministry panel headed by Berry, and also is assisting matchmaking between Israeli and foreign companies at this week's BIO conference in Boston.
Haselkorn, a biophysicist by training, also serves as chairman of D-Pharm, Ltd. in Tel Aviv, which recently signed an exclusive license agreement with large license fees, milestone payments and investments from Shire Pharm aceuticals Group plc, of Andover, UK, to exclusively develop and market DP-VPA (designated SPD 421 by Shire), D-Pharm's new high-potency, low-toxicity analogue of valproic acid, which just completed Phase I studies successfully.
The Clal consortium also owns 28 percent of Compugen, Ltd., of Tel Aviv; 38 percent of Haifa-based Polyheal, Ltd.; 15 percent of NST, of Petach Tikvah, specializing in "interventions in the processes of cell death," with Haselkorn as its chairman. Haselkorn is working on a deal that could be worth over $100 million, including future royalties, with a leading European pharmaceutical firm.
Haselkorn sees Israeli firms active in harnessing the results of the Human Genome Project, but realizes that this could occur in stages and in multiple steps. "Some Israeli firms, like Compugen or QBI, Ltd. in Rehovot, could make essential methodological bioinformatic contributions to analyzing post-translational processes, protein variations in different tissues, in healthy and in diseased conditions." He sees other companies as "major players in protein-directed drug discovery, e.g., tailored to a specific protein encoded by an oncogene or other disease-related gene," such as Interpharm Ltd. in Tel Aviv, and Biotechnology General and XTL Ltd., both in Rehovot.
But Haselkorn wants to help make sure that Israel is prepared on a national level to harvest new information compiled from the research on human gene mapping. "We can already think about the creation of private consortia involving Israeli research firms able to cooperate on an international level. Government policy - not preferential government money - can provide the right investment conditions to allow Israeli firms to play a greater direct role in such research and development projects, and with an understanding and ability to ride through the financial investments and risk entailed," he told BioWorld International.
"We cannot stand on the side and wait for Prince Charming, some international giant pharma ready to set up a research and development institute here. Today, there is a greater awareness and willingness on the part of venture capital and investment firms to invest in biotech locally. And, we come with local understanding of the difficulties that the sector experiences, its needs in terms of skilled manpower, management, as well as strategic cooperation and globalization," he says.
In short, biotechnology has a potentially stunning growth curve that can help all other industrial sectors. His idea is "to follow a neutral policy in giving support to all worthy sectors, instead of prioritizing one sector, but to invest in large, even massive, national infrastructure projects combining several sectors that no single institution alone can muster. Allocating $100 million to $150 million over the next five years to such a national multidisciplinary project would facilitate tremendous leaps of technologies, and of actual product realization." He points to bioelectronics, fusing developments in computer technology, microelectronics, electroptics, and biology, for the development of biochips, computer elements, sensors, nanotechnology, and other undreamed-of applications.