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FLORIDA: Biotech Players Seek Capital FAU professor joins the hunt By Marcia Heroux Pounds - Business Writer Posted November 14 2004 Chemistry professor Russell Kerr toiled for 13 years in a Florida Atlantic University lab developing a topical drug for itchy, irritated skin derived from molecules collected from Florida's reefs. Over the years, more than 40 students have worked with him on the project at the Boca Raton campus. His plan -- to produce the molecule in the lab for therapeutic drug production rather than take it from the environment -- is finally being realized through collaboration with a business partner and a chemist from The Scripps Research Institute in La Jolla, Calif. Together they founded Tequesta Marine Biosciences and are now seeking venture capital. "It's very, very exciting. I'm delighted. Some very talented Ph.D. students who like living in Florida can stay in Florida. In the past students have gone off to California and the Northeast," Kerr said. The FAU-born company is an example of the scientist-entrepreneur partnerships that Florida is counting on in building a biotech community. But ventures like Tequesta need money to finance their plans. Last week's SE Bio 2004 conference in Miami offered a look at how investment money will match up with promising start-ups, now that Scripps is planning to build a research campus in northern Palm Beach County. The conclave was the first large-scale gathering of venture capitalists and biotech entrepreneurs in South Florida since plans for Scripps began moving forward. At the conference, Tequesta was allowed 12 minutes to make its pitch to raise $1 million to $2 million. The company wants to hire key employees, obtain licenses for patents held by other universities, and start making drugs for the over-the-counter and prescription market. It expects to have an over-the counter product on the market in three to five years -- a relatively short time frame for a biotech venture. Tequesta was founded shortly after Scripps signed its deal to come to Palm Beach County last year. Scripps chemist K.C. Nicolaou came to visit FAU in search of collaboration. Kerr already was working on a business plan with Rhys Williams, a venture capitalist and lawyer who was introduced to him by FAU's technology transfer director Jeanie McGuire. Williams, now CEO, was formerly vice president of finance for Ixion Biotechnology, an adult stem cell firm near Gainesville that is researching therapies for diabetics. The Scripps connection was exactly what was needed to raise the profile of the new company, which is the first to come out of FAU's Center of Excellence in Biomedical and Marine Biotechnology. For Gov. Jeb Bush's vision of a Florida biotech cluster to be realized, such collaborations need to happen thousands of times over. Then they need to progress to companies that can take hugely profitable products to the marketplace. Nearly 400 people showed up at the conference. Venture capital firms came from the hottest biotech markets around: North Carolina, California, New Jersey, New York City and Washington, D.C. Venture capital firms raise money from wealthy individual investors, investment banks and other financial institutions to invest in high- growth startups. In biotech, investors look for ventures that involve top scientists and novel ideas. The big players who were there included Cardinal Partners of Princeton, N.J., and Intersouth Partners of Durham, N.C. They were curious about Florida's plans and were hungry for deals. "We have our eye on Florida," said Garheng Kong of Intersouth. "The dollar-to-idea ratio is very good. Florida is untapped." He said Intersouth would be looking at biotech ventures that offer multiple applications and have a short time frame to clinical trials. Cardinal Partners also is scouting for investments in the state. Cardinal partner John Clarke has started four companies over the years with Scripps scientist Paul Schimmel, who has joined Scripps Florida. "When he decided to make the big jump, he said I had to pay attention to it, and I always pay attention to Paul," Clarke said. Florida has laid the groundwork for a biotech cluster with a $310 million investment in Scripps Florida, which plans a northwestern Palm Beach County campus for research. The investment in Scripps is designed to attract new biotech business -- from scientist/entrepreneurs to large pharmaceutical companies. Florida also is investing $350 million to $1 billion of pension funds through venture firms in bioscience and other investments. "It's a long-term process, building a biotech community," Clarke said. The challenge, he said, will be "keeping up the level of enthusiasm." Ongoing investment One obstacle is a funding gap, according to David Day, director of technology licensing at the University of Florida and the chairman of SE Bio 2004. Day said there's a gap for taking science from the petri dish to the animal testing stage. "There's nobody who funds that," he said. To be successful, there has to be a continual investment, Day said. "[Florida] has a chance to be in the top dozen. We don't have a chance to be one of the top two," he said. There will be competition from more established biotech areas such as North Carolina's Research Triangle Park. Some Scripps scientists will want to stay in California, which is establishing itself as the U.S. center for human embryonic stem cell research with a state-backed initiative to spend $3 billion over the next decade. Many scientists think stem cells could someday be used to repair crippling spinal cord injuries and treat an array of diseases, including diabetes and Parkinson's. "That's going to help them retain talent," Day said. "Stem cell research was in danger of going overseas." Making the pitch In Florida, as in any biotech community, companies will have to prove themselves worthy of financing. After so many investors got burned in the Internet bubble, venture capital firms are looking for firms that generate a steady stream of revenues. But in the biotech world, revenue and profitability are often lacking for a number of years. Companies most likely to attract venture capital are those that hold patents and whose products show broad marketplace potential. One such candidate could be Boca Raton-based Intercept Biomedical Technology, which presented at SE Bio. The company is a competitor to Medtronic in the field of implantable drug delivery systems. Intercept has come up with a flexible design for its implant that Chief Executive G.L. "Jud" Carlson thinks will be more palatable to patients. Carlson, who has 20 years' experience working for competitors including Medtronic, sees a $400 million market for Intercept's product, in sufferers of chronic pain and liver cancer. Intercept expects to market the device to physicians first in Europe, where the implant already has regulatory approval. There also could be a quick exit for investors: He expects the company to be acquired within five years. From its broad market to experienced management, Intercept would appear to be a classic candidate for venture capital investment, but competition from other ventures and other states is stiff. "If we raise $6 million, that may be all the company needs to raise," Carlson told investors at SE Bio. If Intercept and Tequesta use their seed money wisely, they may be able to grow flourishing businesses. And Florida, which has sunk hundreds of millions into a bet on biotech, can only hope that scores of others won't be far behind. Marcia Heroux Pounds can be reached at [log in to unmask] or 561-243-6650 SOURCE: Fort Lauderdale Sun Sentinel, FL http://tinyurl.com/6s34t * * * Murray Charters <[log in to unmask]> Please place this address in your address book Please purge all others Web site: Parkinsons Resources on the WWWeb http://www.geocities.com/murraycharters ---------------------------------------------------------------------- To sign-off Parkinsn send a message to: mailto:[log in to unmask] In the body of the message put: signoff parkinsn