Eight Israeli life science startups will establish their worldwide headquarters in Richmond.
“This is clinical and scientific economic development,” said Donna Edmonds, the head of the nascent Virginia Biosciences Commercialization Center (VBCC), an off-shoot of the Virginia BioTechnology Research Park that helped lure the companies to town.
The Israeli companies – which make all sorts of healthcare products from wound care treatments to special surgery devices – have no trouble inventing aand researching new gizmos. Israel has a well-known entrepreneurial culture and registers more patents per capita than any other country in the world.
It’s in the commercial and market development that the Israelis can use some help, Edmonds said. The U.S. contains more than half the global healthcare market, and Israeli companies need access to that market in order to turn new ideas into profitable biotech companies.
Enter Richmond. In October, a local delegation went to Israel to recruit new blood for the downtown BioTech Park. The VBCC helps the companies with commercial launch, which means assisting with hiring, planning and networking, amongst other things.
On Thursday, Edmonds and BioTechnology Park President and CEO Robert Skunda told the a Venture Forum luncheon that Richmond is positioning itself as a center for biotech research, competing with larger cities like Boston, New York, Philadelphia and the Research Triangle (in Raleigh-Durham).
The companies will help Richmond expand its biotechnology sector, which Edmunds said cannot grow solely by relying on spin-offs from VCU. The Virginia BioTechnology Park currently employs around 3,000 people in 44 private companies and five nonprofits on 34 acres downtown.
By coming to Richmond, the Israeli companies also gain access to VCU clinicians, who can help them set up and complete clinical studies, and to major healthcare distributors McKesson and Owens & Minor.
Further sweetening the deal, the Israeli companies can also receive additional funding. A new $3 million Israeli Opportunity Fund will pool local venture capital to help the Israeli companies grow. That fund is still in the planning stages. Carl Johnson, a former president of the Venture Forum who runs NBI Advisors, said the new fund could be a good way for smaller investors to gain access to various startups.
“This allows people to invest in angel deals on a diversified basis,” Johnson said.
The Israeli companies already have drugs or products in some stage of FDA approval, but they still need cash.
“Any growth company needs access to capital to grow,” Edmonds said. “Therefore, having a community which is willing to and able to help support from an investment perspective, and which provides a high potential rate of return, makes our area more attractive,” Edmonds said. (Listen to a Edmonds on a podcast here)
None of the Israeli companies have actual operations in Richmond, but Edmonds said she will be hiring three or four employees in 2008 on behalf of the Israeli companies, including a director of clinical affairs and a national director for sales and marketing for Enzysurge, which is developing an apparatus for treating chronic wounds. Edmonds is also searching for an operating CEO for another company.
“Each company is committed, and each company plans to build an employee base here,” she said.
ImmunArray, which produces products that detect metabolic diseases among other things, plans to establish a laboratory at the Park that will employ around 70 people, Edmonds said.
Richmond is well positioned for such companies because it’s similar in size to some Israeli cities and has a welcoming local Jewish Community, Skunda said. The Commercialization Center, meanwhile, has partnered with one of the top Israeli biotech incubators, which should lead to a pipeline of future Israeli companies coming to Richmond.
Skunda added that the model applied to Israel is “translatable and transferable to other countries,” which could continue to strengthen the park and its role in the local economy.
So what are the companies like:
At the Venture Forum luncheon, Richmond orthopedic surgeon Dr. Kenneth Zaslav explained some of the cutting-edge (no pun intended) products of a company called Virtual Ports, which uses a small hole to deliver tools necessary during laparoscopic (involving tiny camera) surgery.
Generally, surgeons have to extract their camera from time to time because the scope gets foggy. That’s a problem, Zaslav said.
“It’s a way of bringing tools into the abdomen to make life easier for the surgeon. Fifteen times a case, the surgeon has to pulls cope out of abdomen, loses the whole field of view, and a nurse rubs a tip with rag. Then he puts it back in,” Zaslav said.
“Obviously (there’s an) increased infection risk. It takes time away from surgeon — looking at screen and back in the virtual world.”
The product, called EndoClear, attaches to the abdominal wall, opens on right corner and provides little rags for cleaning the scope. That way the surgeon does not have to yank out the scope during the procedure.
”You’re working on gall bladder, the scope gets dirty. You move over one inch, rub (the camera lens) on the Lunar Lander (the rags), and go right back to work,” Zaslav said.
“How simple is that. No American I know thought of it.”
ADDENDUM: After the original version of this story ran, Udi Gordon, a partner in Virtual Ports, emailed me that the company will move to Richmond, “Upon completion of the investment from the group of private investors from Virginia, we will establish the actual commercial plan and can provide updates as that proceeds.”
The other Israeli companies are:
State of Virginia woos Israeli life science companies