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FEATURE: As Genomics Frenzy Rages, Israel Seeks Place on the Map

JERUSALEM, Dec 19 – Since Compugen’s founding in 1993, the company has stood out as the only Israeli genomics company to grab worldwide attention.

Now center stage promises to become  increasingly crowded as a number of Israeli biologists, physicists, and bioinformaticists look to set up shop in the hopes of exploiting the genomics frenzy.

“The landscape has changed a lot in terms of the number of companies and the quality,” said Batsheva Elran, a general partner at Concord Ventures, a Tel Aviv-based venture capital company that has recently started seeking out investment opportunities in the local genomics market.

Over the past few months especially, the number of genomics start-ups has begun to increase, and many researchers from places like the esteemed Weizmann Institute of Science are also hoping to commercialize their ideas.

The requisite attention and money have been forthcoming, with a number of local biotechnology and general venture capital funds starting to invest in genomics ventures.

Companies like IDGene and Bio-I.T. have both successfully raised millions of dollars in start-up funds from venerable institutions and individuals worldwide. IDGene, a start-up that plans to score SNPs based on DNA samples gathered from Israel’s homogeneous Ashkenazi population, has raised a total of $10 million from investors such as the Wellcome Trust and Apax-Europe.

And Bio-I.T., a bioinformatics company, raised $3 million from investors such as Israel’s Yozma venture capital group and U.S.-based Orbimed Advisors.

Genomics Plays Catch Up

Given the growing worldwide enthusiasm for genomics over the last couple of years and Israel’s reputation as a major high-tech player, this flurry of startups may come as no surprise. Instead, some industry observers may wonder why Israel has been so slow to catch the genomics wave.

The reason for this delay lies in a paradox.

According to Jonathan Medved, of Israel Seed Partners, a venture capital firm that invested in Compugen, there are more scientists and academics in the life sciences than there are academics and professionals working in the computer and communication sectors. Yet, in terms of the number of companies, the ratio favors the computer and communications industries by nine to one.

Over the last few decades, Israeli entrepreneurs, most of whom got their high-tech start in the army, built up the country’s technological industry by developing civilian applications for military technologies.

Israeli entrepreneurs’ ability to move quickly to assess new technological needs and to develop top-notch solutions put the country on the high-tech map. Companies like CheckPoint Software, a maker of Internet firewalls, and Nice Systems, a provider of multimedia digital recording products, have become global leaders within their niches.

Most of the companies that did succeed, however, were in the information technology, telecommunications, and Internet sectors.

The lack of a military connection is only one reason for the lack of Israeli genomics companies. Medved and others familiar with the Israeli market attributed the shortage to the fact that global pharmaceutical companies have historically eschewed Israel.

“During the years of the Arab embargo, no pharmaceutical companies would come here,” said Medved, sitting in his Jerusalem office. “Israelis have a lot of IT exposure because a lot of international companies – the Intels, Motorolas, Ciscos, Nortels, 3Coms – came here. Their people move back and forth and get training. They’ve been exposed to international companies before starting their own companies.”

“In the life sciences Israel is simply lacking a whole managerial class,” Medved added, noting that that he was less intimidated than some other venture capitalists to invest in genomics due in part to his partner’s experience at a British biotechnology fund.

Some Israelis compensate for their inability to gain experience locally by going abroad. Ariel Darvasi spent two years abroad at SmithKline Beecham before he started his company, IDGene.

“I had the idea of setting up a biotech company before I joined SB (SmithKline Beecham), but my thinking was very naïve,” said Darvasi, who admits that it would have been “very difficult to impossible” to set up his company without big pharma experience.

“Being at SB allowed me learn the needs of a big pharma and also familiarize myself with many biotech companies and how they operate,” he said.

Up and Coming

While Israeli talents such as Darvasi are returning home to launch their new businesses, some local academics are also trying to take their ideas from the lab to the boardroom.

As the ongoing Israeli-Palestinian conflict raged along the country's edges one recent morning, researchers at the Weizmann Institute located in the heart of the middle class suburb of Rehovot busily worked on such tools as clustering algorithms, web-based search engines for genomic research, and protein studies that may bolster tomorrow’s proteomics technologies.

Walking through the quiet halls of the campus’ physics building, Professor Eytan Domany spoke of how he hoped to commercialize a two-way clustering algorithm designed to glean important information from the mounds of genomics data generated from such tools as gene chips.

Doron Lancet, head of the institute’s Crown Human Genome Center, later explained how his group of researchers is developing a web-based interface designed to give users access to biomedical information regarding the function of human genes.

And Steven Karlish, a professor in the chemistry department, said that he had recently adopted a genomics approach to studying protein-protein interactions in renal cells.

Established companies such as Compugen and venture capitalists from around the country are keeping abreast of the ideas floating around the Weizmann Institute and other universities.

But Batsheva Elran of Concord Ventures, who recently toured the United States in search of advisors who could work with her to evaluate Israeli technologies, cautioned that the challenge of honing in on the ideas that could be developed into commercial applications still remains.

“We still have to prove ourselves in genomics,” Elran said. “If we start to create some terrific companies then we’ll be on the map.”

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