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QB3 Eyes Awards to Startups in First Quarter 2010

This is an updated version of a report published by GWDN earlier on Dec. 23.

NEW YORK (GenomeWeb News) – The California Institute for Quantitative Biosciences, or QB3, is ringing in 2010 by working to grow its base of limited partners willing to invest in startups — with the first such award just weeks away — and to expand its portfolio of early-stage companies being nurtured in its incubators.

QB3's Mission Bay Capital LLC is on track to award its first half million dollars or so in seed funding during the first quarter of 2010. Mission Bay Capital is in discussions with one additional LP, "and we hope to attract others in 2010," Douglas Crawford, QB3's director of industry alliances and associate executive director, told GenomeWeb Daily News.

Mission Bay Capital's eight limited partners enabled the firm to raise a total $7.5 million in two offerings during 2009.

"We'd love to get to somewhere between $10 million to $15 million, but we're pretty happy where we are right now," Crawford said in a wide-ranging interview about QB3's initiatives for the coming year.

The firm's goal is to award capital to "more than 10 companies" that will receive an average $500,000 in seed funding, Crawford said. Mission Bay Capital is expected to approve a handful of investments over the next three to four years, he said. "Three to four are possible, and I would say we'd be satisfied with two or more.

"Right now, our big ambition for Mission Bay Capital is to make our first investment. We have several exciting companies we're tracking right now," Crawford added.

Those companies, he said, include startups specializing in "a research tool for enhancing high-throughput screening," one startup "in the wings, and one in the very near term" that are focused on developing protein therapeutics platforms, and startups in biotherapeutics and biofuels.

"Our original mission was to have one third (of startups) in synthetic biology and biofuels, one third in new generation biotherapeutics platform technologies, and one-third in research tools or medical devices," Crawford said. "Those are the big buckets, the way we had imagined how our investments would break out, subject to what innovations cross our transom as well."

Crawford, who along with QB3 Executive Director Regis Kelly also serves as unpaid directors of Mission Bay Capital, said the firm's goal remains to award capital to 15 startups that will receive an average $500,000 in seed funding.

By setting a 10-year timeframe for the fund, rather than maintaining an evergreen fund, Mission Bay Capital hopes to sharpen its focus on returns for the limited partners, as well as liquidity events, Crawford said.

QB3 — which includes the University of California's San Francisco, Berkeley, and Santa Cruz campuses — has more than 200 researchers between the campuses, and operates on a $5 million subsidy from the state. The institute expects to maintain its current subsidy and headcount, which includes 30 administrators and staff listed on its web site.

Earlier this month, QB3 redesigned and relaunched that web site, hoping to better showcase the institute's full range of programs.

On the research side, Crawford, said, QB3 hopes in 2010 to conduct in collaboration with GE Healthcare its first imaging within humans using hyperpolarized carbon-13, a stable, naturally-occurring isotope of carbon, to enhance up to 70,000 fold the MRI signal.

"We now have two hyperpolarizers for pre-clinical development, and we have a human hyperpolarizer, and we have very large MRI and NMR facilities, 600 megaherz wide-bore, where you can control the probe's condition, so you can image live cells or even animals," he said.

QB3 also hopes to see increased use of the genome sequencing center at UCSC, for which it provided key funding. The center recently began accepting samples from investigators at other academic institutions as well as regional biotechnology companies.

In addition, QB3 is planning in 2010 to grow its family of 16 startups housed at its incubators within San Francisco's Mission Bay campus. Those incubators are "The Garage," the 2,500-square-foot space that houses six companies, and a 10,000-square-foot space that houses 11 startups one block east. That space is within a section of FibroGen's headquarters at 409 Illinois St., the 239,000-square-foot building to which the developer of recombinant collagen and gelatin for medical device and pharmaceutical uses, relocated its headquarters more than a year ago.

Some 7,300 of the 10,000 square feet at FibroGen is now occupied, company spokeswoman Laura Hansen told GWDN. The space could be expanded, Crawford said, if it continues to attract startups like the newest arrival, the drug delivery technology developer Delpor.

"We hope to see something in the order of maybe 15,000 square feet there," Crawford told GWDN. "I would love to see half a dozen to 10 more companies by the end of next year in the network. If we could get to 25 or more companies, that would be fantastic."

Since Oct. 1, Crawford added, "I have had 19 inquiries for space come in to me. Not all of those will convert into leases, and some of those are inquiries from companies filing SBIR grant applications, so we are awaiting funding on their part. But it shows an intense level of interest from young entrepreneurs to start bioscience companies."

QB3 is hoping the startups team up with Mission Bay's largest tenants such as Celgene, which expanded its space there in 2009, and Nektar Therapeutics. Nektar plans to move this summer from San Carlos, Calif., into a 102,283-square-foot space it will sublease from Pfizer.

Hansen told GWDN on Wednesday her company is also looking to add space at the incubator in the new year: "We are targeting up to 12,000 square feet for 2010."

Crawford said QB3 in 2010 will continue to examine whether startup demand for space warrants creating new incubators within the Bay Area: "Stay tuned. We'll see what we can do."

On another initiative, QB3 has yet to have its role defined in a joint degree program in translational medicine being planned by UCSF and UC Berkeley, an idea suggested by Intel co-founder Andy Grove last month at a conference hosted by the institute.

The program could combine UCSF's biomedical research with Berkeley's engineering programs. "It's something we're intensely interested in, one we wholeheartedly believe in and would love to help in as much as we can," said Crawford.