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Baltimore Non-Profit Helps Israeli Scientists Stake Flags in Maryland

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Years before it became cliché to observe the increasingly global nature of business, especially in the life sciences, a non-profit group of Jewish business leaders in Baltimore two decades ago began working to grow businesses in Israel in a variety of tech fields by helping them establish a US presence.
 
They hoped to not only grow their community — in their case, in Maryland — but to help scientists and other professionals who were having difficulty finding work in Israel after emigrating there following the collapse of the Soviet Union in 1991.
 
That effort has grown over the years, spawning an annual conference in Israel and the US, MarketReach America, focused on medical devices and other life sciences. Its chief aim is to introduce Israeli entrepreneurs to potential partners and locations for doing business in Maryland with an eye toward boosting a state life-sci cluster that is considered among the strongest in the nation.
 
This year’s MarketReach America effort, held Aug. 20, consisted of a half-day coaching workship in Tel Aviv followed by a two-day strategic partnering and investment conference Sept. 10-11 at the Johns Hopkins University campus in Baltimore.
MarketReach America this year was presented by the nonprofit economic development firm Maryland/Israel Development Center; the Trendlines Group of Israel, a business development and marketing consulting firm; the Strauss and Marvin Schapiro family foundations; and other sponsors.
 
The 2007 conference culminated in four deals. “Last year was great for us,” said Barry Bogage, executive director of the Maryland/Israel Development Center.
 
BioRegion News recently spoke with Bogage about MarketReach America and the challenge of attracting Israeli companies to Maryland and nurturing them into businesses with significant presences in the US.
 

 
How and why did the collaboration come to be focused on the medical device sector?
 
I’d say that’s a very timely question. We’re very focused on the medical device sector. As a matter of fact, we had a dozen Israeli companies coming to town on [Sept. 9], most of which are in the medical device sector. We started a series of conferences with Israel about five or six years ago called MarketReach America, and we started it initially saying ‘life sciences’ and then learned of the different needs that the biotech and pharmaceutical companies have from the medical device companies. And we also learned that we could really provide a lot more value to the medical device companies because they’re much closer to market. So we have [the US Food and Drug Administration], we have Johns Hopkins [University], we have a lot of companies that investors – they won’t need the tens and hundreds of millions of dollars that the biopharmaceutical companies will need, so we’re able to help the medical device companies a lot better.
 
In Israel, they kind of use the term ‘biotech’ generically. And they actually did a study, and reported that over 50 percent of their quote-unquote biotech companies are medical device companies. It’s a sector that we work with pretty heavily.
 
What kind of presence is there now for Israeli companies in Maryland?
 
We have about 30-some Israeli companies here, and they’re all in a technology field, whether it’s biotech or medical devices or telecommunications. Of course there are some defense and homeland security companies.
 
How many of those 30-some companies are in the life sciences?
 
I think about four of them; four or five.
 
Can you name them?
 
There’s a company called Medispec [that has offices in Germantown and uses shock-wave technology to develop non-invasive medical devices used in urology, cardiology, orthopedics, physiotherapy, thermotherapy, and veterinary medicine — Ed.]. There’s a company called Compugen, [which has established a US headquarters in Rockville and identifies itself on its web site as a developer of drug-discovery technology platforms — Ed.]. There’s a drug development firm that just recently opened an office here called BioLineRx. And by way of acquisition, Teva Pharmaceuticals acquired a company in Maryland in the spring, it was called Cogenesis. We actually took that company to Israel in May, and took them in to meet with the executives of Teva, and they are now committed to keeping it growing in Maryland. They renamed it Teva Biopharmaceuticals USA. And what they’re looking to do there is, Teva is a generic [drug] maker. The new company is looking to take a biotech approach to developing generics. And there’s a company in Baltimore, it’s really health care informatics, called Global Medical Networks. They’re in the [Emerging Technology [email protected]] incubator in Baltimore. And they have an online patient record keeping system, specifically targeted to diabetes patients.
 
How far along in development are these companies?
 
They’re all early-stage startups, by and large. And they’re at the stage where they need to focus on FDA approval and raising money to stay alive. We really work hard to get them matched up with scientists at Hopkins and [the University of] Maryland, in the private sector, and at [the National Institutes of Health], and so forth, where they can advance their science, get their clinical trials done, so they will have a viable product.
 
And then, since they’re such early-stage companies, they don’t need a US office right away. But if we help them out early and we establish our credibility and the value of Maryland, then I would say we try to position ourselves as being the phone call they’re going to make when the time comes that they have enough business to warrant opening up a US office.
 
If these companies are too early-stage to need an office, where would they carry out operations? Would they go to an incubator, or to a university?
 
Usually, they just travel a lot.
 
What’s drawing these companies to Maryland?
 
It’s the talent pool. They need to hire an MBA with a scientist — a microbiologist who has an MBA. Well you can find them here, or some such combination. It’s the private sector, the labs, and the university. It’s the talent they can find. BioLineRx specifically located their office here because of the guy that they hired.
 
How much has the cost of doing business in Maryland impeded companies like that from developing more of a presence in the state?
 
I don’t think that has really entered into the equation at all. The Israeli companies that come here, first of all they’re small. And the big concentrations of Israeli companies in the United States are found in Boston, in the New York-New Jersey area, here, Atlanta, and California. So they’re all expensive areas by and large, with an incremental difference between one to another. They go where they need to go for business reasons. We call it the fourth ‘C’ after their capital from investors in the area, their customers and other specific contacts like a scientific partner, and their CEO; if he’s located here, that’s where they’ll go rather than pay him to move him somewhere. Those are the reasons that we have found that the Israelis use to choose a location. It’s not like you’re putting up a big factory, and they need to look at energy costs and all that kind of stuff.
 
Is the Israeli collaboration based on a model with another country Maryland has dealt with in the past?
 
[Maryland] Gov. [Martin] O’Malley’s Transition Team report pointed out our program as a model that they could use for other countries.
 
How did your program get established?
 
It was really a joint effort of [then-] Gov. [William Donald] Schaefer, the governor here about 20 years ago, who was expanding Maryland’s international trade activity, and really joined forces with the Jewish leadership of Baltimore — some Jewish business executives who just saw common interest in promoting Maryland trade with Israel; it would help Israel and it would help Maryland. And they organized a declaration of common interest to be signed between the governor and the ambassador, who took the governor to Israel in 1989. He met with the minister of trade, and that’s where the idea came to form this joint program, this public-private partnership between the state Department of [Business and] Economic Development and the Baltimore Jewish Federation.
 
How long have you been overseeing the program?
 
I’ve been here since we’ve opened our doors in 1992. Those conversations and the initial efforts pre-date that by three or four years. In the Jewish community, which historically has provided social service assistance to Israel, in the ‘80s when the Soviet Union fell apart, there was mass immigration to Israel. The unemployment rate in Israel, with all the Russian immigrants, went up to like 20-25 percent.
 
So the Jewish community of Baltimore took a unique approach: The social services were fine, but Israel needs to create jobs. The Jewish community started a program linking itself to Israel in a sister city relationship. They saw that it worked, and then they talked to the governor and said, ‘Let’s do this’ for all of Maryland and all of Israel. That took a few years to percolate. Then in 1992, [the collaboration] was officially incorporated as a nonprofit, and they raised the startup funds for the first five years, all from the Jewish community, The Department of [Business and] Economic Development provided free office space. And then, after five years, the state government started giving us what started out as a small grant, and now it’s about 40 percent of our budget.
 
How much do you receive from the state, and what is the total budget?
 
The budget is about $450,000, and we get $175,000 from the state.
 
Where does the remainder of your funding come from?
 
The rest comes from the Jewish Federation in Baltimore. The Jewish federations are umbrella social services and fundraising organizations. Every city with a Jewish community has one. So the Baltimore Jewish Federation provides about $185,000, and then a little bit of the remainder comes from memberships, and from corporate sponsorships, and philanthropic agencies.
 
We kind of have the philosophy that a rising tide lifts all ships. When we put a Maryland-Israeli company together, presumably if they sign a deal, it’s going to be good for both sides. Each company thinks it’s going to make money out of the deal, and hopefully the deal is successful, and they do make the money, and they hire more people. And that’s what our ultimate goal is: Job creation in Israel and job creation in Maryland.
 
You mentioned Israeli companies’ interest in Maryland’s talent before. When companies from Israel come into Maryland, what else are they looking for in terms of services to help them break into the market?
 
They’re coming here as kind of their gateway into the US market. Usually what they set up here is their business development office. They’ll start small with maybe three people who are basically representing them here, in terms of trying to raise money, and trying to sell the company and its product in any number of ways: Raise money, get scientific partners, get customers, get marketing and distribution set up. And then, it’s really is just a function of their success whether and how they grow.
 
So what they’re looking for is their first foothold in the US. That’s often dictated by where the person lives that they hire to be the head of US operations; or where their investor is; or if they have a scientific partner at Johns Hopkins. It could just be familiarity after doing clinical trials with someone a year or two, and they’ve had to travel here on a quarterly basis for two years — they know the place, so [developing that foothold in Maryland] is an easy decision.
 
What change, if any, have you seen over the years in terms of the types of technologies being pursued by the Israel companies coming into Maryland?
 
It seems to me a certain extent — I don’t know whether to call it a fad or a trend — it kind of depends on what’s strong in the investment community. So I’ve seen a flood of, for a while, a ton of bioinformatics companies. Then there were a lot of fiberoptics companies. Now, there’s a lot of talk about environmental companies. Israel is particularly strong in water technology. Water is so precious over there that they have developed all kinds of technologies for keeping and preserving water. They have a big outreach effort now working with those kinds of companies. So we’re getting geared up to work in that industry.
 
The constants are the whole IT world, a lot of which grows out of the military in Israel, and medical devices. And then after 9/11, homeland security companies, because everybody looked to Israel as a leader in that field out of necessity. And with [the US departments of] homeland security, defense, and all of the major contractors — Lockheed Martin is headquartered in Maryland; Northrop Grumman’s largest division is headquartered in Maryland — they do a lot of work with Israel too. 
 
How many jobs do these companies generate in Maryland?
 
The startup companies, they’ll start up with two, three, five people, something like that. Then as they become successful, they have to add maintenance and technicians if it’s a product that needs after-sale service and maintenance, and they’ll boost their office space. And if they’re very, very successful — we haven’t had that in Maryland yet, but I’ve seen it elsewhere in the United States — they become global firms, starting out with the Israeli entrepreneurs and management, then they hire just the best talent they can find, which often is an American.
 
What effect, if any, will the reorganization of Maryland’s DBED have on your own effort?
 
Our organizational structure, because of the partnership between the Jewish community and the state, we’re set up as our own 501(c)3 with our own board. The secretary of business and economic development [David Edgerley] sits on our board. So does the economic minister out of the Israeli embassy. We’re independent, organizationally. Plus, we do successful work, so the reorganization isn’t really going to affect us. If anything, they’re boosting the international activities at DBED. That whole division of international trade has been upgraded to report to [Edgerley]. They want to boost its profit and its activity.
 
How big of a delegation are you hosting?
 
Twelve companies that combined are sending about 20 people here. And we have a whole-day conference at Johns Hopkins. It’s basically a whole-day corporate partnering and investment conference. Throughout the day, there will be a couple of different panels on raising money and developing the US market, exit strategies, and so forth. But the bulk of the day is time for the Israeli entrepreneurs to make presentations to the audience of investors, and then a poster session … we get a lot of top-tier scientists who are very curious about the new technologies coming out of Israel, which can lead to doing the clinical trials at Hopkins, which is great for the Israeli companies: Johns Hopkins is a big name, gives them a lot of credibility, helps them make money.

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