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New AZ VC Fund, Non-Profit Aim to Turn State’s Bio Research Skills Into Big Money

Arizona this month unveiled a dedicated $20 million bioscience venture fund and a $21.5 million non-profit funding entity as part of recent efforts by state officials and other stakeholders to help translate Arizona’s booming academic bioscience research capabilities into a booming industry.
Together, the initiatives hope to expand a number of public and private programs developed over the past several years aimed at augmenting life sciences research and expertise in the state, particularly at Arizona’s universities and non-profit research institutes.
In addition, the two new programs may be able to work together to spin out promising academic technologies into new companies and keep them in the state, according to officials involved with the programs.
The first initiative, announced last week, is called Translational Accelerator, or TRAC, a $20 million private bioscience venture group backed by various Phoenix-area bioscience and investment professionals.
Claiming to be the state’s first venture fund specifically targeting early-stage bioscience companies, TRAC said it plans to dole out its investments in $500,000 to $2 million chunks to biotech firms either located in Arizona or planning to relocate to the state.
Eric Tooker, president and CEO of Scottsdale-based consulting firm Medical Consultant Services, and one of four TRAC managing partners, told BTW this week that the fund will likely make no more than eight to 10 investments initially using the $20 million fund.
“We will make an investment, and then we will try to keep a certain amount dedicated to that investment for follow-up investments on a case-by-case basis,” Tooker said. “That’s very important for us to do. So that’s going to limit the number of investments we can do.”
These investments, Tooker said, will primarily focus on companies developing diagnostics, services, and treatments in oncology and neurology.
“Arizona is trying to make great strides to become a player in the biotech field,” Tooker said. “We have lots of assets here in Arizona through the universities and organizations like [the Translational Genomics Research Institute]. We have a lot of expertise right here in the state both in oncology and the neurosciences. What we have lacked is the funding for companies that are either born here in Arizona, or that want to come here if they get funding in those areas.”
Tooker added that the fund is intended to play to the state’s research strengths and “to commercialize that research and keep the companies here.”
The TRAC fund is backed primarily by an undisclosed investment from the Flinn Foundation, a 40-year-old privately endowed grant-making organization dedicated to improving the quality of life in Arizona; as well as by a number of unnamed individual investors.
Along with Tooker, TRAC is managed by Richard Love, former senior executive at TGen and former CEO of Ilex Oncology; Dan Von Hoff, physician-in-chief of TGen, director of its translational drug development division, and CSO of Scottsdale Healthcare; and John Bentley, a partner with venture capital firm Grayhawk Venture Partners.
Raising Arizona Companies
The second funding initiative announced this month is part of a $21.5 million agreement between TGen’s Accelerators program and Abraxis Biosciences, a Los Angeles-based biopharmaceutical company that recorded $765 million in revenues in 2006 and recently established a drug-manufacturing plant in Phoenix.
According to a statement from the office of Arizona Governor Janet Napolitano, the two entities have entered into a letter of intent to use $14 million of a $21.5 million investment by Abraxis to create a non-profit called Catapult Bio. According to the release, Catapult will focus on “bringing promising life sciences research with a focus on diagnostics, prognostics, therapeutics, devices, and services to market.”
The remaining $7.5 million will be used to help establish a National Personalized Health Network based in Phoenix and to increase evidence-based personalized medicine clinical trials conducted in the state.

“We have a lot of expertise right here in the state both in oncology and the neurosciences. What we have lacked is the funding for companies that are either born here in Arizona, or that want to come here if they get funding in those areas.”

“This is significant for Arizona; we have the infrastructure and bioscience capital in place to conduct clinical trials and bring to market important bioscientific work,” Gov. Napolitano said in the statement.
Neither TGen nor Abraxis have issued statements on the matter. Officials from both organizations did not return calls in time for this publication.
Tooker told BTW that although there is no formal relationship between Catapult Bio and Translational Accelerator, they are products of the same desire to provide a financial boost to the academic and other pieces in place to make Arizona a biosciences hotbed.
“We’re very anxious to have [the Catapult Bio program] happen,” Tooker said. “We [at TRAC] were encouraged along the way by TGen when the idea was formed to work hard in getting some venture money here in Arizona for Arizona companies.”
Tooker pointed to a “huge increase” over the past five to 10 years in biosciences-related research funding in Arizona as laid out by the Arizona Bioscience Roadmap, commissioned in 2002 by the Flinn Foundation and authored by national R&D firm Battelle Technology Partnership Practice.
The roadmap established the goal for Arizona's growth rate in National Institutes of Health research funding to be comparable to that of the top 10 states in the nation by 2007, according to the Flinn Foundation.
That goal was accomplished in 2005, according to Flinn. The foundation also states that Arizona is now 75 percent of the way to the 2007 Bioscience Roadmap target of garnering $214 million in NIH funding.
Other examples of Arizona’s recent long-term investment in the life sciences include state legislative and executive branch investments of $440 million in research facilities, primarily in the biosciences, since the roadmap was written; and the establishment in 2006 of Science Foundation Arizona, a public-private research grant-making organization designed to serve as an extension of the Bioscience Roadmap.
According to Tooker, Arizona’s research universities and non-profit research institutes – especially TGen – have played an enormous role in building the biosciences industry in the state, and are expected to continue to do so.
For example, the University of Arizona and Arizona State University have collaborated in recent years to expand the UA College of Medicine in downtown Phoenix and to establish the Phoenix Biomedical Campus, which includes outposts for the UA College of Pharmacy, the ASU College of Nursing, and both universities' linkages to TGen.
Further, plans are in the works to develop an additional research park near ASU anchored by the non-profit Critical Path Institute.
Tooker also specifically mentioned the BioDesign Institute at ASU and the Bio5 Institute at UA, which last month was named lead institute on a $50 million National Science Foundation grant to create the iPlant Collaborative for plant research.
TGen, however, remains at the center of this growth, Tooker said, and will be the most immediate source of technologies ripe for commercialization or development into a spinout company. However, he added that the state’s other research institutions and universities are expected to provide a rich source of technology to bring to market.
“It’s our hope that as things spin out of TGen, that they come to us and they want us to be involved,” Tooker said. “I think that what may happen with the Catapult Bio fund is that [it] will provide financing for these companies to a certain point, and then they would be ready for an investment from TRAC. That would provide a seamless funding strategy, and I think that would be the best of all worlds if we can structure it that way.”

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