Israeli biotech - a child with great promise

The Israeli biotech industry is still in its infancy but heavy investment, an aggressive technology sector and a supportive academic community should ensure some big growth spurts.

Sep 26, 2000
John Borchardt

HOUSTON. The nascent Israeli biotech industry boasts brilliant technology but remains in the early stages of commercial development. "Computational genomics, DNA chips … the snapshot is a whole array of pieces of knowledge, technology and methodology that will serve as a basis for 21st century biotech, here as elsewhere in the world," says Professor Doron Lancet, head of genomics at the Weizmann Institute's Crown Human Genome Center. Biotech requires long-term commitment and considerable financial investment for commercialisation. Israel is attracting investment and industry leaders say an aggressive technology sector and supportive academic community will make biotech work.

The Weizmann Institute of Science plays a key part in the development of Israeli biotechnology. Current genomic studies include Y. Groner's large-scale sequencing within the acute myeloid leukaemia (AML1) gene on human chromosome 21 and Lancet's sequencing of an olfactory receptor cluster on human chromosome 17.

Biochemist Gideon Schreiber of the Weizmann Institute, and PhD student Tziki Seltzer, developed a computer algorithm that calculates the rate at which two proteins associate and used it to design proteins with increased affinity — of a hundred times or more. Schreiber notes "A common approach to improving protein affinity is to create a large pool of mutations and discover the optimal complex through trial and error. However, the possibilities are often endless. Computer simulations are far more efficient in pinpointing potentially successful complexes." This computer algorithm may lead to medicinal applications based on increasing or inhibiting protein activity and new diagnostic procedures including antibody detection.

In bioinformatics, Weizmann scientists have developed computational genomics systems that include GeneCards, a database of genes, their products and their involvement in diseases. Its intelligent software performs data mining for gene-related information in a variety of sources, producing an integrated database available for web-based inquiries. Other developments include the Unified Database, which integrates information from disparate maps of the human genome and GESTALT, a software workbench for genomic sequence analyses, comparison and annotation.

Yeda Research and Development Company is the Institute's technology transfer organisation. Yeda's mission is to: identify and assess research projects with commercial potential; protect the intellectual property of the Institute and its scientists; attract funding for research projects in exchange for commercial rights; license the Institute's inventions and technologies to industry; and establish start-up companies to cultivate Institute discoveries.

Since its establishment in 1959, Yeda has licensed several of the Institute's biotechnology products to industry. For example, Israel's Teva Pharmaceutical Industries has licensed Copaxone®, a synthetic polymer for treating multiple sclerosis. Switzerland's Ares-Sereno International SA has licensed Rebif® recombinant interferon beta for treating multiple sclerosis and Frone® native interferon beta for treating viral diseases and cancer. Israel's Biotechnology General, Inc. has licensed Bio-Hep® recombinant hepatitis B vaccine. Yeda also assists in establishment of start-up companies and joint ventures based on Institute research and inventions. Yeda's management team provides start-ups with administrative support and development guidance as well as the local and global connections required for success.

In areas ranging from bioinformatics and proteomic sciences to medical devices and imaging, Israel is poised to reap the benefits of high-tech superiority derived from its military prowess. "There is a lot of convergence," said Batsheva Elran, the general partner for life sciences at venture capital firm Concord Ventures. "There won't be such a distinction between high-tech software and biotech in business development in the future."

A good example is Compugen Ltd, which was recently taken public. Compugen hardware accelerates gene sequencing, whereas its algorithms analyse genetic information. "About 40% of our research and development people come out of high-tech military training and they bring similar concepts into biology," says Compugen vice president Ma'ayan Lior.

Compugen began life in a government-sponsored incubator programme seven years ago, but attracted private funding and left the incubator after only 11 months. Compugen illustrates that despite long exit trajectories, a complicated regulatory environment, proprietary concerns and other risks associated with biotechs, Israeli companies are attracting investment. Nearly a dozen Israeli venture capital funds invest in biotech start-ups. "Everybody is talking about genomics and proteomics," said Ruti Alon, managing director for health care ventures at Polaris Venture Capital.

At Concord Ventures, about US$180 million is actively managed in the Concord II fund, with 25% (US$45 million) invested in life sciences, Elran said. "We are early stage investors, so early that we set up an entrepreneur-in-residence programme [to consider biotechnology investments]," Elran said. "We want a full-fledged company, a story that is IPO-suitable." Concord plans to open a third fund next year and balance its portfolio with later-stage projects.

Ruti Alon said Polaris plans to commit 10% of its $500 million Polaris 3 fund to biotech projects, doubling the US$25 million earmarked for companies such as MindGuard or Proneuron Biotechnologies. Mindguard is developing an implantable device that filters away the blood clots that cause most strokes, diverting them from the carotid arteries supplying blood to the brain.

Most financial analysts agree that what the Israeli biotech industry lacks is experienced business leadership. Elran notes that Israeli biotech must use global talent until the young industry develops its own leaders. Lior agrees, commenting, "[The industry] lacks seasoned multicultural managers, which we have to bring in from abroad …) But we believe that more knowledge and people will move into start-ups, and the environment is very friendly for start-ups."

Israel is sharing its hard-won biotechnology expertise. The International Center for Cooperation in Bioinformatics (ICCB) has its headquarters at the Weizmann Institute and is co-ordinated by Prof Marvin Edelman. ICCB provides developing countries with scientific training and technical instruction in the use of international bioinformatics data banks and analysis of the data they provide. Whereas scientists in the US, western Europe and Japan are generally well equipped to make use of bioinformatics data banks containing this information, their colleagues in most other regions of the world often lack the equipment and training to exploit these vital new tools. The International Bioinformatics Network, co-ordinated by the Weizmann Institute and sponsored by UNESCO, is aimed at amending this situation for Asia and eastern Europe, and in the future for other regions, including Israel's neighbouring countries.