innovate arkansas

UAMS hosted a private equity roundtable last month to give venture capitalists in the region an opportunity to look at some of the latest intellectual property from the school and the prospects of some of the startups.

Sponsors of the event said those invited came away impressed with what they saw. Backers seemed pleased that four of the companies have been placed on the watch list of the venture capital firms for possible future investments. Two of the venture capitalists with experience in life sciences have provided guidance and expertise on what kind of help the companies need from government to further their development.

The six startups that gave presentations were DCV Technology Inc., InterveXion Therapeutics LLC, NanoBlade LLC, IntraTherm LLC, Stage 1 Diagnostics Inc. and XenoCept Inc.

Out-of-state venture capitalists included Delta Capital of Cordova, Tenn., MB Venture Partners of Memphis, ProLogVentures of St. Louis, Richland Ventures of Nashville, Tenn., and Chisholm Private Capital of Tulsa.

Dr. Timothy O’Brien, director of Arkansas BioVentures, the business incubator formed by the College of Medicine’s Biomedical Biotechnology Center, has been talking for several years about ways to raise seed capital for some of the technology coming from UAMS research. But the idea for the roundtable came from Les Lane, formerly with the Arkansas Science & Technology Authority and now a senior vice president with Arkansas Capital Corp. Group.

The two-day roundtable gave the opportunity for state agencies, private investors and capital groups to meet face-to-face with the entrepreneurs who want to make viable commercial ventures out of UAMS technology.

Lane and J.J. Watkins, finance program manager with ASTA, credit the Venture Capital Act of 2001 for giving the state a green light to develop biotech companies. Commercialization of newly developed products and growth of firms created from UAMS research are among ASTA’s goals. And ASTA staff members meet with companies seeking state incentives as well as interested venture capital funds.

“While there was no impediment there was also no incentive” to invest in startup companies before the 2001 law, Lane said.

All involved had one goal in mind: to keep the startups in Arkansas if at all possible.

That was the idea behind inviting only venture capitalists from surrounding states who might not be so tempted to move a company as venture capitalists headquartered much farther away.

Jeff Stinson, who heads Fund for Arkansas’ Future, a Little Rock-based angel fund, said getting those outside firms was critical because they had the expertise to screen the companies.

Lane and Watkins pointed to Stephen Snowdy with MB Ventures and Christine Karslake with ProLog Ventures. Both are firms that specialize in investing in life sciences and related information technologies.

“They are a new breed of venture capitalists who know more about life sciences,” Lane said.

Karslake, a senior associate at ProLog, has a broad background in pharmaceuticals, nutrition, medical technology and agriculture. She has a doctorate in chemistry from Purdue University in Indiana and an MBA in finance and strategy from the University of Chicago.

Karslake said she thought it was interesting to see how the leadership of the state and university were working to advance UAMS technology.

“I thought very highly of the research being done there, particularly in the areas of multiple myeloma and addiction therapy,” she said.

Snowdy is the first person to simultaneously complete doctorate and MBA degrees at the University of North Carolina at Chapel Hill. He earned a doctorate in neurobiology. As part of his MBA studies, he helped start a small biotechnology company. He is currently giving a series of seminars to UAMS faculty on entrepreneurship.

O’Brien considers the roundtable “an outstanding success.” The invited venture capitalists were not familiar with the intellectual property at UAMS, he said, and didn’t have an appreciation about what research is under development.

“They were surprised by the technology,” he said after giving each of them followup calls. “And now they are comfortable with the faculty and entrepreneurs.”

The next step most likely will come from ASTA, which will make the call on giving any funds to help the startups under its Seed Capital Investment Program. That decision could come within the next 30 days.

The seed capital program is for “initial capitalization of Arkansas-based enterprises that are involved with a project that is scientific or technological in nature.”

Although the maximum for seed capital investment under the program is $500,000, Watkins said funding of $30,000 to $50,000 is most probable. That is the amount the venture capitalists suggested was needed to get the startups to the next level, where angel investors or venture capitalists would likely be willing to invest, Watkins said.

The seed money from ASTA will be used to help fund the hiring of industry experts in the field to advise on developing a more marketable business plan.

A BioVentures task force has been set up to continue the work of the roundtable. On it are O’Brien, Stinson and James Hendren from Fund for Arkansas’ Future; Watkins; Brad Greenway from the Arkansas Department of Economic Development; Mike Smith Jr. from ProLog Ventures; Snowdy; and Alan Engstrom and Stuart McLendon from CFO Net of Little Rock.

The Little Rock Regional Chamber of Commerce also has a Biotechnology Task Force, which dates back to the Angelou Economics study, that is an advisory board looking for ways to advance biotech and biomedical research. On it are O’Brien, Greenway, Lane and Smith as well as Jan Burford, Dickson Flake, Watt Gregory, Johnny Heflin, Larry Suva, Brandy Carroll, Robbie Linn, Lewis May, Stan Roberts, Milo Shult, Ed Peek, Barry Brady and Charlie Cook. Lucas Hargraves of the chamber staff provides support.

While the BioVentures roundtable focused on attracting life sciences investors, Watkins said ASTA would like to replicate the event at the University of Arkansas’ Genesis Incubator, which focuses on engineering technology.

Here’s a quick look at the technologies that are now earmarked by the BioVentures task force as giving UAMS and investors the “most bang for the buck,” as Stinson described it.

Stage I Diagnostics LLC

Stage I’s mission is to develop and produce a system for the early detection of cancer — especially ovarian cancer. Its first product, OvaStage, will focus on the detection of ovarian cancer in stage I of the disease. ProStage, its second product, will focus on the early detection of prostate cancer.

According to the American Cancer Society, 90 percent of women with reproductive tract cancers are not diagnosed until stages III and IV; and of those women, only 20 percent will survive five years. If diagnosed in the early stages, however, a woman’s survival rate increases to 80 percent. The Stage I cancer diagnostic kits are based on newly discovered, patented gene products and tumor markers produced by breast and ovarian cancer cells but very seldom by normal blood cells.

The company’s Web site is www.stageidiagnostics.com.

DCV Technologies Inc.

DCV Technologies is developing therapeutic vaccines for the treatment of cancer. DCV’s initial focus is on the development of dendritic cell vaccines for the treatment of gynecological malignancies and prostate cancer. A vaccine for the treatment of cervical cancer received FDA approval in March 2001 for combined Phase I/Phase II clinical trials. Preclinical testing of a therapeutic vaccine for the treatment of ovarian cancer is at an advanced stage. A therapeutic vaccine for the treatment of prostate cancer is also currently undergoing in vitro preclinical testing. DCV Technologies anticipates that Phase I clinical trial protocols for both ovarian cancer and prostate cancer vaccines will receive approval this year. DCV seeks seed funding for its preclinical research program and for clinical trials.

The company’s Web site is www.dcvtech.net.

InterveXion Therapeutics LLC

InterveXion is focused on developing protective therapies using monoclonal antibodies to treat substance abuse from PCP and methamphetamine. Abuse of these stimulants is increasing, and no therapies are currently available for treatment. The company is developing PCP-mAb for the treatment of PCP abuse and METH-mAb for the treatment of methamphetamine abuse. These therapies are monoclonal antibodies that can “absorb” these toxins in the bloodstream to reduce the acute effects of overdose and can also be used in the chronic setting to help abusers overcome their dependency.

The company’s Web site is www.intervexion.com.

Final Piece

The final concept the venture capitalists liked is not yet a company but is intellectual property under research by Dr. Justin Regner.

It’s called Improved Hepatico-Enteric Drainage. The technology developed is a catheter designed to create a connection between the liver and the intestinal tract through the biliary system. The technology can be applied to a variety of surgical procedures involving cancers of the liver or biliary tree, tumors or liver transplants.

Sponsors of the roundtable were Arkansas Capital Corp. Group, Arkansas Department of Economic Development, Arkansas Development Finance Authority, Arkansas Science & Technology Authority, Little Rock Regional Chamber of Commerce, Small Business Development Center, UAMS, and Arkansas BioVentures.