Translational Accelerator looks to invest in Arizona bioscience companies
By Don Weiner
Providing funds is one thing. Lending a hand may mean something else. But select companies can expect both from the Translational Accelerator LLC, a new $20 million Arizona-based venture capital group that has set its sights on assisting early-stage bioscience companies already located in the state or planning to move here.
“We will make an investment, we will keep what we call ‘dry powder’ to enable us to do follow-on investments with that same company a
nd we are committed to the companies that we invest in to assist them from a management perspective as well,” says Eric Tooker, president and CEO of MCS Biotech Resources in Scottsdale and one of four managers for the TRAC fund. “We want to be active managers because of our expertise.”
TRAC is targeting companies involved in cancer and neuroscience diagnostics, services, prevention and treatment. There’s enough funding available, according to Tooker, to initially assist about six or seven companies with investments ranging from $500,000 to $1.5 million. The idea is to help these firms during their pre-clinical or early clinical stages.
There may be some flexibility in terms of which stage of development a company has reached, but there’s none in terms of where the company is located.
Love points out that Arizona has done a good job supporting bioscience research at institutions such as TGen and at state universities.
“It’s clear that funding has led to discoveries and those discoveries can be commercialized,” Love says. “But if you don’t have local venture capital here, particularly for the early-stage discoveries, the discoveries will be taken out of state and go to San Diego or San Francisco or elsewhere.
“So it’s real clear we had a big need for local venture capital here. … That’s what stimulated all of us to do this.”
Tooker agrees and adds: “The idea for TRAC really was born out of a desire to keep those companies here and raise a fund that was Arizona-only, biotech-only to help the biotech infrastructure here.”
The first business to receive TRAC funding is Silamed Inc., a Scottsdale biopharmaceutical company that is developing ways to enhance new or existing drugs through the use of silicon. It is also an example of a company that has received more than a check from TRAC. Both Love and Von Hoff serve as Silamed advisors.
Silamed CEO Craig Taylor and Stephen Gately, the company’s founder and chief scientific officer, have come to rely on Von Hoff for his expertise in oncology therapeutics and on Love for his business acumen. Their counsel, according to Taylor, has been invaluable.
“They’re really trying to take us by the hand here a bit and help us along,” Taylor says. “And while I have experience doing this on the investment side, having people in there with us is very valuable.”
Other venture-capital firms looking at Silamed often seek Love’s input on the investment opportunity and Von Hoff’s thoughts on the company’s technology.
“Those are perspectives that they provide to would-be investors that, because of their position (and) because of their experience, is very valuable to us,” Taylor says.
There are several priorities TRAC managers consider when evaluating potential investments. One is strong management.
“Many times, especially in drug development, the technology can always be improved but management talent is something that is either there or is not there,” Tooker says.
A novel and promising technology is a second criterion. And, finally, TRAC managers want to know there is a market for a company’s technology, one that warrants an investment and indicates the potential for profit.
“We’re looking at probably a four- to six-year time horizon from the time we invest to the time that there’s an exit,” Tooker says. “Our preferred exit strategy and our likely exit strategy will be a purchase of the companies that we invest in by big pharma or even, really, medium-sized pharma.”
When that happens, the return can be substantial.
“Our expectation is that, yeah, there will be ‘gold in them thar hills,’ ” Love says. “From what we’ve seen, I think there’s a good probability of that.
“I think it’s very important for our fund to make money for investors because part of the problem in Arizona is that high net worth people who invest in this industry have no experience investing in it. So it’s important that those who are investing have a good experience and they’ll bring more in. That’s how venture capital in biotech in the Bay Area, for example, took off.”