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Feb 1, 2009 (Vol. 29, No. 3)

Israeli Initiatives Seek to Sidestep Funding Crisis

Dearth of Venture Capital Spawns Innovative Actions to Invigorate Country’s Life Science Industry

  • Incubators

    Recognizing that drug development is inherently more risky and requires longer timelines than medical device development, the Israeli government proposed establishing two specialized incubators solely for biotech-related R&D, with an increased funding ceiling ($1.8 million) and longer residence times (up to three years).

    Although this vision has not yet become a reality, one biotech incubator, BioLine Innovations Jerusalem, owned by BioLineRx, an Israeli clinical drug development company, was recognized by the government in 2004 as being essentially equivalent to what it had planned to create and received a special $23 million grant from the Ministry of Trade and Industry.

    Unlike a traditional incubator, in which a corporate structure is built around a drug or technology, BioLineRx takes a different approach and in-licenses projects that are developed as independent programs under a single corporate structure. Successful projects can be developed further by BioLineRx or licensed out. If a project is successful, the incubator pays the government back for that project; if it is not, BioLine shuts it down.

    “We have created an incentive to fail unsuccessful projects early,” says Morris Laster, M.D., CEO of BioLineRx, who has a history of successfully commercializing innovative technologies, having cofounded four publicly traded companies, including Keryx, XTL, and Neose Technologies.

    “We don’t believe in the need for a company for each project,” Dr. Laster says. “A company is a living thing,” and as such is inherently driven to remain in existence, even when there is no longer justification for it to exist.

    Dr. Laster sees potential advantages of the BioLine Innovations incubator model for regional development of biotech outside of Israel as well, in areas that are research/academic-rich and investor-poor, such as the southeastern U.S., for example.

    BioLineRx was founded in 2003 through a joint effort of Teva Pharmaceuticals, Israeli venture capital firms Giza and Pitango, Hadasit (the technology transfer company of Hadassah Hospital), and the Jerusalem Development Authority (JDA).

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Posted 03/01/2009 by Israel Biotech

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