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For San Antonio’s Consideration: A Biotech Incubator and Accelerator

Xconomy Texas — 

San Antonio — [Updated, 1:55 p.m. See below.] Most research institutions or universities have at least one success story, a medicine or therapy developed there that made a big impact. Some have many.

For the Oklahoma Medical Research Foundation, a 70-year-old nonprofit biomedical-focused institute with 56 researchers on staff based in Oklahoma City, OK, what first comes to mind is Alexion and its blockbuster monoclonal antibody treatment, Soliris. Alexion (NASDAQ: ALXN) is a New Haven, CT-based company and researchers at the Oklahoma foundation made scientific discoveries that led to the development of Soliris, a treatment for rare disorders, says Stephen Prescott, president of the foundation.

In spite of that and other success in the corporate world, Prescott says he often found himself perplexed by the difficulties his foundation had when trying to create a company out of the science it discovered—internally or externally. Like many small markets, there wasn’t enough local money or talent.

“We could never find the number of talented, managerial entrepreneurs we needed—people to come run the companies, put it together, raise money, get it going,” Prescott says. “If we wanted to drill oil and gas wells, there was plenty of structured capital. … People were not willing to take our lines of risk.”

That is, until he took a page out of a Seattle entrepreneur’s book.

Prescott was speaking to a group of scientists, investors, and entrepreneurs at an event hosted by the University of Texas Health Science Center at San Antonio and its commercialization office this week. His perspective and experience was meant to provide context for the San Antonio market, a city with historically strong biomedical research, such as the health science center and the military.

Like Oklahoma City, San Antonio has had its share of milestone stories—Julio Palmaz’s stent, for example, or Ilex Oncology’s sale to biotech giant Genzyme—but it also deals with some of the same concerns that faced Prescott. Is there enough venture capital? Is there enough managerial talent?

For the Oklahoma Medical Research Foundation and a couple of collaborators, the key was looking to work done in Seattle to promote the biotech economy. In 2003, a pair of entrepreneurs founded Accelerator, a venture-backed group that funds and supports early stage biotech companies.

In 2011, Prescott’s research foundation—along with the Presbyterian Healthcare Foundation and economic development nonprofit i2E—followed suit. The group created Accele BioPharma, an accelerator and incubator based in Oklahoma City.

Accele and a related venture capital arm, Accele Venture Partners, help find, finance, and manage young, early stage biotechs. Currently, there are five businesses in the Accele portfolio. The company hired as its CEO Clayton Duncan, a former biotech executive and venture capitalist, as well as four other people who work in finance, business development, and operations. Duncan has worked for companies in Research Triangle Park, including Sphinx Pharmaceuticals, which was acquired by Eli Lilly in 1994.

The system allows portfolio companies to operate with high-quality executives, use Oklahoma Medical Research Foundation’s facilities, and find dedicated funding, all at a low cost, Prescott says. “We created a new model for startups that would be really capital efficient,” he says.

The startups must adhere to a set of goals Accele has created for each of them to grow. Otherwise, the management team can move on to another business within the portfolio. “If these companies don’t hit various rigorous milestones completed such as funding, they’re shut down, but the managers aren’t out of work,” Prescott says.

Accele also has a direct tie to Accelerate in Carl Weissman, who co-founded the Seattle organization. Now a director at OVP Venture Partners in Seattle and Portland, OR, Weissman serves on the board of Accele Venture Partners, also based in Oklahoma City, which operates a $10 million fund.

Prescott’s research foundation did some work internally, too, to gain more attention for its research from pharma and biotech companies, hiring one person who works with researchers to ensure they effectively work with the corporations and other partners to develop new partnerships.

In Oklahoma City, the conundrum that Accele and its founders have at least started to solve—investors don’t want to give companies money unless they have experienced leaders, and experienced leaders want to work for companies with funding—is relevant to many small-market towns, where hordes of cash and workers may not be readily available, including San Antonio.

Whether a new Accelerate—or a new Accele—follows suit in the Alamo City remains to be seen. But it is on the minds of those working in San Antonio. [Comment below added.]

“The University of Texas Health Science Center and the city of San Antonio understand there is a real opportunity to build a unique life sciences ecosystem capitalizing on the unique strengths present in the city,” says John Gebhard, senior executive director of the health science center’s office of technology commercialization. A place to incubate the health science center’s research would “not only increase their value to the HSC but also aid in product sustainability to the patient, as well as provide an economic impact to the city,” he says.