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Minnesota biotech joins forces with medical device industry
by Lorna Benson, Minnesota Public Radio
September 23, 2005

Dan Fagan of PepTx explains his company's new cancer drug to a room full of potential investors. (MPR Photo/Lorna Benson)

Leaders in Minnesota's fledgling biotech industry think they've figured out a way to attract more investors. They're teaming up with the state's well-established medical device industry in the hopes of getting more exposure and ultimately more money for research. The new arrangement got one of its first tests at a conference in Minneapolis.

Minneapolis, Minn. — It's no secret that Minnesota biotech companies have struggled to get the attention of East and West Coast investors. It's a sore subject for some who believe that biomedical research should be as successful here as Minnesota's medical device industry.

Changing that trend is the sole mission of the BIO Mid-America VentureForum, a gathering of biomedical research companies and venture capital investors.

During Thursday's opening session of the conference, Gov. Tim Pawlenty told the crowd of scientists and financiers that it's not too late for Minnesota to create its own biotech niche.

	Venture capitalist

"There are some skeptics who say, 'Well you know, the ship has sailed. Look at California, what they're doing,' says Pawlenty. "Well, the biosciences is very large. It is an enormous, huge area. And to suggest the book is closed on who's positioned to proceed is ridiculous."

Pawlenty pointed to a new medical trend that he thinks bodes well for the biotech industry in the state -- the development of therapies that utilize a device and a drug in combination. Drug-coated stents are an example; so are implantable insulin pumps. Pawlenty told the audience that Minnesota has an opportunity to lead the world in this area of biosciences.

Ray Frost shares that opinion. He's senior vice president of one the groups sponsoring the conference, Medical Alley/MNBIO. Frost says this conference is the first biotech conference that also includes medical device makers.

"We made a strategic decision last year and said we need to open it up," says Frost. We're not California, we're not New Jersey, Boston. We don't have as many biotech, pure biotech companies here. So we need to open it up. And we opened it up logically to the medtech community. I think marrying the two is very logical."

Why can't we develop a great biotech company in the Midwest? Why should we move great technology from the University of Minnesota to some place on the East or West coast? - Dan Fagan, President and CEO of PepTx in St. Paul

Frost says the change has attracted much bigger players to this year's conference, from top law firms to Fortune 500 companies.

Many of them squeezed into a breakout session room to hear Dan Fagan, President and CEO of PepTx in St. Paul, talk about his company's new cancer drug.

Fagan pitched his new drug at last year's conference too. He didn't get any money then. He doesn't know if he'll get any money this time either. But he's pleased with the response he got from the audience.

"Everybody seemed to be interested. I could see from the podium that they were genuinely interested in what was in the slides," says Fagan.

After his presentation Fagan wasn't approached by any investors, but a medical device company did talk to him about the possibility of pairing his cancer drug with its device. Fagan says the idea was interesting.

If Fagan is unsuccessful again in his attempts to raise money, he could always consider taking his research project to another state where biotech investors are more plentiful.

But at this point, he says that's not appealing.

"My philosophy is, I'm a Midwesterner. I'm thinking, why can't we develop a great biotech company in the Midwest? Why should we move great technology from the University of Minnesota to some place on the East or West Coast? Let's find the money, let's find the funds and let's do it here," says Fagan.

Venture capitalists say the money is here. Kathy Tune, with Thomas McNearny and Partners, a local venture capital firm based in the Twin Cities, says capital is available for biotech businesses who've done the work required to succeed.

"I think that there needs to be an awareness of the company. There needs to be a significant management team that people are comfortable has the experience to take the product through development and a protectable patent situation. Then I think the money is there to be had," Tune says.

Organizers of the BIO Mid-America VentureForum are hoping their marriage with medical devices is exactly the exposure that Minnesota's biotech industry needs to be successful.

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