Real estate developer Tower Investments confirmed Thursday that it has formed a partnership with a prominent San Francisco-based biotech investor to fund promising start-ups at a planned bioscience incubator near Rochester.
Steven Burrill, CEO of Burrill & Co., and Tower officials said in a statement that they hope to start a private equity and venture capital fund to support new technologies emanating from the Mayo Clinic in Rochester and the University of Minnesota and to attract biotech/ biomedical companies to the Elk Run bioscience center near Hwy. 52 in Pine Island, north of Rochester.
The venture capital fund's size could top $1 billion, sources have said. A $1 billion fund would significantly boost Minnesota's nascent biotech industry. The state, known for medical devices, has struggled to attract venture capital money for biotech and pharmaceutical companies, forcing some start-ups to move out of Minnesota. Such a sizable investment could jump-start the creation of new companies, cutting-edge technologies and high-paying jobs, experts say.
"This is a big deal," said Jay Hare, a partner at PricewaterhouseCoopers in Minneapolis who tracks venture capital investment. "It has to rank in the top three, if not the top of the list, of early stage funding support in Minnesota over the past decade and a half."
Even if Burrill could raise $250 million, or a quarter of the proposed fund's size, "that would make a meaningful dent," Hare said. Burrill, whose firm has about $900 million under management, is widely considered one of the nation's most prominent biotech investors and long has wanted to work with the Mayo Clinic, which owns a large pool of intellectual property.
From 1995 to 2008, the state's average annual share of biotech venture capital investments was $4.4 million, compared with the average of $8.1 million for all states receiving biotech funding, according to the MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association based on data provided by Thomson Reuters.
Tower executives and state and local officials say such a facility could help establish a biotech corridor along Hwy. 52, which connects the Mayo Clinic, the University of Minnesota Rochester and IBM Life Sciences' research and development labs with the U's Twin Cities campuses and the major medical companies in the metropolitan area.
"Elk Run is geographically and strategically positioned in a uniquely propitious way," Burrill said in a statement. "The opportunity to work with Tower on this enterprise is exciting for us, especially considering Elk Run's proximity to Rochester, home of Mayo Clinic and its incredible potential to create and attract bioscience companies to the state."
Tower officials declined to comment further; Burrill did not return a phone call seeking comment.
Gov. Tim Pawlenty said in the Tower statement: "There is a high level of energy, interest and enthusiasm surrounding the growth of the bioscience industry in Minnesota. Projects such as Elk Run signify the opportunities available and the progress being made in our state."
Hare said be believes the key to Burrill's interest is Mayo's participation.
"There has to be a greater tie other than the geographic location," Hare said. "Otherwise, [the deal] does not make sense."
In 2007, the Mayo Clinic and the university inaugurated a $25 million, three-story genomics research facility at a Mayo building in Rochester. The collaboration, called the Minnesota Partnership for Biotechnology and Medical Genomics, hopes to speed the research and commercialization of projects such as anti-cancer drug development and treatments for heart disease, pancreatic cancer, neuromuscular diseases, auto-immune diseases, transplant rejection, drug addiction and tuberculosis.
In theory, the partnership could spin off that research into companies that move to Elk Run, where they can further refine and test their technology.
Adam Brase, a Mayo spokesman, said the hospital has had several discussions with Tower over the Elk Run project. He said it was too early to speculate what specific projects Mayo could direct toward Elk Run.
"We do support the concept of a biomedical accelerator that could create new companies and develop new therapies that helps our patients," Brase said. "If we can have more of that in our area, the better off any medical organization is going to be."
Thomas Lee • 612-673-7744
