Bio Matters: OK Life Science Fund

By Jim Stafford

William Paiva once told me that he puts more than 40,000 miles annually on his vehicle driving from Tulsa to Oklahoma City and back.

Paiva lives and works in Tulsa as manager of the Oklahoma Life Science Fund venture capital fund that invests only in Oklahoma bioscience com-panies.

Since the vast majority of the fund’s investments were started in Oklahoma City, Paiva makes almost daily commutes down I-44 as he works closely with the entrepreneurs that make up the fund’s portfolio.

“I can tell you every mile marker on the Turner Turnpike,” he said. “I just crossed 200,000 miles on a 2008 vehicle. Thank goodness for XM Radio.”

Created in 2000, the Oklahoma Life Science Fund has invested in 10 Oklahoma startups through two separate investment funds, OLSF I and OLSF II.

Investments include Norman-based Ekips, Stillwater-based ForHealth Technologies (since relocated to Florida and acquired by Baxa Corp.), AliveCor, Altheus Therapeutics, Consano Healthcare, Inoveon, InterGenetics, Lifetone Technology, Selexys Pharmaceuticals and Zapaq (now San Francisco-based CoMentis), all founded in Oklahoma City.

Some are new therapeutics that treat devastating diseases like Alzheimer’s or Sickle Cell. Others are potentially lifesaving medical devices such as a mobile electrocardiogram technology from AliveCor.

All are “disruptive” innovations, which have the potential to redirect whole markets away from current products and technologies.

However, incredible patience is a requirement for investors in early stage life science companies.

Even a monster return of 30 times the investment might not materialize for a decade or more.

Paiva raised $5.1 million for OLSF I and $10.5 million for OLSF II from a vast array of Oklahoma sources.

Limited partners in the funds include the Presbyterian Health Foundation, the Oklahoma Medical Research Foundation, Noble Foundation, Kerr Foundation, the Oklahoma Capital Investment Board and a group of private investors.

“There is lots of enthusiasm for a dedicated life science and health care fund within Oklahoma,” he said. “Having a local fund, with whom out of state venture capital funds can co-invest, has resulted in attracting some very astute and sophisticated investors to Oklahoma and our portfolio companies. For every $1 we have invested at OLSF, our companies have attracted $20 from outside venture capital funds, most of which are out-of-state venture capital funds who have invested in Oklahoma for the first time.”

OLSF has had two exits already. ForHealth Technologies was sold to Baxa Corp. and Inoveon was sold to IFA Systems.

There is plenty of potential in the remaining portfolio companies.

For instance, Selexys, which has taken its drug to treat Sickle Cell disease into Phase II clinical study, is an OLSF II portfolio company.

In 2012, Selexys signed a deal with the global pharmaceutical company, Novartis, in which Novartis would acquire Selexys in a deal valued at up to $665 million pending a successful Phase 2 trial.

Paiva said the emergence of sophisticated life science technologies in Oklahoma has established the state as a growing hub for life science innovation, increasing the volume of deals.

Early stage investment from i2E and the i2E-managed SeedStep Angels are also helping to brighten the outlook for future innovation, he said.

“These deals and successes within OLSF portfolio companies do two things that are great for the Oklahoma life science community,” Paiva said. “First, it lends credibility to the health care companies and innovators within Oklahoma. Second, it serves as a road map to other companies and entrepreneurs that are in a similar stage of development, whether those are pharmaceuticals or medical devices or something else.”

Call it the road map to life science success.

Jim Stafford is a Communications Specialist with i2E, Inc.

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