BIRD bringing Israeli, U.S. companies together for research

U.S. and Israeli partners have benefited from $180 million in funding from BIRD for industrial and technology projects.The BIRD Foundation has been promoting bi-lateral cooperation between the United States and Israel in a wide range of industries for the past …

U.S. and Israeli partners have benefited from $180 million in funding from BIRD for industrial and technology projects.The BIRD Foundation has been promoting bi-lateral cooperation between the United States and Israel in a wide range of industries for the past 25 years. Now, the agency is putting the focus on the life sciences to help emerging technologies in the field in both countries.

BIRD, or the Israel-U.S. Binational Industrial Research and Development Foundation, has granted $180 million to industrial projects since it was created in 1977 with life sciences now the most highly represented sector, receiving about 30 to 40 percent of all grant funding.

BIRD provides a maximum of $1 million to projects involving American and Israeli partners. The foundation takes no equity in the companies with projects in which it invests, but receives repayment as a percentage of reported sales revenue when products reach the market.

“Our real talent is our experience in the evaluation of market potential for a given technology, and our understanding of the business environment,” said Dov Hershberg, BIRD’s executive director. “We have to be able to rapidly determine the chances for a project given that we offer about 30 grants a year across a variety of industries, whereas the average VC may only make two investments in a year.”

During the first week in June, BIRD approved $10 million in investments in three health care partnerships, one of which is a joint project by Israel’s Proneuron Biotechnologies and Craig Hospital of Denver, Colo., for spinal cord injury therapies. A second project is between Israel’s Glycominds and Schott Glass Technologies of Duryea, Pa., to develop a chip that uses sugar molecules to diagnose genetic illnesses.

U.S. companies are eager to take advantage of Israel’s innovative technologies, and often choose to seek appropriate partners through BIRD, rather than alone, Hershberg said.

“Companies such as GE Medical have formed partnerships through BIRD because we provide them with an extra measure of confidence in a company, a seal of approval,” Hershberg said. “BIRD’s grants provide a measure of risk-sharing by covering up to one-half of a project’s cost, and need to be repaid only from sales.”

Current BIRD partnerships include Johnson and Johnson and NESS, an Israeli developer of neuromuscular electrical stimulation technologies; Quark Biotech, which was founded in Israel, and the Cleveland Clinic; and other collaborations connecting Israeli companies with multinational industry giants, including Bayer and Becton Dickinson.

However, it isn’t always a large American company that partners with a smaller Israeli firm, Hershberg said. An example of this is Bio-Technology General, founded in Israel, which recently entered into a partnership with Mountain View Pharmaceutical, a startup in Menlo Park, Calif., that specializes in the development of therapeutics for gout.

BIRD’s focus has turned largely to life sciences during the past three years, corresponding to the dramatic increase in biotechnology companies in Israel over the same period.

“We have enjoyed success with our life sciences projects to date, although not necessarily in financial terms yet, due to the newness of many collaborations in this area,” Hershberg said.

Hershberg himself has substantial experience on the entrepreneurial side of the biomedical business. In 1992 he left Israel to establish a bioinformatics company, Molecular Application Group, with colleagues from Stanford University. In the late 90s he sold the company and returned to Israel, taking over leadership of BIRD soon after.

BIRD has a staff of eight in Israel and two in the United States, which assists in establishing partnerships. The agency uses tools, including reverse trade missions, sometimes in conjunction with the U.S. embassy, teleconferences, and its own Web site to market organizations that are seeking suitable partners.

BIRD relies on its own experience in evaluating projects as well as the technological expertise from the projects evaluation group associated with the Israeli Office of the Chief Scientist of the Ministry of Industry and Trade and the National Institute of Standards and Technology of the U.S. Department of Commerce.

BIRD’s board of directors meets twice a year to review applicants and make final determinations on which projects will receive funding. The six-member Board includes three members from both Israel and the United States Israel’s representatives include the Chief Scientist of the Ministry of Industry, while U.S. representatives include senior personnel from the State Department, Treasury Department and the National Institute of Standards and Technology.

The agency relies on straightforward criteria when deciding where to spend its money.

“We look for projects that, with the integration of the technologies of two companies or research institutions, will generate revenue when complete,” generally after a period of up to three years.

The Foundation considers the ability of at least one partner to do product marketing, the presence of a clear marketing plan, uniqueness of the product and the potential for both sides to profit when examining a project.

“In the case of biotech projects grant money might be used to complete pre-clinical studies, making it possible to license a technology at the end of the project,” Hershberg said. “This increases our confidence that we will get our money back within a reasonable time.”

To date, BIRD has received about $70 million in repayment, more than one-third of all grants. BIRD has invested in approximately 600 projects to date, which have generated about $7 billion in revenues across all industries.