Elk Run gets major boost

Posted on July 29th, 2009 – 4:39 PM
By Thomas Lee

The proposed Elk Run biosciences project in Pine Island just took one major step toward reality.

Developer Tower Investments said Wednesday that the state Department of Transportation will spend nearly $15 million building an interchange at U.S. Highway 52 and Olmstead County Highway 12.

The interchange, Tower notes, is key to the project because it provides direct access for potential tenants to the bioscience center from 52, which connects the Twin Cities and Rochester, home of the Mayo Clinic. Congressman Tim Walz is also seeking additional federal stimulus money.

The money marks an important milestone for Elk Run in another way: it means the state is firmly committed to the project, despite the fact that biotech guru Steven Burrill has yet to announce any investors in his proposed $1 billion venture capital/real estate fund.

In a recent interview, Burrill said he would complete such a fund by the end of the year. However, he sounded a more cautious tone in the Tower press release.

“While we must temper our expectations with an awareness of our challenging economic environment, this undoubtedly a significant step forward for Elk Run,” Burrill said.

It sounds to me that Burrill is playing a delicate game: selling an ambitious, high risk proposition to investors but at the same tempering expectations to a public grappling with a recession and weak state finances.

$15 million is an awful big leap of faith for something so vague and speculative. One thing’s for sure though.

We’re really on the hook now.

“Budget jihad”

Posted on July 24th, 2009 – 12:43 AM
By Thomas Lee

If you need to know how much is riding on the new Dr. Doris Taylor company the University of Minnesota plans to spin out later this year, consider the following story, confirmed by several sources.

About four months ago, Matt Kramer, Gov. Tim Pawlenty’s chief of staff, summons Taylor and Jay Schrankler, who run’s the university’s Office of Technology Commercialization, to a meeting to discuss the yet-to-be named spin off company. Taylor, you may remember, gained international fame last year when she successfully grew a beating rat’s heart in the jar.

U officials believe Taylor’s work in regenerative medicine will do for the school what the pacemaker did for Medtronic. By the end of this year, the U hopes to spin out the first of what they hope to be many lucrative start-ups based on Taylor’s work: a company that helps drug companies test their therapies on human tissue.

Kramer was certainly impressed, as was Dan McElroy, the commissioner of the state Department of Economic Development (DEED) who attended the meeting. But things took a turn for the worst when Schrankler told McElroy, correctly, that the company might not stay in Minnesota if it couldn’t find local investors.

The prospect of losing one of the most promising companies to emerge out of the U in decades did not sit well with McElroy, who threatened to “wage budget jihad” on the U if the start-up left Minnesota.

Yowzers! (Apparently, the term jihad is a popular word these days for both Muslim extremists and state economic development officials.)

McElroy denies using those words.

“I talked to Commissioner McElroy and he assured me that he said no such thing,” said DEED spokeswoman Kirsten Morell. “Rather he expressed DEED’s willingness to be helpful and do what we can to ensure that the company, as it continues to develop, stays in Minnesota. The University of Minnesota is a tremendous partner and asset to the state and we want to work with them to advance their initiatives.”

When asked about the incident, Schrankler, perhaps channeling his inner Hillary Clinton, smiled and replied “Let me put to you this way: we had a good, no-holds bar discussion,” sounding more like he was negotiating a nuclear arms treaty with the Russians than staring down the DEED commissioner.

Is it my imagination or is McElroy getting a little grumpy lately? Just a few weeks ago, the DEED commissioner chewed out U vice president of research Tim Mulchay for some seemingly innocent remarks Schrankler made to this reporter about nanotechnology.  I guess giving press conferences each month about the state’s rising unemployment numbers is testing McElroy’s patience.

Sadly, this episode represents the state of political leadership in Minnesota. Maybe the Pawlenty Administration should do something useful and pass an angel investment tax credit instead of making threats against U officials. You can’t scream at U officials for moving a company out of Minnesota if you do nothing to keep them here. (Also see “Farewell Vital Medix” post below)

In any case, Schrankler and Doug Johnson, who heads the U’s Venture Center, say while they hope the company remains in Minnesota, they will do what’s best for the start-up.

“We don’t want to screw this one up,” Schrankler said.

Unable to find the right talent in Minnesota, the U recently hired a headhunter to launch a nationwide search for a CEO. The school is raising $1 million from angel investors and local wealthy families, most notably the Pohlads.

The U has also assembled an all-star cast to advise the start-up, including AppTec founder and former CEO Bonnie Baskin, John McDonald, former vice president of research for MGI Pharma, and Kathleen Tune, a principal with local VC firm Thomas, McNerney & Partners.

Hopefully the U will succeed, jihad aside.

Burrill and Piper Jaffray

Posted on July 17th, 2009 – 11:41 AM
By Thomas Lee

Will Piper Jaffray invest in Steve Burrill’s $1 billion Elk Run fund?

Would seem to make sense. Burrill, a San Francisco-based biotech investor,  is scouring the Twin Cities for capital and as Minnesota’s largest investment bank, Piper presumably has some.

To me, Elk Run also fits the “alternative investment” portfolio Piper hired Lois Quam to create before she quit in April after only two years on the job.

Under Quam’s leadership, Piper was supposed to invest directly in health care and green energy start-ups instead of just earning fees from managing IPOs and advising mergers and acquisitions. She even recruited Doug Cameron, a respected clean tech venture capitalist, to look for deals. But the cash strapped Piper never made any and Quam left to start her own incubator.

Cameron, as it turns out, knows Burrill pretty well from his days in Silicon Valley. On Thursday, Burrill, who was in town to court potential investors, swung by Piper Jaffray headquarters in downtown Minneapolis to chat with Cameron.

In an interview afterwards, Burrill said they only talked broadly about biosciences and  didn’t directly discuss the venture fund.

Cameron himself was mum.

“I have known Steve for several years; we had a nice visit,” Cameron wrote in an e-mail. “Can’t comment on the fund.”

Hmmmm…..

U to host big conference

Posted on July 10th, 2009 – 6:07 PM
By Thomas Lee

The University of Minnesota will host the annual conference of the Association of University Research Parks in 2010. The conference will focus on ways research parks and innovation can aid the world’s economic recovery.

Pretty good timing for the U. Through state-approved bonds, the school is spending $292 million to build four biomedical buidlings on its East Bank campus called Discovery Square.

“We’re very excited to host the AURP 2010 conference in the Twin Cities, as we’re in the midst of expanding our Biomedical Discovery District on campus,” said Frank B. Cerra, M.D., Senior Vice President for Health Sciences and Dean of the Medical School at the University of Minnesota.

Too bad the U didn’t host this conference before 2004.

Farewell VitalMedix

Posted on July 10th, 2009 – 11:22 AM
By Thomas Lee

It’s official. VitalMedix Inc., the promising University of Minnesota drug startup, is leaving for Wisconsin.

The company, which is developing a hemorrhagic shock drug designed to keep patients alive even after catastrophic blood loss, hasn’t been able to find investors in Minnesota. Wisconsin, on the other hand, boasts a thriving angel investor community thanks to generous investment tax credits (see previous “Wisconsin kicks our butt” post further down the page).

“This company has got to survive,” VitalMedix CEO Jeff Williams said. “This technology is too important.”

Williams said the company has not yet signed a lease but will do so by the end of the year.

Bits of other stuff

Posted on July 7th, 2009 – 5:24 PM
By Thomas Lee

AbbeyMoor Medical of Parkers Prairie has received pre-market approval from the Food and Drug Administration to sell “The Spanner,” a stent that treats men suffering from urinary problems because of a blocked prostate.

Catchy name for a stent. Very vivid imagery.

TST Media, a Minneapolis-based software company that specializes in Websites for amateur sport teams, said it raised an undisclosed amount of money from investors led by TC Angels.

Ever heard of FC Barcelona Penya LA or the Hamptons Collegiate Baseball league? Neither have I.

RedBrick Health, a Minneapolis-based health and wellness management startup, was recently named one of the top 50 best places to work in America for small to medium sized companies by Great Places to Work Institute and the Society for Human Resource Management, the only Minnesota firm to make the list.

Let me guess: their health benefits rock.