Tag: Targeted Technology

Targeted Technology Funds San Antonio Life Sciences Startups

Reporter with Silicon Hills News

Paul Castella, cofounder and senior managing partner of Targeted Technology, courtesy photo

Paul Castella, cofounder and senior managing partner of Targeted Technology, courtesy photo

Entrepreneurs in the life sciences industry in San Antonio for years complained about the lack of venture capital.

In 2008, Paul Castella and Alan Dean, cofounders and senior managing partners of Targeted Technology, a venture capital firm based in San Antonio, decided to do something about that.

“The quality of innovation we have here in San Antonio is really meaningful,” Castella said.

To help fund ideas, Castella and Dean created the first $11.2 million Targeted Technology Fund and invested in 12 companies. Since then, four of those companies have been sold. Its first investment, Vidacare sold to Teleflex for $262.5 million in 2013. Early investors made 4.2 times a return on their investment, Dean said.

ENTrigue Surgical sold to ArthroCare for $42 million in 2013. More recently, in June, an Australian company, TFS Corp. bought ViroXis Corp. and Santalis Pharmaceuticals for a combined cash and stock deal initially worth $45.3 million.

“It was a very small fund,” Castella said. “We started it during the financial meltdown of 2008. We had our first close in 2009. We ended up with 12 companies in that portfolio and we’ve sold a third of them. All of the other investments are viable and potentially exit able.”

Alan Dean, cofounder and senior managing partner of Targeted Technology

Alan Dean, cofounder and senior managing partner of Targeted Technology

Targeted Technology also has investments in Birmingham, Alabama, because Dean moved there in 2006 to serve as managing partner of Greer Capital Advisors, a venture capital fund. He now splits his time between his two houses in San Antonio and Birmingham.

“It gives us a bigger geographic reach and both communities have a lot of activity in this area and they are underserved by venture funds,” Dean said.

Previously, Dean served as director of technology transfer at the University of Texas Health Science Center at San Antonio. Castella shared office space with Dean at the university where Castella worked on his startup, CardioSpectra, founded in 2005. He served as co-founder and president. The company sold in 2007 to Volcano Corp. for $63 million.

Both Castella and Dean have extensive experience in the biotechnology and medical technology industry. They play “a critical role in growing and nurturing our local innovation ecosystem,” said Ann Stevens, president of BioMed SA.

“The founders are life science entrepreneurs themselves and understand firsthand how the scarcity of local venture funding and the necessity for San Antonio entrepreneurs to raise money elsewhere was holding our life science sector back,” Stevens said.

Photo licensed from iStockphotos.com

Photo licensed from iStockphotos.com

In 2014, Targeted Technology launched its second fund with $42 million in venture capital. Many of the same investors from the first fund also participated in the second one, Dean said. It has made investments in nine companies so far and a few more currently undergoing due diligence that the company declined to disclose.

“We could certainly spend a lot more money than we have,” Castella said. “The second fund is $42 million and it’s all accounted for now. It only took us two years to spend $42 million. We could easily spend double that.”

Recently, Targeted Technology worked to attract German-based Cytocentrics Bioscience’s international headquarters to San Antonio. The company makes a medical device called a CytoPatch Machine. Its patch clamping technology evaluates drug interactions with human cells and analyzes data. The company has pledged to create 300 jobs and invest $15 million locally in the next eight years.

“The importance of Targeted Technology to the local ecosystem cannot be overstated,” Stevens said.

Targeted Technology invested in biotech serial entrepreneur Fred Dinger’s latest venture, Aerin Medical, an ear, nose and throat device company. The company is in the process of moving from California to Austin, where Dinger lives.

“Obviously we’re very keen on investing with Fred,” Castella said.

Dinger founded Osteobiologics, which sold to Smith and Nephew, then C2M Medical, which sold to Tornier and ENTrigue Surgical, which sold to ArthoCare.

Gabriele Niederauer, an executive who has worked with Dinger on a number of his startups, now serves as CEO of Bluegrass Vascular Technologies, another company in Targeted Technology’s portfolio, which moved from Kentucky to San Antonio.

“That’s what happens when you have a critical mass of biotech and life science companies – people move to another company,” Castella said. “A company gets bought and you still have trained skilled people and they tend to gravitate to entrepreneurial activities. “

Targeted Technology plans a third fund in a few years.

“Our next fund we would like it to be much larger because the opportunities are here and they’re growing,” Dean said.

“It creates its own momentum,” Castella said. “We support ideas that originate here. But truthfully most of what we’ve done is bring ideas in. That’s a function of having a venture fund this stage, which is fairly rare. A small amount of money can attract in significant opportunities.”

Targeted Technology has brought companies in from Kentucky, Canada, California, Ohio, Houston, Birmingham and Australia.

“If you have a team that’s capable of working deals and has a focus not just on investing but all of the ancillary functions necessary to support a company it’s a good mechanism for attracting opportunities,” Castella said.

Photo licensed from iStockphotos

Photo licensed from iStockphotos

Targeted Technology’s longest investment is in Bio2 Medical, creators of the Angel Catheter to protect critically ill patients from Pulmonary Embolism. Its average investment is about five years, Castella said.

“A lot of the companies we invest in have very significant technology in the sense that they have the potential to radically improve healthcare,” Castella said. “Vidacare was a life saving device that changed EMS. Bio2 is a device that will have a huge impact on hospital patient outcomes. Bluegrass is focused on vein access and Cytocentrics will open up a whole new avenue of drug research.”

Even though Targeted Technology is in South Texas the area is not shortchanged for transformational technologies, Castella said.

“In San Antonio, it’s been more of an organic, grinding path to get things going,” Dean said. “But it starts building on itself.”

Targeted Technology is also working to create a biotech accelerator and incubator in San Antonio. Birmingham has Innovation Depot, founded eight years ago, which has more than 100 companies today, Dean said.

“San Antonio could benefit from a similar program,” Castella said. “We are willing to work to help develop one of those here.”

A group from San Antonio visited the Innovation Depot in Birmingham recently to learn from the activity there.

Targeted Technology, with eight employees, has eight companies working out of its office in the Stone Oak area. They are all fund investments and they are focused on changing the world, Dean said.

“We want to make money for our investors but we really, really appreciate that we’re in the space where we save lives or improve lives with our technology,” Dean said. “This is more than just a job.”

BioMed SA Celebrates 10th Anniversary

Reporter with Silicon Hills News

Ann Stevens, president of BioMed SA, courtesy photo.

Ann Stevens, president of BioMed SA, courtesy photo.

Ten years ago, a group of leaders in San Antonio, led by former Mayor Henry Cisneros and the Greater San Antonio Chamber of Commerce, created an advocacy organization for the city’s biomedical industry.

They founded BioMed SA with the core mission to raise the visibility of San Antonio’s sizable biomedical industry locally, statewide, nationally and internationally.

“We’ve gained considerable traction in the last few years,” said Ann Stevens, BioMed SA’s president.

During the last decade, the organization’s mission has evolved to include economic development, Stevens said.

In 2009, Medtronic selected San Antonio for its new Diabetes Therapy Management & Education Center with plans to create 1,400 jobs. San Antonio beat out more than 900 other cities for the project and BioMed SA played an important role in convincing the company to locate here, Stevens said.

“EDF (The San Antonio Economic Development Foundation) had been working on it for more than a year,” Stevens said. “In the final stages, they asked BioMed SA to come into the project and help them land it.”

Since then, BioMed SA has worked closely with the EDF to bring new businesses here and to retain the ones that are here as well as foster new startups.

“We believe we are bringing real value by not only our promotional activities, but we’re beginning to attract outside investments to the city,” Stevens said.

In addition, the local startup scene in the life sciences industry is growing, Stevens said. The entrepreneurial side of the life sciences industry fosters new companies, attracts venture capital, brings seasoned executives to the city and helps the overall ecosystem to grow, she said.

Just recently, Targeted Technology, a locally based venture capital fund, brought Cytocentrics Bioscience, a Rostock, Germany-based biotech company, to San Antonio. The company agreed to relocate its corporate headquarters to San Antonio and create 15 jobs by the end of the year. In June, the City of San Antonio granted Cytocentrics $1 million in economic development funds to attract the company, which has pledged to create 285 additional jobs in the next eight years and invest $15 million. The company will be based initially at 18618 Tuscany Stone. Cytocentrics makes a medical device called a CytoPatch Machine. The company’s patch clamping technology evaluates drug interactions with human cells and analyzes data.

In addition to biomedical startups relocating here, one of the trends locally is to focus on technology transfer by taking academic research out of local institutions like the University of Texas Health Science Center at San Antonio and the University of Texas at San Antonio and spinning that technology out into startups, Stevens said.

On the startup front, Invictus Medical, which makes a cranial support device for the heads of newborn babies, is a prime example of a spin off coming out of the University of Texas at San Antonio, Stevens said. Other startups spinning out of the Health Science Center include Astrocyte Pharmaceuticals, which is developing drugs for brain injuries, and Rapamycin Holdings, a drug development company focused on disease prevention and treatment in pets and humans.

Randy Goldsmith, who heads up Rapamycin, also runs The Texas Technology Development Center, known as T3DC, and hosts a quarterly luncheon to keep everyone informed on what’s going on in the biomedical industry in San Antonio. About 200 people attend the luncheon, which features company presentations.

“By working together and raising visibility we have attracted more economic activity including a lot of activity in entrepreneurial startups and retained our hometown business,” Stevens said.

To continue to move the life sciences industry forward, BioMed SA plans to pursue new revenue sources from foundations, corporate grants and donations from individuals, said BioMed SA Chairman Ken Trevett.

Nobel Laureate, W.E. (William Esco) Moerner, Ph. D., to receive BioMed SA's 10th Annual Julio Palmaz Award. Photo courtesy of BioMed SA

Nobel Laureate, W.E. (William Esco) Moerner, Ph. D., to receive BioMed SA’s 10th Annual Julio Palmaz Award. Photo courtesy of BioMed SA

A few of BioMed SA’s key accomplishments in its first 10 years include the creation of the annual Julio Palmaz Award for Innovation in Healthcare and Biosciences. The next award, now in its 10th year, will go to W.E. Moerner, PhD, a San Antonio native and winner of the 2014 Nobel Prize in Chemistry. He will receive the award at BioMed SA’s annual award dinner in San Antonio on September 10th.

BioMed SA also recently completed a two-year Asset Initiative to identify “five key disease areas in which San Antonio has biomedical assets and expertise of national or world-class caliber.” That information is being used to promote San Antonio to researchers and companies in those areas and helped attract the World Stem Cell Summit to San Antonio last December.

San Antonio’s healthcare and bioscience industry employs nearly one of every six members of the city’s workforce and has an annual economic impact exceeding $30 billion, according to BioMed SA.

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