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Israeli Knesset's Finance Committee Approved Israel Innovation Authority to Launch a Competitive Process for Additional Biotechnology Incubator in Northern Israel

Eli Cohen, Minister of Economy and Industry : "It is very importance for us to understand the needs of the high tech industry and adjust programs to the varying needs of ever changing technologies. Our task is first and foremost to enable the industry to evolve while fully supporting its success. This is another stage in the Northern Region Program, estimated at a total of about 920 million NIS which will conclude by the end of 2018."

The purpose of a biotechnological incubator is to assist in strengthening the pharma industry in Israel, by putting together investors and strategic partners who can identify innovative technological projects and help them turn into innovative companies in Israel.

Following Government Resolution number 2262 that passed on January 8, 2017, Israel Innovation Authority evaluated the establishment of a biotechnology incubator at the Northern region of the country. Subsequently, the Finance Committee has now decided to approve the launch of a competitive process to establish a second biotechnology incubator. This resolution comes following the success of the first competitive process in which FutuRx incubator was selected. Its success highlighted the need for additional incubator to help establish and create many more quality companies in this field.

Aharon Aharon, CEO, Israel Innovation Authority: "Hundreds of innovative biotechnological and pharma researches are taking place in academia. About 50% of patent requests originated in Israel are from the fields of pharma and biotechnology. The global industry of medicine sales based on academic studies that originated in Israeli research institutes is valued at about $60 Billion. It is important that the great value created in local academia will flow to the Israeli industry. Our data show that in recent years there is an increased activity in these fields, therefore, there is a crucial need to continue and realize this potential. Establishing an additional biotechnological incubator is therefore paramount to meeting this need.

We see in the northern region of the country the beginnings of research infrastructures and relevant services as well as great human capital potential. The plan approved by the Finance Committee enables the incubator to establish an extension in Haifa in order to connect to the city's rich life-sciences ecosystem that includes hospitals, universities and medical companies. This foundation, along with the biotechnology incubator will assist in the establishment of new startup companies and in creating an important regional ecosystem that will strengthen the Israeli pharma industry. The association with Haifa will allow a combination of complementary capabilities and synergies in life-sciences between the northern region and Haifa, creating a significant growth engine for the region in particular and for the Israeli market as a whole."

Today, some 20 global pharma companies focused mainly on commercial activities operate in Israel. There is great potential to expand their operation to innovative R&D areas, which will have an impact on the Israeli pharma industry. The first competitive process, where FutuRx incubator won, drew two multinational pharma corporations to Israel: Johnson & Johnson from the USA and Takeda from Japan in cooperation with the veteran US venture capital Orbimed. The fusion of multinational corporations and a venture capital fund's complementary capabilities is very successful, bringing great value to the 11-startup companies the incubator has invested in thus far.

Anya Eldan, VP Startup Division at the Israel Innovation Authority: "The Technological Incubators Program is a pivotal platform for Israeli companies to capture value created in academia. The technological incubators have proved themselves an important tool in helping create innovative new companies based on academic know how in numerous fields. An additional biotechnological incubator will multiply the number of young companies in this field and serve as an entry gate to multinational pharma corporations and specialized investment funds, bringing additional pharma corporations to Israel enabling the required support to establish new and sustainable companies. Therefore, bolstering the entire pharma industry in Israel."

The biotechnological incubator that wins said competitive process would gain an 8-year franchise to leverage its investment in startup companies with a substantial funding from the Innovation Authority. Each company approved the by Authority will receive a budget of up to $2.3 million for a duration of three years, 85% of the budget will be provided as an Authority grant while the remaining 15% will be provided by the incubator. In exchange, the incubator will gain up to 50% of each company's shares (up to 80% if the enterprise comes from a research institute), additionally, the incubator will gain financial aid from the Authority in establishing a central lab, which will serve the incubator's member companies.