Slowly, the ranks of New York biotechs are increasing, thanks in part to a growing group of early-stage venture capitalists dipping their toes in the local startup scene. Tara Biosystems is one of those startups, and today it’s brought a few new investors in as part of a plan to take root and grow in the city.
Harris & Harris Group (NASDAQ: TINY), a publicly traded New York venture firm and Tara’s founder, has brought in Alexandria Real Estate Equities and the Partnership Fund for New York City in a $2.25 million seed round. Including the $500,000 that Harris & Harris put into Tara last year, the company has now raised $2.75 million total since its inception.
This, of course, is a nominal amount in biotech, particularly in the hotbeds of Boston and San Francisco, where high-profile startups can form in conjunction with a nine-figure series A round. And Tara, which is developing a stem-cell based tool for screening potential drugs, has a long way to go to become a sustainable company.
But Tara CEO and Harris & Harris managing director Misti Ushio notes that the startup’s goal is to prove itself on a small amount of money, and then grow locally in New York. That’s why Tara’s investors include Alexandria (a builder of life sciences spaces, among them Manhattan’s Alexandria Center for Life Science) and the Partnership Fund (an evergreen fund investing in initiatives that lead to New York jobs), and why it plans to open a lab in the city and hire folks to work in it.
“We want to grow in New York and be a part of this whole ecosystem,” Ushio says.
I’ve written extensively about New York biotech’s ongoing transformation and the challenges, but one of the most recent developments over the past year has been the presence of a number of early stage biotech investors trying to set up companies. Among them are Versant Ventures, Flagship Ventures and Arch Venture Partners (who have teamed up to back a $150 million biotech fund from the New York City Economic Development Corp.), and Accelerator Corp.
Neither the NYCEDC’s fund nor Accelerator have publicly announced an investment as of yet. But Versant, via its Highline Therapeutics incubator, just seeded Kyras Therapeutics out of Columbia University in December. And another local firm, Lux Capital, helped start Kallyope, another startup with Columbia roots.
Then there’s Harris & Harris, another local biotech startup investor. The firm invested in a fund that Accelerator closed when it opened up a branch in New York in July 2014, and seeded Tara that year based on work of two biomedical engineers: Columbia’s Gordana Vunjak-Novakovic, and the University of Toronto’s Milica Radisic.
As I wrote last year, Tara is one of several firms developing new technology meant to improve the reliability of preclinical testing. The startup uses stem cells to create what amounts to tiny micro-hearts attached to polymer wires, a system that Tara calls “Biowire.” When the hearts beat they pull on the wires, which allows researchers to quickly measure the effects of a host of would-be drugs on heart tissue. (Check out this piece for more on Tara’s technology and how it compares to other companies’ “organ on a chip” approaches.)
Tara aims to use Biowire to help drug companies either get a better read on how experimental medicines affect the heart—do they damage it, for instance?—or discover new drugs. Ushio says the company just began earning its first revenue in December through a deal with an unspecified large pharma company, and aims to have five customers in place in 2016. It’ll need multiple deals, and recurring customers, to become profitable.
To pull that off, Tara needs its own lab—it’s currently outsourcing a lot of work—and, as Ushio acknowledges, a more economical way of producing Biowire on a larger scale. As with any biotech trying to grow in New York, part of the problem for Tara is finding the space to grow. Ushio says Tara wants to have a lab in New York (preferably Manhattan) in the first quarter, though she wouldn’t say much about where that would be. Given Harris & Harris’s relationship with Alexandria, how about the Alexandria Center?
“We in the process of nailing down our space in [New York city], but that’s certainly a great option,” she says. “I’ve looked at everything.”