A Look at Three Regional Investors
By Rodney Campbell
It takes people and products to fund success in the biotech market. Just as important is the funding that makes those dreams a reality.
Before a COVID-caused dip in investments last year, venture capitalists poured a combined $36 billion into biotech companies nationwide in 2018 and 2019, according to BioPharma Dive, a newsletter and website that covers news and trends shaping biotech and pharma. Through the University of Arizona and a skilled workforce, Southern Arizona is drawing its share of that money.
“New ideas in the bioscience arena take significant investment to help bring them from the ‘bench to the bedside,’ as they say,” said Sun Corridor Inc. President and CEO Joe Snell. “Venture capital is key to this. We have made great strides in recent years with venture capital firms like UAVenture Capital, BlueStone Venture Partners and others. There is a lot of attention in this area, and we are making progress.”
Here’s a look at three individuals and organizations making significant investments in Tucson-area biotech.
Mara Aspinall – Managing Director and Co-Founder, BlueStone Venture Partners
Aspinall has significant biotech experience, having served as president and CEO of Ventana Medical Systems and named the Arizona Biosciences Leader of the Year by the Arizona Biotechnology Association in 2016. She recently was appointed to the board of directors for Critical Path Institute, an independent, nonprofit dedicated to bringing together experts from regulatory agencies, industry and academia to collaborate and improve the medical product development process.
“My time leading Ventana inspired me to do more to move the industry forward,” Aspinall said. “I love being part of companies that break tradition, take risks and create leading products. That is what the strongest entrepreneurs do.”
She’s also the co-founder of the Arizona State University School of Biomedical Diagnostics, an accomplishment she calls the most meaningful of her career.
“Working with the next generation of healthcare leaders is what drives me,” Aspinall said. “We should not have needed a pandemic to prove that diagnostics are critical to effective patient care, but it is heartening to see so many executives go back to school to learn about the power of diagnostics.”
Creating more opportunities for women is also among Aspinall’s goals; she was named to Women Inc. Magazine’s Most Influential Corporate Directors List in 2019. That applies to the world of venture capital, which skews heavily male. Aspinall said 94% of venture capitalists are men, a figure she calls “unacceptable.”
“There is more money going into risk capital than ever before, but the composition of the industry has not changed in 10 years,” she said. “It’s also sad to see that the number of investments in women-led firms dropped to a new low in 2020. We need to make conscious efforts to change this situation. Diversity isn’t about being politically correct; it is profitable. New viewpoints and new networks fuel success.”
BlueStone concentrates on supporting companies that operate in the life-sciences space in the Southwest. Aspinall sees great potential for further biotech growth in Tucson.
“Tucson is like an unpolished diamond in the desert,” she said. “The city is a fantastic place to live and to work but not enough people know that. Costs to run a business are lower in Arizona than in any other southwestern state. We have great talent but we need more companies to start here and to grow here. We have the building blocks for a great ecosystem, but we need to reach critical mass.”
Joann MacMaster – CEO, Desert Angels
MacMaster has been on both sides of the venture capital coin. She was part of Tech Launch Arizona’s leadership team from 2013 to 2020 before joining Desert Angels in her present position.
“Building a startup company requires significant effort but building a startup company in the biotech space may present a few unique challenges that require additional time and capital,” said MacMaster, a Desert Angels member for 10 years. “I joined TLA just after it came together and had the honor to be part of developing those startup companies. It is truly rewarding to see the right team connect at the right time and with the right plans.
“However, the gap between executing a license and moving toward market is significant. Desert Angels can help bridge some of that gap by connecting founders to mentors, advisors and investment at a critical time to help their companies advance. It’s exciting now to be on the investor side of the conversation, working to help these companies move forward.”
Founded in 2000, Desert Angels is a Tucson-based non-profit organization of investors that seeks opportunities to invest in regional startup and early stage companies. The group has invested more than $60 million to help more than 130 companies get started in Southern Arizona. Approximately 40% of Desert Angels’ invested portfolio of companies are biotech-related (pharmaceutical, diagnostic, other medical technologies and digital health).
The organization is ranked first in the Southwest and seventh in the country among Angel groups.
“Angel investing strengthens startup companies, which creates new jobs, attracts new resources to our community, and has a positive regional economic impact,” MacMaster said.
MacMaster, a former president of the Arizona Business Incubation Association, believes that conditions are right for biotech entrepreneurs to find success in the state.
“Arizona has a strong network of talent, startups, associations, partners and funding sources that are all actively supporting our biotech community,” she said. “It is an exciting time to build a biotech company here in Arizona.”
Fletcher McCusker – CEO, UAVenture Capital
McCusker has steadily ascended through the healthcare field, moving from administrator to COO to CEO. As he gained experience and insight, he learned that venture capital played a vital role in advancing businesses.
He helped start two healthcare-related companies, Providence Service Corporation and Sinfonia Healthcare. Providence was the first home-based mental health care company in the world. The Tucson-based company brought in more than $1 billion a year in revenue and delivered more than 10 times upon initial investments. McCusker and Providence CFO Michael Deitch retired and started Sinfonia, the first integrated health care company in the U.S., with their money and invited others to invest. Sinfonia combined physical and behavioral health under one roof.
Thanks to partnerships with Tech Launch Arizona, Sinfonia teamed with the Medication Management Center in the College of Pharmacy to eventually create SinfoniaRX. The new business had a program that allowed insurance companies to compare physician-written prescriptions to other medications in seconds to determine any conflicts or issues. Sinfonia was sold for $130 million after just a few years.
“There is no reward in venture capital without risk, and really risking everything,” McCusker said. “It is more art than science and you learn to trust your instincts about what ideas, patents, products on campus might prove valuable to a world market. We also want to believe in the faculty partner and embrace their lifelong passion about their specialty. We invest as much in people as we do product.”
UArizona hired Dr. Robert C. Robbins as its president around the same time Sinfonia was sold. McCusker and his team met with Robbins, an inventor himself, to design a fund to help UArizona-led companies in optics, biomedicine, space, defense and software. Investors combined to put approximately $30 million into the fund and UAVenture Capital was on its way.
“My interest was to give back, create an environment where others could benefit from risk capital and mentoring, improve the reputation of the UofA and help put the Tucson region on the map,” McCusker said. “None of this occurs without the UofA and the leadership of (Robbins) and (Senior VP for Research and Innovation) Betsy Cantwell. The university has always been a robust environment for the creation of ideas. Now, we can demonstrate they can also commercialize.”
McCusker also serves as chair of the Rio Nuevo Board, Downtown Tucson’s most important investor. He said the community is on the verge of making big moves in the biotech arena.
“Tucson is indeed the next Austin, San Diego, Boston when it comes to biotech and biomedical,” he said. “We are still, largely, undiscovered, but wait three to five years.”