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INFLUX OF VENTURE CAPITAL COMPANIES
GROWS ON HOME TURF
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By Laurie Burstein
Acombined $45 million in new venture capital money is helping finance two entrepreneurial
companies in the St. Louis life sciences cluster. Centerre Healthcare and Kereos Inc. are the two companies to receive this new round of funding and their respective healthcare-related services and products have the potential to vastly improve and even save lives.
Centerre Healthcare received $30 million in venture capital and is the only company in the nation exclusively developing and operating specialty rehabilitation hospitals in partnership with leading general acute care hospitals. Centerre specializes in operating and
staffing these rehabilitation centers to treat patients of stroke, brain injuries and spinal cord injuries.
 John Lewis, CEO,
Centerre Healthcare |
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With two rehabilitation centers currently operating at hospitals in Phoenix and outside Philadelphia, Centerre recently announced plans to develop additional centers including a rehabilitation hospital in partnership with
St. John’s Mercy Medical Center opening in West County in 2007.
John Lewis, CEO of Centerre Healthcare says, “In the next five years, we expect to have 26 rehab hospitals in operation across the country. The $30 million allows us to fully fund these new hospitals.”
Kereos CEO Robert “Al” Beardsley Ph.D believes that the St. Louis region is ripe for investment in the biotech industry. Beardsley says that the recent venture capital investment of $15 million in Kereos, along with the company’s partnerships with Washington University and Barnes Jewish Hospital for research and development, large talent pool from the pharmacy industry and lower operating costs, are the key factors why St. Louis is an ideal place for Kereos’ headquarters.
Kereos develops products designed to provide more effective treatment and detection of cancer and cardiovascular disease. The company’s two lead cancer products are tumor targeted MRI agents that can detect tumors only one millimeter in size. These products are currently undergoing testing to determine their safety in preparation for human clinical trials, which begin in 2006.
“We believe that our cancer products will enable physicians to find tumors earlier and treat them more effectively, while our lead cardiovascular products should be the first to find and treat unstable plaque underlying most heart attacks,” Beardsley says.
| Robert “Al” Beardsley Ph.D, CEO, Kereos |
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He continues, “The money allows us to demonstrate in human clinical trials the potential of these products to save lives. Our strong partnerships in the venture and
corporate communities has made it possible to continue to develop and test our two lead cancer agents.”
The recent influx of venture capital money into the region’s life sciences cluster is important on many levels, says Tom Melzer,
managing director of RiverVest Investments, a St. Louis-based venture capital firm
focusing on seed, early-stage and selected later-stage life science investments. Melzer co-founded RiverVest in 2000 after 13 years with the Federal Reserve Bank of St. Louis, along with former Boatmen’s CEO Andy Craig.
RiverVest Venture Partners is one of the key investors in Centerre and Kereos and provided bridge financing to allow sufficient time to complete the new financings, as well as invested significant additional funds in these financings, demonstrating strong insider support for both companies.
“Not only do the investments in Centerre and Kereos further enable the development of these companies, the financing advances
St. Louis’ efforts to build a sustainable life
science cluster while adding jobs,” Melzer explains. “In addition, the participation of new investors from outside the region increases the chance that they will consider other life science investments in St. Louis,” he says.
With most of the venture capital funds
concentrated on either coast, outside VC firms are making sizable investments in life sciences start-ups in the St. Louis region. In the case of Centerre, the majority of funding for this latest round came from Three Arch Partners of Portola Valley, Calif., one of the
pre-eminent venture capital firms investing in health care services in the country.
Kereos also has many investors from the coasts including the high profile West Coast firm Genentech. But it has been two St. Louis venture capital funds, Prolog Ventures, and especially RiverVest, who have made key investments.
RiverVest was the first investor in Kereos in 2001 and remains a large supporter of the company today. As a board member and
advisor Melzer helped build the company from one employee into a company with an experienced management team and multiple corporate partnerships. Melzer says, “We were impressed with the academic founders of Kereos and knew that their technology was very important. We saw an opportunity to help this new life sciences company grow,” Melzer says.
Melzer’s involvement with Centerre is more recent, but he says there were many key reasons to invest in Centerre. “St. Louis has been home to several of the leading national rehabilitation and long-term acute care hospital companies over the past twenty years. We don’t normally invest in healthcare services, but with John Lewis and the Centerre corporate team contributing so much to that success, we were easily motivated to get involved.”
Both Lewis and Beardsley have strong track records for building companies in their respective niches, earning them the title of “serial” entrepreneurs. Both say they are attracted to the problem solving and team building, as well as the fundraising that goes
with building a start-up
company.
“John Lewis and Al Beardsley have been involved with successful entrepreneurial endeavors previously and therefore are serial entrepreneurs in the sense that they are leading new startups today, applying the knowledge and experience they have acquired in the past,” Melzer says.
Lewis has had a successful history in the post acute-care industry in St. Louis for the past twenty years. He was a senior executive with RehabCare, a leading company in providing contract management services for rehabilitation units since 1987. He then went on to start similar companies including Advanced Rehabilitation Resources (ARRI) and Intensiva Healthcare, a national leader in specialty long-term acute care hospitals. Both companies were sold for a profit.
He started Centerre in the fall of 2000 which today has 25 employees. Lewis says a key to his success has been to recruit a number of top executives from past rehab companies to Centerre.
Kereos’ Beardsley has been on both sides of the venture capital fence having been with a series of biotech firms, as well as having worked for venture capital firms investing in biotech companies. Prior to joining Kereos in 2002, Beardsley was CEO of MetaPhore Pharmaceuticals, where he played key roles in successfully raising funds for the company. He holds a Ph.D. in Biochemical Engineering and a B.S.Ch.E. from the University of Iowa, along with an MBA from the University
of Chicago.
Both Lewis and Beardsley agree that the new capital coming into the BioBelt region and to their businesses makes it easier to stay headquartered in St. Louis, where they want to remain.
Lewis adds, “St. Louis is the premiere location for post-acute care companies. We have built a strong network of resources and talent pool in St. Louis. This is the right place to build our business.”
“St. Louis is fertile ground for venture
capital money,” Beardsley says. “Early on we had a great deal of interest from a large investor who asked us to relocate. We decided to stay in St. Louis due to our strong ties to Washington University and so many other important factors.” |
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