Venture capital funds lure biotech company from across the pond

A state-run pool of venture capital money has helped land a startup medical technology business from abroad, marking another addition to the Lowcountry's budding life-sciences industry. U.K.-based Myconostica Ltd. said Monday that it recently raised $7.7 million, allowing it to establish its U.S. headquarters in Charleston and to launch its first two diagnostic products.

"The United States clearly is going to be our biggest market," said John Thornback, the company's chief operating officer.

The Medical University of South Carolina is one of the reasons U.K.-based Myconostica Ltd. decided to open it U.S. headquarter in Charleston. Myconostica plans to set up offices and laboratory space along Clements Ferry Road with about five employees while seeking approval from the Food and Drug Administration to sell its products to U.S. hospitals and medical laboratories.

The company's launch includes test kits designed to speed up the detection of invasive fungal infections in patients with weakened immune systems. A quick diagnosis is critical to treating those cases but "very difficult," Thornback said. "Fifty percent of the patients are diagnosed after they die," he said.

The company also will be seeking approval to market and sell a system that can extract contaminant-free samples of fungal DNA for a fast and accurate analysis. Thornback said the company hopes to grow its U.S. business to the point that it makes financial sense to import materials from overseas for assembly in Charleston. Eventually, it would like to start manufacturing its products from scratch in the region, he said.

Myconostica's decision to plant its flag in South Carolina stemmed in part from legislation passed several years ago to help attract better-paying jobs from so-called knowledge-based businesses. The Venture Capital Investment Act allows the state to borrow up to $50 million at low interest rates and hire professional firms to scout out promising technology startups. One of those VCs, Boston-based Nexus Medical Partners, provided about a quarter of Myconostica's latest financing. It also introduced the company to Charleston.

"Our strategy has been to look for companies outside of South Carolina and bring them in. ... We're focused on high-quality opportunities," said Gregory F. Zaic, who oversees Nexus' Upper King Street office. Zaic said the fact that most of the $7.7 million in Myconostica funding came from other sources "is a terrific example" of how the South Carolina's seed money can be leveraged. Without the state's financial involvement, the company probably would have set up shop elsewhere, he added.

Myconostica was spun out of the University of Manchester about two years ago. Its founder, David Denning, is an authority on fungal disease at the University Hospital of South Manchester. Company executives have met with Ray Greenberg, president of the Medical University of South Carolina, and are being assisted by Ernest Andrade of Charleston Life Sciences, a new sister organization to the city's Digital Corridor technology initiative.

Aside from the state's financial interest in the business, Thornback said the company is impressed with the quality of life in the region, where he had visited in the past. "Charleston is a city where we can attract ... senior people to the company," he said.

The presence of MUSC and its growing research arm was another big attraction. "We really need a good medical school nearby in terms of cooperation, collaboration and discussions," Thornback said.