This year, Maryland Economic and Business Development Secretary Richard C. Mike Lewin was drawn repeatedly to the floor below his office, where he watched on a stock monitor as shares of Gene Logic Inc. traded higher hour by hour. When they hit $75, the state's venture capital gurus began to sell.
The sale brought the state's Enterprise Investment Fund about $17.2 million on the $500,000 investment it had made in the young company in 1996, a whopping 3,340 percent increase.
Yesterday, as yet another fledgling biotechnology company announced that the state's enterprise fund had invested $500,000 in it, Lewin could only hope that the state would once again fare so well. But, he said, "Our end game is not just profit: It's creating jobs and economic activity."
NeuralStem Biopharmaceuticals Ltd. is the latest recipient of money from the Enterprise Investment Fund, a state-sponsored venture capital fund the state formed in 1993 to help young Maryland biotech and high-tech companies grow. Since its inception, the fund has directly invested nearly $11.2 million in 32 Maryland companies and reaped about $46.8 million from sales of stock in company shares it has sold - money that goes back into the fund and is available for reinvestment. The companies have created a total of about 1,200 jobs.
The fund has a value of $54 million, parlayed from just $9 million in general obligation funds approved by the General Assembly. The fund's value includes about $6 million that it invested in companies through four venture capital firms that concentrate on investing in Maryland companies.
The biggest home run: last year's $28.1 million take from the sale of stock in Visual Networks Inc., a computer networking company.
The fund invested $250,000 in Visual Networks in 1994.
To be sure, the fund also has had its share of losers. Lion Pharmaceuticals, the recipient of a $500,000 investment in 1997, for example, is no longer in business. The fund's records list a total of four companies in which it invested but reaped no rewards from stock sales when they were sold or went out of business. (The state-sponsored fund usually gets stock in exchange for its investment.)
NeuralStem is an example of the kind of company in which the fund's managers have liked to invest. It is Maryland-based, has a product to sell and already has attracted substantial investment from private sources. Among them: an investment company led by Jeong H. Kim, the former chief executive officer of Landover-based Yurie Systems Inc., which Lucent Technologies Inc. bought for more than $1 billion in 1998.
NeuralStem has raised $16.5 million, including the state enterprise fund investment, this year. That is about four times what the 3-year-old company had raised in previous years combined.
College Park-based NeuralStem has patented a way to grow stem cells that would become the central nervous system. The company is licensing the knowledge to pharmaceutical and biotechnology companies that will use it, in part, to test drugs they are developing to fight central nervous system disorders.
It has about 15 employees and plans to increase to 30 by year's end, growth that could be just the beginning for the company if current talks to license its technology pay off.