By Carrie Ghose, (February 1, 2013) – The same mystery toxins from blooms of algae that sicken swimmers and kill fish also might be the source of drugs to fight cancer or drug-resistant bacteria.

Biosortia Pharmaceuticals, a subsidiary of Marysville-based Algaeventure Systems Inc., is prospecting wild waterways for rare and previously unidentified chemicals that could be licensed to drug makers, akin to how penicillin was discovered in bread mold.

If even one treatment makes it to market, CEO Kurt Dieck said, the average royalties to the discoverer are about $250 million over the life of a prescription drug’s patent.

Until now, researchers have skimmed for aquatic material, isolated algae, and tried to grow it in a lab to ID toxins, not near enough material for drug research, Dieck said. What sets Biosortia apart is Algaeventure’s proprietary equipment to harvest and de-water huge masses of algae – and the mold, fungus, and amoebas living with it – without destroying their chemical properties. For the first time, researchers can work with literally tons of teeming microbial communities.

“The stuff we’re finding in their large collections from around the country is absolutely amazing,” said Peter Moeller, program lead in toxins and natural products chemistry at the Charleston, S.C., marine lab of the National Oceanic and Atmospheric Administration. “It’s like nothing I’ve ever seen before.”

When Algaeventure was developing its algae-removing technology under a Department of Energy grant, the federal government had Moeller monitor for toxicity. He was stunned to see the entire community of organisms preserved in large quantities and told the company about the potential for drug research.

“They fight each other with chemical warfare,” Moeller said. “I told them, you have some value-added products available to you.”

Ross Youngs, the Algaeventure founder, created Biosortia, which is named for the “consortia” or communities of aquatic organisms. He’s hired leaders for the company with Fortune 100 backgrounds: Dieck, who until late 2011 was senior vice president of strategy and business execution at Cardinal Health Inc., and Guy Carter, chief science officer, a natural products research expert who retired in 2010 from Pfizer Inc.

Based at Dublin’s TechDEC incubator, the company recently completed a $1 million financing round, including $600,000 cash from investors and conversion of debt to equity from a sister company, Univenture Systems Inc., the packaging business founded by Youngs in 1988.

Algaeventure, meanwhile, no longer is researching or producing biofuels from algae but licenses its technology to others.

“(Drug exploration) is the most exciting technology and opportunity that I’ve ever been involved in,” Youngs said.

The consulting firm McKinsey & Co. in a 2012 study on the choking pipeline for pharmaceutical R&D recommended drug makers rely less on the in-house synthesis and turn to collaborations.

Biosortia has submitted 13 compounds for review through a drug discovery program at Eli Lilly and Co., Dieck said. If it chooses to license any, such deals are typically structured with flat payments upfront and at various research milestones, with royalties assessed if an approved drug goes to market.

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About Biosortia Pharmaceuticals – Biosortia has a proven and unique ability to obtain unculturable aquatic microbial consortia from the natural environment in unprecedented quantities allowing its research team to discover a diverse array of new natural products. Biosortia is actively engaging pharmaceutical research and development organizations to explore the huge opportunity of exploring aquatic microbial consortia for potential therapeutic agents.

About JLABS – The Biosortia Pharmaceutical operations are located at JLABS in San Diego (JLABS @SD). JLABS is a 40,000 square-foot life science innovation center, located in San Diego. The labs provide a flexible environment for start-up companies pursuing new technologies and research platforms to advance medical care. Through a “no strings attached” model, JJI does not take an equity stake in the companies occupying JLABS and the companies are free to develop products – either on their own or by initiating a separate external partnership with JJI or any other company.

If you’d like more information about the announcement or Biosortia, please contact Chad Hummell of Biosortia at 614-203- 8040 or ch******@*******ia.com.