WINSTON-SALEM, NC — North Carolina’s business-expansion partnership Piedmont Triad must develop a steady pipeline of entrepreneurs capable of building new life-science companies if the region is to emerge as the state’s third biotech hotbed, two key industry observers told an audience of workforce-development professionals here.
“If right outside here there were great companies with great business plans and great opportunities on every street corner of Winston-Salem, guys like me will be tired of flying here and will go live here,” Steven Burrill, CEO of life-science merchant bank Burrill and Company, said of the region, which connects Greensboro, Winston-Salem, and High Point. “The question is, ‘What comes first?’ If you build an entrepreneurial-based community, all of the capital you ever need will be right down that street.”
Burrill made his comments at the Wired Bioscience Institute, a two-day life-sciences workforce-development conference held here last week.
Burrill used as an example his home region, the San Francisco Bay Area, which has built the nation’s largest cluster of life-sciences businesses — more than 900, according to the region’s life-sciences industry group BayBio.
“It isn’t because we have better science than everyone else. It’s cause we have fabulous entrepreneurship,” said Burrill. “So the question in all of your communities is, ‘How do you build the entrepreneurial base?’”
Burrill told BioRegion News that the Piedmont Triad was on its way to building that base, noting the presence of more than four dozen life-sciences companies, from startups to early-stage and more mature companies.
He cited the mature biopharma Targacept, on whose board he sits, which spun off from tobacco company RJ Reynolds in 2000 and raised more than $200 million since going public six years later with the goal of developing treatments for central nervous system disorders.
“In the middle of tobacco country, [Targacept] managed to build a real company that can employ people and improve the quality of life. That’s a role model that says you can take science from this kind of old-line tobacco company and spawn a pharmaceutical company,” Burrill said. “That’s exciting, and it gives a lot of people confidence.”
Scott Sarazen, global biotechnology markets leader with Ernst and Young, said he agrees with Burrill that raising entrepreneurs must precede raising capital.
“If you have good science, you can get the capital. There’s great science in North Carolina,” Sarazen told BioRegion News. “The challenge that this region, like every other region, faces is capital. How do you create linkages that keep that new company, that new investment in the area? There has to be something that keeps them there. And that’s a structural, economic-development function.”
Sarazen, a former Genzyme executive who later served as life-sciences ombudsman for the Massachusetts Development Finance Agency, said the Triad should encourage life-sciences leaders to develop roots in the region as they grow with it.
“The question you have to ask yourself is, ‘What am I putting in place that creates some roots to the technology here?’” said Sarazen. “’Am I putting in a capital program in place that also creates an incentive for that company to stay here?’
“If they don’t have an incentive to stay here, the flipside is not [investors saying] ‘I’m flying there to Winston-Salem to do a deal, I’ll eventually move here.’ I don’t want to fly to Winston-Salem if I’m an investor from some other location,” Sarazen said. “I’d rather have them start the company in a place where I can fly to that board meeting.”
Getting a handle on venture activity in the Triad isn’t easy; the state-funded North Carolina Biotechnology Center doesn’t track private equity influx region by region. Nevertheless, one indication of progress is a MoneyTree Report issued last month by PricewaterhouseCoopers and the National Venture Capital Association using Thomson Financial data that showed that just one Triad company, Piedmont Pharmaceuticals of Greensboro, racked up $8.5 million in biotech venture capital in the final three months of 2007.
The MoneyTree report shows that venture capital flowing to Triad companies lags behind similar investments in the Research Triangle, North Carolina’s largest life-sciences region that is anchored by Research Triangle Park and the nearby cities of Raleigh and Durham During the same period, companies based in those areas reported a combined $36.4 million in VC financing compared with $16.1 million during in Q4 ’06.
MoneyTree does not break out data for the Triad into a separate region. Subtracting the “Research Triangle” region results from the results for all of North Carolina yielded Piedmont’s $8 million for Q4’07, and a single biotech recipient of $1.8 million in VC for the Q4’06. However, neither the identity and headquarters location of that company appear on the historical data made public by PwC.
Gwyn Riddick, director of the Piedmont Triad Office, told BRN that the Triad’s lower numbers is a reflection of the fact that there are more earlier-development stage companies than are based in and around RTP.
Yet the Triad remains a significant player in North Carolina’s life sciences industry. It is part of a 12-county sub-region that employs 28,000 people with a connection to the industry — either direct jobs at life science companies, or indirect support jobs at law firms, industry-specific software developers, and other businesses, Riddick said.
He said the biotech center did not have an updated count of direct life-science jobs in the Triad. As of November 2005, the region had 14,430 “biotechnology” jobs, according to a list maintained by the regional economic-development group Piedmont Triad Partnership.
‘Fat and Sassy’
In 2004, the North Carolina Biotech Center, a state-funded agency created to advance the life sciences industries, foresaw the Triad emerging as North Carolina’s second life-sciences hub. In a report it produced that year, “New Jobs Across North Carolina,” which can be read here. The biotech center noted the region’s existing concentration of healthcare activity and mentioned Wake Forest University as being the largest employer, with 11,398 people, for both Winston-Salem and the 12-county Triad region. It also noted the 3,800 people employed by the Baptist Medical Center, based in Winston-Salem.
Winston-Salem is also home to Wake Forest’s School of Medicine and several other programs based at Piedmont Triad Research Park, including its Institute for Regenerative Medicine headed by the region’s best-known research scientist, Anthony Atala, who came to WFU in 2004 from Children’s Hospital and Harvard Medical School in Boston.
“Piedmont Triad can build upon its well-developed human health resources,” according to the plan. “Regional strengths statewide might include specific scientific research, preparation of a workforce, investment, incubator facilities, schools and community colleges, support services, or new capabilities in traditional manufacturing.”
The plan also said that North Carolina’s life-science workforce can grow to 48,000 by 2013, a goal the state has more than surpassed; and said the
workforce can grow to 125,000 by 2023.
The projections were made as the Triad was in the midst of a restructuring spasm that would eventually cut hundreds of non-bio jobs at companies in industries such as tobacco and textiles.
“[Triad communities] had forgotten how to compete,” Targacept CEO Donald deBethizy told conferees. “We’ve really transformed the area into an entrepreneurial area. We were fat and sassy. We had some very big industries here, we had gotten very comfortable, and you had a lot of people managing the success of those businesses, not creating new businesses.”
As the tobacco and textiles industries began to falter in the 1990s, and as RTP capitalized on its presence of three top-tier research universities and numerous pharma giants, the Triad’s only option of creating its own life-science cluster was to anchor around smaller companies.
Jon Obermeyer, CEO of the Piedmont Triad Entrepreneurial Network, said the region is now home to some “40 to 45” life sciences employers, divided roughly in thirds among biotech and pharmaceutical companies, medical device makers, and therapeutics providers.
Targacept isn’t the only successful company in the Triad. TransTech Pharma, a clinical pharmaceutical development company, and its spinout company PharmaCore announced plans last December to add 205 jobs in High Point by 2012 through a $23.3 million expansion that would more than double the companies’ facilities from 77,000 to about 186,000 square feet at a corporate park off Mendenhall Oaks Parkway.
“When Glaxo [SmithKline] lays off 30 executives, you could start 30 companies in the Triangle. And [here in the TRiad], we just don’t have that critical mass [of executives] who know how to do the business-development side of this industry.”
In return for the job-creation promises, the companies received a $6.6 million Job Development Investment Grant from the North Carolina Economic Investment Committee, and $3 million in city tax incentives from High Point’s City Council. TransTech will add 155 workers during the next five years, growing from its current 85 employees to 240. PharmaCore will add 50 employees to its current roster of 40.years, state and local officials said.
Yet not all the news is good either. MWG Biotech is closing its High Point plant at Piedmont Centre and shifting its production operations to the Huntsville, Ala., office of its partner in a joint venture to manufacture custom DNA, Opheron Biotechnologies managing director Patrick Weiss did not return a BRN message seeking more information on the consolidation, which would idle the 45 employees based there as of November 2005; a current figure was unavailable.
“I consider us an emerging region,” said Obermeyer, whose group provides mentoring and programs for growth-minded companies, as well as access to capital through an angel capital fund for startups. “We need wet-lab space, plus what my organization works on, [which is] the education and the management-team development.”
Some of that managerial development may come from Wake Forest University. Michael Batalia, director of Wake Forest’s Office of Technology Asset Management, said the university is forming a new institute for entrepreneurship.
“We are in the process of pulling together all the pieces in our Wake Forest community that participate in, or are interested in, developing entrepreneurship, including some framework clearly to make it a program that can then overlap and provide an experience for a student, from, ‘Are you coming in? Are you interested?’ all the way up to when they graduate,” Batalia said.
One answer to the region’s wet-lab need will come next month, when the first of three tenant businesses move into the $750,000, 5,000-square-foot Wet-Lab LaunchPad within the Piedmont Triad Research Park [BioRegion News, Dec. 3, 2007; Dec. 31, 2007].
Yet even with these efforts, Obermeyer said the Triad has a long way to go before it can lay claim to a cluster comparable to RTP.
“When Glaxo [SmithKline] lays off 30 executives, you could start 30 companies in the Triangle. And here, we just don’t have that critical mass [of executives] who know how to do the business-development side of this industry,” Obermeyer said.
He said this hole feeds on itself by dissuading companies from moving to the region. “Those companies aren’t coming because there’s no second act for their people,” said Obermeyer. “They think, ‘Well gosh, if this doesn’t work out, where do I land?’”
The Triad is also home to the state-funded Biomanufacturing Research Institute and Technology Enterprise, or “BRITE”, Institute, created to train workers for biomanufacturing and bioprocessing jobs. The institute is completing a 52,000-square-foot permanent facility set to open next month on the campus of North Carolina Central University in Durham.
The building’s $20.1 million cost was funded by the Golden LEAF Foundation, the nonprofit formed by North Carolina to administer the state’s share of the 1999 tobacco settlement. Golden LEAF gives preference to projects deemed to help “tobacco-dependent” areas, a designation applied to the Triad’s Davie and Randolph counties.
About 100 students are enrolled in BRITE’s bachelor’s degree programs — biology, chemistry and physics, each with pharmaceutical science concentrations; or pharma science itself. Another 24 students — 18 of them workers displaced from jobs in declining industries — are in the institute’s graduate programs, which awards master’s degrees in pharmaceutical science. “We like to provide students with a competitive edge,” Li-An Yeh, director of the program, said at the Wired conference.
BRITE is a program of the North Carolina Biomanufacturing and Pharmaceutical Training Consortium, whose members include the biotech center and Golden LEAF, as well as the state’s university and community college systems, the life sciences industry group North Carolina Biosciences Organization, and its Biotech Manufacturers Forum offshoot.
The consortium operates on annual appropriations of $20 million from the state General Assembly. Last September the consortium completed the 85,000-square-foot Golden LEAF Biomanufacturing Training and Education Center at the Centennial campus of North Carolina State University. The center was built using $70 million of Golden LEAF funds, plus 413 million in in-kind contributions from biomanufacturing companies.
The Triad has seen several multiple private, public, and public-private workforce-development efforts in recent years, all aimed at the life sciences. An internship program begun by Targacept in 2002, for instance, will open slots this year for nine undergraduate or graduate students, and “hopes” to have internship slots for “at least two associate degree candidates” from the Forsyth Technology Community College Biotechnology degree program,” Targacept spokeswoman Linda Gretton said.
Workforce development is the goal of another anchor of the Triad’s life science cluster: the National Center for the Biotechnology Workforce’s Biotech Research and Development Training Center at Forsyth Tech Community College. The center, established in 2004 through a $5 million grant from the US Labor Department’s Employment and Training Administration, operates from a 17,000-square-foot building opened in 2006.
That year, the labor department awarded a separate three-year, $15 million grant through its Workforce Innovation in Regional Economic Development, or WIRED, program to the regional economic-development group Piedmont Triad Partnership to help create clusters in life science and other industries.
Forsyth Tech has the state’s largest biotech training program: a two-year associate in applied science degree in biotechnology with courses intended to offer skills that include animal handling, chromatography, immunology, instrumentation and laboratory mathematics, molecular biology, and tissue culture.
Forsyth Tech is one of five community colleges nationwide that host biotech workforce centers through NCBW. Forsyth Tech focuses on R&D, while Bellevue (Wash.) Community College specializes in bioinformatics; Iowa’s Indian Hills Community College, in agricultural biotech; San Diego’s Mira Costa Community College, in bioprocessing; and New Hampshire Technical College, in biomanufacturing.
Forsyth Tech’s program enrolls about 100 majors and has graduated 68 students during its four years of offering classes. “We’re roughly filling anywhere from 18 to 30 graduates a year,” said Russ Read, executive director of the biotech workforce center at Forsyth Tech
“We’re anticipating the demand that’s there. But we’re not anticipating big-box companies,” Read acknowledged. Should large companies need training, he said, the center would offer a 160-hour version of the BioWorks biomanufacturing course offered at several North Carolina community colleges.
A major player could help the Triad, Obermeyer argued, by bringing with it a supply of entrepreneurially minded executives ready to spin out companies. That could address a problem identified in a report last August, namely a slight oversupply of employees but a paucity if top-level business-minded managers.
Sixty percent of the 59 students interviewed or surveyed, or 35 students who graduated in 2006 with biotech degrees from Forsyth Tech and Alamance Community College — the Triad’s two community colleges with biotech programs — had full-time jobs and another 23 had either part-time jobs or schooling. Seventeen percent were unemployed as of August 2007. The percentage dropped to 13 when accounting to students caring for family members or those also graduating from four-year degree programs.
The report, authored by Johnson, said that among the reasons preventing life-science companies from locating to the Triad are low salaries for entry-level biotech jobs. Those salaries averaged $24,900 for Forsyth Tech graduates and $31,000 for grads of Alamance, which is closer to RTP. And according to the study, less than 10 percent of the 59 grads interviewed or surveyed would look more than 30 miles away for a job.
By comparison, entry-level biotech lab assistant jobs in the RTP is $33,000, according to the job-search website Indeed.com, and similar jobs in the San Francisco Bay Area pay between $30,000 and $45,000, according to a California Employment and Development Department news release issued last July.
That’s a gloomier picture than one published in May 2007 by the North Carolina Community College System, which in recent years has worked to strengthen links among its schools offering biotech programs through its BioNetwork.
In “The Economic Contribution of the NCCCS BioNetwork,” which can be read here, students in network biotech programs were said to have earned $6.37 per hour more than before they began their training, going from $15.54 to $21.91 per hour. The increase adds up to an an annual salary of $45,572.80 for a full-time, 40-hour job, up or 41 percent, or $13,249.60, from $32,323.20.
Obermeyer said where community colleges are located will matter less in the future as jobs become more available in the Triad — even for students attending Alamance, on the Triad’s eastern fringe closest to Durham. “They could just as easily commute to Winston-Salem instead of Durham.
“If you had somebody dominant come in here, the workforce is going to follow where the jobs are,” Obermeyer said.