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As NY Struggles to Foster Biotech, Officials Mull Nanotech as Model, Plan BIO Presence

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NEW YORK — New York may be nicknamed the Empire State, but its life sciences effort has a long way to go before living up to that lofty name, even with a $600 million, 10-year stem-cell program under way, panelists and attendees agreed last week at the state industry group’s annual conference here.
 
Participants in two panel discussions concurred on New York’s shortcomings, joined by a leader in the development of New York’s nanotechnology community who offered plenty of advice for raising the state’s relatively modest profile in biotech, pharmaceuticals, and medical devices.
 
New York’s shortcomings as a biotech mecca have been rehashed for years [BRN, Oct. 15, 2007]. They include a lack of critical mass, with companies scattered between New York City, its suburbs, and several upstate regions; poorer economic incentives compared with neighboring states, let alone the top-tier clusters; and a lack of unity among industry leaders and advocates, let alone between them and academia and government.
 
“When you look at the continuum of how to develop technology, and get it to a company, and help that company grow, there are programs here. … But there’s not an integrated strategy for supporting this industry. It’s very spotty,” said Joseph Scaduto, assistant director of business development for the Center for Biotechnology at the State University of New York’s Stony Brook University.
 
While most of those programs are praiseworthy, such as the state’s tech commercialization agency NYSTAR, Scaduto added: “I think we still have a long way to go, particularly on the integration side, developing a long-term strategy and vision for where we want to be.”
 
One stumbling block, he added, is navigating New York’s patchwork of state and local bureaucracies and nonprofit agencies: “You have to go to so many different organizations for various kinds of things. It doesn’t seem organized. There’s no ombudsperson from New York state whose jobs is strictly to help the bioscience industry throughout.”
 
Scaduto spoke during “Biotechnology and Economic Development in New York State: A Discussion of Statewide and Regional Efforts,” a panel discussion during the New York Biotechnology Association’s 17th Annual Meeting, held here May 19-20 at the Marriott Marquis hotel.
 
The panel moderator and audience members agreed with Scaduto and suggested their own ways of boosting biotech in New York.
 
“What we’re really trying to get our hands on is how do we start an initiative and how do we keep that initiative going long enough [so] that we can have that kind of significant impact in this state,” said Eugene Schuler Jr., chair of Bioconnex, a regional group that supports the life sciences industry in the Albany “Tech Valley.” “The continuity in what we’re talking about, both government, and academia, and regional economic developers, is really lacking.”
 
“One of the possible reasons why we aren’t where we could be or should be is the lack of an understanding by the New York state government of making biotech and life sciences a priority,” said Diana Bartelt, director of the Institute for Biotechnology at St. John’s University in Queens, NY.
 
Rather than having regional groups scrounge for money from Albany, she said state officials should instead be persuaded that “it’s worth investing at the billion-dollar level in developing this industry for New York,” as Massachusetts is close to doing [BRN, March 31].
 
Learning from Nanotech
 
Jeffrey Lawrence, executive vice president of the Center for Economic Growth, or CEG, said the state’s bio industry could learn from the successes of New York’s nanotech cluster, both in organizing professionals, then in securing funds and other essentials for top-flight facilities.
 
Many of those facilities are within the $4.2 billion Albany NanoTech Complex operated by the College of Nanoscale Science and Engineering at SUNY–University at Albany. The complex provides technology acceleration and business incubation support for IBM and about 250 other corporate partners. This fall, the complex is set to mark the completion of the $150 million NanoFab 300 East, a 250,000-square-foot facility that will include 15,000 square feet of 300 mm wafer, class 1-capable cleanroom space.
 
“The challenges are an order of magnitude more daunting, in terms of how to attract life sciences companies,” Lawrence said. “In terms of biotech and life science, I think there’s a much greater potential but a fragmented market.”
 
To achieve that potential, he said, New York’s life sciences industry should:
  • Develop closer ties with government, with an eye to improving economic incentives for the industry — no easy task in New York, which typically eschews industry-specific incentives.
  • Encourage collaboration among companies, academic and other research institutions, financing professionals and state and local governments.
  • Focus on one region — the state’s nanotech industry has grown in and around Albany.
  • Expand beyond the borders — as CEG did in 2005 when it opened a West Coast office in Cupertino, Calif.
  • Pursue a multi-year global industry attraction campaign, including sales calling, advertising, and public relations efforts.
“I don’t see that clarity and focus in bio,” Lawrence said. “There are pockets in central New York and Long Island and the city. So who are we? What are we? How do we define that? It’s relatively simple to do.”
 
While CEG’s desire to look larger than its size of just 2.5 full-time equivalent employees explained the group’s thrust toward collaboration among nanotech leaders, Lawrence said, so too did New York’s high taxes, high wages, and high cost of doing business.
 
“The only way we can compete is on our intellectual prowess and our research. It’s not our cheap labor rates, our favorable tax climate, and our cheap electricity that draws people to this state. It’s what we do with our minds and how we convert that into something of value,” Lawrence said.
 
Lawrence’s group is among about a dozen regional groups statewide with which NYBA has sought to maintain relations through periodic meetings over the past year. New York’s regional groups include Long Island Life Sciences Initiative, or LILSI, where Scaduto serves as executive director.
 
Nathan Tinker, NYBA’s executive director, told BRN in an interview after the panel talk that his organization’s dialogue with regional groups must be broadened into a cross-sector collaboration if the life sciences are to grow in New York. But that collaboration, he said, requires other things to happen first.
 
“Until there’s a broader strategic focus, and not just a billion here and there, we’re not going to have the critical mass of industry, academia and government that I think could really drive the growth of the industry in the state,” Tinker said.
 

“One of the possible reasons why we aren’t where we could be or should be is the lack of an understanding by the New York state government of making biotech and life sciences a priority.”

“New York needs an aggressive, broad strategy for the life sciences generally, and biosciences particularly,” Tinker added. “It’s one thing to build out infrastructure. It’s one thing to go about building academic laboratories and so forth — which New York has done a great job at over the last 10 or 15 years. But we’ve been much more challenged to translate that by getting those technologies out of the laboratory and into the marketplace.”
 
Nanotech succeeded in New York, Tinker said, because it found someone able to forge collaboration by bringing various sectors together — namely Alain Kaloyeros, vice president and chief administrative officer of the College of Nanoscale Science.
 
“What he brought was a personality that brought people together and in a lot of ways — give him a lot of credit — he really bootstrapped that from the science side and drove it into the business side. Having a champion of that sort is a primary issue. In biotech, we don’t have that yet,” said Tinker, who founded and served as executive vice president of a nanotech industry group, the NanoBusiness Alliance before joining NYBA last year.
 
One strength New York does have is a large presence of venture capitalists, which has sometimes resulted in some healthy funding for area startups. New York recorded a $25 million biotech venture capital deal during the first quarter of this year, compared with no deals during the first three months of 2007, according to the quarterly MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association with data by Thomson Reuters.
 
Yet New York’s $28.7 million in activity last year lagged behind the $66.8 million recorded during the first three months of 2006 [see Sidebar]. Overall, the state lags behind not only top-tier clusters like the San Francisco Bay Area and Boston/Cambridge, Mass., but the next tier of strong performers, which include the Empire State’s neighbors of New Jersey and Pennsylvania.
 
New York is home to some 118 bioscience businesses, compared with more than 500 for Boston/Cambridge, Mass., and more than 900 for the nation’s largest biocluster, the San Francisco Bay area. New York’s life sciences businesses include 28 public biotech and pharma companies — accounting for 7 percent of the nation’s 386 public biotech companies in 2007.
 
Last year New York had the fifth largest concentration of public life sciences companies, lagging behind the San Francisco Bay Area, New England, San Diego, and New Jersey, according to Beyond Borders 2008, the global biotechnology report released last week by Ernst & Young.
 
Lab supply, similarly, offers a share of good news and bad. New York City has long been starved for sites where life sciences companies can grow past incubation. One option that has emerged in recent years is BioBAT, a section of the Brooklyn Army Terminal being redeveloped into a 486,000-square-foot life sciences campus, through a collaboration between New York City Economic Development Corporation and SUNY Downstate Medical Center through the SUNY Research Foundation.
 
Another option is in sight. The nation’s largest developer is building the first phase of its $700 million East River Science Park, where 1.2 million square feet of space is planned. But that space won’t be ready to occupy, however, till late 2009 or early 2010. And New York is just one of several markets where Alexandria has projects completed, under construction, or on the drawing board. Last week, the publicly traded real estate investment trust disclosed plans to build 1.6 billion square feet of new lab space in Cambridge [see Around the Regions, this issue].
 
At a luncheon mini-address, a state economic development official told meeting attendees that New York’s effort should pick up steam next month at the Biotechnology Industry Organization’s 2008 BIO International Convention in San Diego. That is where the public-private partnership “New York Loves Bio” will roll out an expanded kiosk, and host a first-ever reception for the state’s bio businesses and institutions and their supporters, patterned after similar receptions by several states.
 
Peter Cunningham, director of international trade with the state’s economic development agency, Empire State Development Corp., cited the BIO presence — plus a new touch-screen kiosk, and a new online database to be launched this summer to promote the state’s far-flung life science assets — as examples of what he called the state’s commitment to advancing the industry within New York.
 
Loving Bio by Half
 
That commitment isn’t always evident in Albany. The state’s $121.7 billion budget for the year starting April 1 slashed a key source of funding for “New York Loves Bio” by half. The program will receive $150,000 from the state Legislature through the state Foundation for Science, Technology and Innovation, compared with $300,000 in 2007-08.
 
Brian McMahon, executive director of the nonprofit New York State Economic Development Corp., which oversees New York Loves Bio, told BRN the funding chop wasn’t a consequence of cost-cutting in a year during which officials plugged a $4.6 billion spending shortfall to balance their budget. Instead, McMahon said, the cutback was a consequence of the public-private effort needing less state funding.
 
“We had the initial investment to build out the infrastructure, one-time expenses that aren’t going to be recurring,” We also believe there are going to be other resources available through ESD and other agencies,” McMahon said in an interview after the conference.
 
This year, McMahon said, New York Loves Bio will try to draw a share of the $3.5 million set aside for business marketing by Empire State Development, the first such money available in more than a decade. ESD helped fund New York Loves Bio last year after the budget was announced, by approving a $150,000 collaborative marketing grant, and a $50,000 grant under the Global Export Markets Service, or GEMS, program.
 
New York Loves Bio is also looking beyond the state for funds. Energy East subsidiary New York State Electric and Gas has donated $50,000 to New York Loves Bio [BRN, Dec. 31, 2007], while Pfizer, which is headquartered in midtown Manhattan, gave $25,000. Economic development groups have chipped in between $1,500 and $13,000 — from the industrial development agencies of Onondaga and Rensselaer counties, to the public-private Buffalo Niagara Enterprise.
 
NYSEDC has hired a staffer to run New York Loves Bio, marketing director Deborah Flack, and last year contributed $125,000 to the program. This year, McMahon said, his group’s funding for New York Loves Bio “will be probably similar.”
 
“This easily could be a $5 million marketing campaign, and we hope someday it will be. We’re in the infant stage of building this organization, and as we go, we’re developing other underwriters, other funding sources, but also, I do think that the state now has other resources it didn’t have before, so if we needed additional funding, it would be there.”
 
That money will help pay for efforts like the kiosk, as well as a database with profiles of the state’s life sciences companies, universities, and research institutions. The database, available here, will include information on companies, institutions, economic incentives, venture capital firms, incubators, and technology parks — with lookups possible by region in addition to statewide.
 
Perhaps the highest-profile marketing by New York Loves Bio will be the 3,500 square-foot pavilion that will house displays for the 35 state-based life sciences employers — 20 of them businesses — that will be represented at next month’s BIO convention. The pavilion is larger than last year’s 3,000-square-foot model, and reconfigured since then with a welcome desk, a stage, a mini-café, and more space for one-on-one meetings with New York Loves Bio representatives.
 
“You’re not competing just with other states. You’re competing with other countries. And the amount of investment that other countries and other states put into this is enormous,” Lawrence said. “You need to have significant presence, and the only way to get that presence is to have companies in your booth, the private and public sectors, colleges and universities, so we can bubble up and have a significant critical mass.”
 
The panel moderator offered another view: “A significant number of states have pavilions. There are countries that have pavilions. I think we’re probably naïve if we think that a pavilion at BIO is going to really turn things around in New York state,” said Schuler of Bioconnex.
 
“On the other hand, it does give us a visibility and a presence that we didn’t have before,” Schuler added. “The question is: Where is this going to go besides the [BIO] convention?”

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