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Proximity to Biocluster, Grants Persuades Carbon Nanopores to Open its HQ in Philly Suburb

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By Alex Philippidis

Proximity to the Philadelphia-area biopharma cluster and the availability of grants targeted to the needs of early-stage companies have persuaded a developer of high-resolution probes used for atomic-force microscopy to establish a new headquarters in the Philadelphia suburb of Malvern.

Carbon Nanoprobes produces carbon nanotubes, which are cylindrically shaped carbon molecules 10,000 times thinner than a human hair and mounted on silicon pyramids. It adds the nanotubes to the silicon tips of atomic-force microscopes, which improves their resolution by tenfold and allows them to produce three-dimensional, atomically scaled images of objects.

The company, which had been based in Seattle's Washington Technology Center, has begun shipping its product to customers that include semiconductor companies and basic research labs. Its nanotubes sell for $250 apiece.

CEO Brian Ruby told BioRegion News this week his company was drawn to its new Malvern HQ in part because of its closeness to some of its potential customers — namely the pharmaceutical and biotech companies that comprise the greater Philadelphia life-sci cluster.

The cluster recently surpassed the San Francisco Bay Area and placed second only to Boston/Cambridge, Mass., in a Milken Institute report that updated its ranking of the nation's top life-sciences clusters [BRN, May 21].

"On a cultural level, you've got a pretty fervent and fertile startup community, much more so than I had anticipated. We've had a tremendous number of good vendors, some of whom have asked for stock. This is not something I expected on the East Coast," Ruby said. "I saw it a lot on the West Coast, and I think it's absolutely essential toward successfully building one of these firms, because it aligns everybody's interests, and it seems to be very, very much prevalent out here, too."

Philly Stake

Ruby spoke with BRN June 29, three days after cutting a ceremonial ribbon to mark the completion of his company's new headquarters, situated within 4,522 square feet at 363 Phoenixville Pike, part of the single-building, 104,400-square-foot 335-395 Phoenixville Pike owned by BioMed Realty Trust.

Privately held Carbon Nanoprobes is basing nine employees, including Ruby, at the Malvern HQ. That number will grow over time, Ruby said, adding: "I can't get into specifics, but I can say we have a very aggressive growth strategy."

Carbon Nanoprobes has received $500,000 in working capital in two tranches from the Life Sciences Greenhouse for Central Pennsylvania, or LSGPA. One tranche came from LSGPA's Technology Development Fund, which invests up to $250,000 in projects that show commercial promise but need additional development of the business model, proof-of-concept, or prototype.

The other tranche came from the greenhouse's Gap Fund, which makes convertible debt-to-equity or straight equity investments in pre-seed stage companies ranging from $250,000 to $1 million. It also requires companies to match their award from the LSGPA.

The greenhouse is one of three incubators created by the state to nurture startup companies in the life sciences and other technologies, using a portion of the state's share of the 1999 nationwide tobacco settlement.

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Michele Washko, the LSGPA's vice president of strategic services, told BRN the greenhouse agreed in 2006 to add Carbon Nanoprobes to its portfolio, subject to scientific and business milestones. Companies whose management, finances, technology, and target market pass muster with the greenhouse are added to its portfolio, which includes developers of new drugs and therapeutics, medical devices, healthcare IT software, and scientific tools.

"That's how we saw Carbon Nanoprobes: as a tool that would advance the life sciences," Washko said.

LSGPA came across Carbon Nanoprobes through the greenhouse's liaison to Pennsylvania State University in State College, Pa., where the company had a working relationship with researchers that included Randen Patterson of the Eberly College of Science. The company had hoped to use the college's nanofabrication facility, but found the equipment and expertise it wanted at the Washington Technology Center in Seattle.

Ruby said the tech center had a piece of needed equipment that produced carbon nanotubes and cost "a few hundred thousand" dollars, "so we had to go there. In my industry, you kind of have to follow the (capital expenditure)," Ruby said.

"They actually let us take state money, bring it out to Washington because of this cap-ex, and then come back. They were very easy to deal with, in that respect, and they were very aggressive about getting us in," he said. "They had enough latitude, and foresight, to realize that because Pennsylvania could not provide what we needed at that moment in time, they let us shoot over to Seattle.

"We went out to Seattle, we proved what we needed to prove," Ruby added. "There was trust that we would [return to Pennsylvania], and we executed on that. We made good on our promise, and [the state] put extra money on the table.

Also putting money on the proverbial table was the Chester County Economic Development Corp. The private, nonprofit agency helped draw Carbon Nanoprobes to the county's state-created Chester County Keystone Industrial Zone, where early-stage life-sci and information technologies in business for eight years or less are eligible for tax credits — as well as grants toward hiring interns and training staffers.

Within the Chester County KIZ, companies are eligible to receive up to $5,000 per person per year for staff training, and up to $4,000 per person per year for the placement of interns within the KIZ company.

Ruby said the grants, which are awarded first-come, first-served, have "enabled us to create jobs we might not normally have." The training grants allowed the company to hire consultants that have helped it by sharing their expertise in better using equipment, he said.

According to its web site, the Chester County KIZ alone is home to about a dozen life-sci companies, including Johnson & Johnson subsidiary Centocor Ortho Biotech, Frontage Laboratories, Melior Discovery, Neuronetics, Molecular Targeting Technologies, Progenra, Promedior, Reaction Biology, and Tetralogic Pharmaceuticals.

Unlike other KIZ zones across Pennsylvania, Chester County's KIZ consists of seven nodes with numerous corporate parks along the US 202 corridor where life-sci and other high-tech businesses are clustered, rather than a single zone anchored by a university or research institute.

"The reason for that is because we have so many life science and biotech companies in this part of the region," Tim Connor, senior director with the Chester County Economic Development Corp., told BRN.

Carbon Nanoprobes had agreed to grow its work force in Pennsylvania in return for the greenhouse funding — a promise it began to fulfill when it relocated the company to the Keystone State six months ago from Seattle.

Carbon Nanoprobes found the home base it wanted at Phoenixville Pike, a property San Diego-based BioMed Realty acquired in 2005 and renovated three years later by creating four suites with offices and labs within what had previously been warehouse space, at an undisclosed cost. One attraction for the company: BioMed Realty built for it a production facility in the space, which had not been occupied since the publicly-traded real estate investment trust acquired the property.

"One of the things that was fabulous about that deal was that BMR's interest with us is long-term. They have enough space to rent us, so if we expand into a bigger space, they'll rip up our current lease. That's a contractual term; that's not a handshake. That's great for both parties," Ruby told BRN.

Richard Howe, a BioMed Realty spokesman, told BRN that the Phoenixville Pike property "has [speculative] lab space available to accommodate the requirements of wide range of life science and biotech tenants, including smaller companies. " As of March 31, the property's occupancy rate stood at 74 percent, he said.

Before moving to Malvern, Carbon Nanoprobes had been based at the Washington tech center for three years starting in 2006, when it moved west from the BioMed Realty-owned lab-office campus The Landmark at Eastview, in the New York City suburb of Tarrytown.

The company occupied a lab within the headquarters of Progenics Pharmaceuticals, where Ruby interned after he was among the winners of the 2001 Intel International Science and Engineering Fair, which the biopharma company sponsored.

Ruby's work with nanoprobes began as a 15-year-old intern at IBM's Thomas J. Watson Research Center in another New York City suburb, Yorktown. He persuaded Progenics to let him use its technology for his job of imaging proteins being used for possible vaccines.

Ruby founded Carbon Nanoprobes in 2003, while a student at Columbia University's School of Engineering and Applied Science, and graduated from the school three years later. Since then, Ruby said, the company has refined the technology, and raised "somewhere between $4 million and $6 million" in multiple rounds of financing.

Carbon Nanoprobes explored locating to New Jersey a few years back, Ruby said. While not wanting to criticize the Garden State, he contrasted that state, and neighboring New York, with the Keystone State when it comes to how far along businesses must be into early stages before they find economic subsidies.

"Many states put themselves in a much less risky position than the state of Pennsylvania, which was a venture investor. They understood, at the time when they made their initial investment, that we were pretty much a concept company. They were comfortable with that risk profile."

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