Triangle Business Journal -- CHAPEL HILL – North Carolina’s frequently cited No. 3 national biotech ranking may have an unwelcome side effect: Other states have begun eying the Tar Heel state’s homegrown talent.Triangle biotech company executives say they regularly field recruitment calls from bureaucrats in other states – many of whom offer cash and tax incentives to entice them to relocate. Even governors are getting into the game.
Massachusetts Gov. Deval Patrick in late July personally called NanoCor Therapeutics CEO Sheila Mikhail and dangled a relocation package to lure the early-stage company to the Bay State. NanoCor, which is based in Chapel Hill, is developing a protein therapy for chronic heart failure.
Mikhail says she received the call following her presentation on NanoCor to attendees at the 2008 BIO International Convention, which was held June 17-20 in San Diego. Mikhail declined to divulge details of Patrick’s offer but pointed out that Massachusetts has a $1 billion life sciences initiative that includes $250 million in tax benefits attached to job creation. She says the offer is “still under negotiation.”
Patrick’s office referred inquiries to Kofi Jones, a spokeswoman for the Massachusetts Life Sciences Center who confirmed that Patrick “did call that particular company.” Jones says Patrick is a crucial salesperson for Massachusetts’ biotech industry.
Another Triangle biotech that presented at BIO is Argos Therapeutics. Jeff Abbey, vice president of business development at Argos, says several states, including Maryland, Washington and Ohio invited Argos to parties or requested meetings at the confab.
“We got invited to a lot of states hosting different parties,” says Abbey. “I didn’t get a specific call from Patrick. However, we do get calls fairly regularly from representatives of different states and different countries.”
Usually, Abbey says, calls come from someone working with an economic development office or chamber.
“It is good politics and good policy,” says Abbey. “For us, we’re not interested in moving. For other companies, if there’s benefits, I don’t find anything wrong with it.”
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More than 450 biotech companies are now either headquartered or operate within North Carolina, according to the North Carolina Biotechnology Center. Of these, 13 are publicly traded companies with a combined market capitalization of $543 billion. More than 55,000 people work in the biotech sector, with an estimated payroll of $3 billion annually.
Of course, Massachusetts’ biotech landscape dwarfs North Carolina’s cluster. In fact, Massachusetts’ $1 billion life science initiative offers a 10-year plan that includes the development of a stem cell bank at the University of Massachusetts, which would be “the largest collection of stem cell lines in the world” and the establishment of “Innovation Centers” to serve as “regional economic engines” for technology development and commercialization.
Jon Mahoney, who runs Massachusetts’ biotechnology effort, did not return calls seeking comment.
Florida too has committed $1 billion in state and local funds to attract life science research positions. The state used incentives to attract the Burnham Institute for Medical Research, the Torrey Pines Institute for Molecular Studies, the Max Planck Institute and the Vaccine and Gene Therapy Institute of Oregon Health and Science University, which plans to open a satellite facility in Florida.
Ohio earmarked $1.6 billion to expand high-tech research, innovation and company formation with a focus on life sciences. And in Maryland, another state with which North Carolina competes for biotech jobs, the governor’s Life Science Advisory Board is tasked with developing a comprehensive biotechnology plan for the state. The Maryland Stem Cell Research Fund has conducted two rounds of funding totaling $38 million. It awards research money to institutions and individuals conducting stem cell research in the state.
Norris Tolson, president and CEO of the Biotech Center, says North Carolina is well prepared to attract and retain biotechnology companies. “Companies, especially biotech companies, are not only looking for financial incentives,” says Tolson. “They are looking for a scientific community, a trained work force, a favorable business climate, and a high quality of life. North Carolina has that in spades, and the Biotechnology Center continues to develop programs that enhance and support it.”
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States on the hunt for biotech prey in North Carolina will likely turn to Biolex, a clinical stage biopharmaceutical company based in Pittsboro.
The company withdrew plans for an initial public offering earlier in 2008 and raised $30 million in series C fundraising in March 2007. Biolex is conducting phase 2 clinical trials of Locteron, a drug to treat Hepatitis C.
“We’re approached all the time,” says Jan Turek, president and CEO of Biolex.
“We get a lot of calls from other states offering incentives,” Turek says. “I don’t inquire about what they’re offering because we’re well situated in North Carolina. I have no plans to leave.”
Garheng Kong, investment partner with Intersouth Partners, a Durham venture capital firm that has invested in Biolex, says it can be difficult for other states to recruit well-established companies, even if significant incentives are offered.
