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Biotech boom? Featured

12:11pm EDT March 11, 2004
The numbers are impressive.

Tobacco settlement money awarded to Pennsylvania -- $33 million of it --has been dedicated to establishing and funding the Pittsburgh Life Sciences Greenhouse, an effort to jumpstart and develop biotech ventures in the region.

The Pittsburgh foundation community has matched that money by more than two to one. The University of Pittsburgh has attracted more than half a billion dollars in sponsored research, two-thirds of it going into life sciences investigations. More than $5 million from the PLSG has flowed into the University of Pittsburgh and Carnegie Mellon University to attract top biotech researchers to those institutions.

And venture and angel investors are showing interest in backing biotech companies. Birchmere Investments, for instance, has brought in its first life sciences partner.

The landscape is just as notable. Two world-class universities churn out research in science and information technology, two disciplines that converge in the relatively new field of bioinformatics. The Pittsburgh region is one of the top five locations in the world for tissue engineering, thanks to the development of companies such as Cellomics and TissueInformatics, and the talent that organizations like them have attracted to the region.

That drawing power is exemplified by the recent recruitment of a senior executive from Baxter Pharmaceuticals to Renal Solutions.

The stakes are high and the opportunities enormous, say local players.

"I think there are tremendous opportunities in this area," says Bernard Cambou, a partner in Birchmere Ventures who came to the fund specifically to evaluate biotech companies.

"Biotech is coming back, it's coming back big, at least on both coasts," says Doros Platika, president and CEO of the Pittsburgh Life Sciences Greenhouse.

The key to making the most of Pittsburgh's resources, Platika says, is for the region to identify areas of strength, match them with areas of opportunity, accelerate the creation of start-ups and attract new companies and technologies to Pittsburgh.

The value of identifying key areas of opportunity is critical, says Platika. Singapore, he points out, has determined that it will attempt to carve out a market in human stem cell technology, a sector that researchers in the United States are wary of because of the legal and ethical issues surrounding its investigation and application.

Singapore has concluded, says Platika, that by the time the moral and legal considerations are sorted out in the United States, Singapore will be far ahead on its own stem cell research and development.

In the wake of the tech boom, it appears that there are differences in the way investors are evaluating life science opportunities. Angel investors, burned by vague opportunities in IT during the tech boom, are looking for models that are more clear-cut in terms of their viability and the time it will take to achieve their exit strategies.

"I think what we want to see is a specific timeline," says Gus Mantia, chairman of Advanced Global Technologies, an angel fund comprised of 50 physicians.

Many of his fund's investors are in their 50s and 60s, says Mantia, and are looking for investments with shorter time horizons. Biotech ventures, because of their long development cycles, can be less attractive to this type of investor.

Platika says investors are leaning toward making larger investments in fewer companies, indicating that they are taking harder looks at ventures and raising the bar for potential investments.

Indeed, the angel investment community says the most critical thing that organizations like the Pittsburgh Life Sciences Greenhouse can do is to qualify companies for investment.

Says Mantia: "The biggest thing you can do is bring those companies to maturity and filter them out for us." How to reach: Pittsburgh Life Sciences Greenhouse, www.pittsburghlifescience.com, Birchmere Ventures, www.birchmerevc.com