Realizing biotech’s promise

10.25.12 Thumbnail MicroscopeAfter a decade of promises, Oregon’s biotech sector shows signs of growth, although lack of venture capital and business accelerators continue to thwart industry development.

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10.25.12 Blog MicroscopeFor more than a decade, biotech enthusiasts have touted Oregon’s potential to build a thriving local industry.  But the naysayers have been equally vocal, and many critics continue to proclaim, loudly, that Portland will never be San Francisco, San Diego, or Boston–all hotbeds of bioscience activity.

But just as Portland’s once languishing South Waterfront District—another naysayer target and symbolic home of the life sciences crowd–appears to be on the upswing, the local bioscience industry also appears to be gathering strength. A recent study, the Battelle Bio/State Bioscience Industry Development 2012 report, shows that Oregon is among the leading states in total bioscience industry growth, with 5 percent or greater job gains between 2007 and 2010.  In the past year, two publicly traded biotech companies have relocated to Portland; just this week, CytoDyn, a company that develops therapies to combat immune deficiency viruses announced it was moving its headquarters from Florida to the Rose City.

Philanthropic activity and corporate partnerships are also expected to boost the local sector. This past September, OHSU announced a landmark $125 million gift from Phil Knight establishing a cardiovascular institute at OHSU, while this past spring, the Providence Cancer Center inked a massive partnership agreement with Bristol Myers Squibb to research and test new drug therapies.

Against this evolving backdrop, Oregon Business checked in with a few industry experts, including David Eastman, CEO of Gamma Therapeutics, a Portland startup working on a novel class of biopharmaceutical and diagnostic test solutions, and Dennis McNannay, executive director of the Oregon Bioscience Association, to find out if the Portland biotech industry is entering a new growth phase and what challenges and opportunities lie ahead.  The former was more of a critic—the latter, a booster. Together, they offer a perspective on an industry that has struggled to get the attention, respect—and money– accorded to the state’s software and clean tech sectors.  

David Eastman, Gamma Therapeutics

The day I spoke with Eastman, he had just finished compiling a list of 51 venture firms he hopes will help fill the funding gap when Gamma’s three-year, $1.56 million National Institutes of Health grant expires this year. All 51 were in the San Francisco Bay area, Eastman said, sounding a bit forlorn. “There just aren’t any local investors; Oregon doesn’t have the level of venture investment you have back East or in California.”

Money is always the problem.   But Eastman ticks off a list of other hurdles to overcome in Portland, including lack of a bioscience-dedicated accelerator.  OHSU does a good job incubating new companies, Eastman says.  But the university’s commercialization office “goes the way of all technology transfer divisions. Once you start up your company, you’re left to build it on your own.”

A life sciences incubator would help give startups access to the resources and mentors necessary to build early stage research ventures into successful companies.  And in other biotech hotspots, such accelerators abound. Eastman pointed to the new CoLaborator on Mission Bay in San Francisco, a 6,000 square foot incubator that opened this past September, funded by Bayer Health Care. One of the tenants is Aronora, a startup founded by OHSU researcher Andras Gruber that works on drugs to prevent blood clotting.

For those who argue Portland’s biotech industry will never develop the necessary critical mass,  Eastman points to the phenomenal growth of the Mission Bay biotech cluster. In 2007, the neighborhood housed 5 life science companies; today, the count is 110.

To move Portland in that direction, Eastman would like to see state leaders incubate a $100 million life science fund accessible to local startups.  He is also taking matters in his own hands as a member of the Oregon startup advisory group, an entity that launched this summer to give biotech entrepreneurs advice about the business side of running a company.  

Gamma aims to grow a successful life science company in Oregon.  “We prefer to build our company here and could probably find the talent,” Eastman says.  “But the reality is we may have to seek money elsewhere.”

Dennis McNannay, Oregon Bioscience Association

Once a sleepy organization, the OBA in the past few years has been on a mission to remake itself as a networking powerhouse and leader in the community.  The organization’s annual two day conference typically features a roster of local researchers, McNannay says.  But this year’s event, held earlier this month, was a national affair, featuring Brad Vale, head of venture investing for Johnson &  Johnson Development, and Leroy Hood,  renowned head of the Institute for Systems Biology in Seattle. The star studded  conference lineup “was a big change for us,” McNannay says.

Critics say Portland will never be San Francisco or Boston, he observes. “And they’re right.”  Until recently, much of the industry was built around pursuit of blockbuster drugs, and “Oregon was never going to fare well if the goal was to pursue blockbuster drugs.”  But with the rise of personalized medicine revolving around genetic technology and DNA sequencing, the age of blockbuster drugs is over, he says.  Given the state’s expertise in high tech digital technologies, Oregon is “perfectly positioned” to take advantage of these new industry trends. “We need to focus on what we can do that is world class.”

McNannay points to a recent agreement between OHSU and FEI creating a new Living Lab for Cell Biology; the partnership provdes researchers with state of the art electron microscopes required to investigate novel drug therapies. The lab will be run by Joe Gray, a cancer and genomic researcher who was recruited to OHSU from Lawrence Berkeley National Laboratory. “FEI is giving him access to next generation technology not even released to the market with the proviso he will help explore how the equipment will be used outer limits,” says McNannay.  “It’s a classic example of how Oregon can leverage its strengths in digital technology to uncover next generation therapeutics.”

McNannay sees other bright lights on the horizon, including the relocation of companies such as CytoDyn.  “In a tough economy, the cost of things really matters, so we’re going see companies migrating out of higher wage areas into areas that can offer same research benefits,” he says.  “We are going to see more of that happening.” As government research dollars decline, Oregon’s philanthropic coffers will also give the region an edge.

McNannay also referred a bit mysteriously to the creation of a new bioscience accelerator, with more details to be revealed in a few weeks. 

If that accelerator comes to be, it will be the latest in a string of promising biotech developments. Oregon has the educational infrastructure and foundation support to conduct R & D and unravel basic scientific insights, says Mark Ahn, CEO of Galena Biopharma, an oncology treatment company that relocated to Portland last year and now has a market cap of $125 million.  What the state also needs are “people with the requisite entrepreneurial skills to take those insights and turn them into products and mobilize the people and the risk capital.”

A tall order, the naysayers might claim, but one that seems more likely to be fulfilled today than ten years ago.

Linda Baker is the managing editor of Oregon Business

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