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Is Rochester ready for the Biotech boom?



Are you one of Rochester's biotech-savvy citizens? Take a moment to answer this multiple-choice question and find out.

            Q: A "bio cluster" is __.

a.      Something you cough up when you have a chest cold

b.      The latest candy from Hershey's, combining chocolate, caramel, and genetically modified "super-cashews"

c.      A group of biotechnology businesses located near one another

d.      All of the above

            If you answered "c," congratulations. You may be positioned to get rich if biotechnology becomes Rochester's next big industry.

            If you answered incorrectly, don't worry. Though the city is poised to become a biotech center, local biotechies say we've still got a ways to go.

            Members of Rochester's small but growing biotech community recently formed the Greater Rochester Bio Cluster. The group gives dues-paying members --- about 20 businesses have signed on so far --- an opportunity to network, share ideas, swap tips on how to score grant money, and plan collaborative projects.

            It also has some symbolic value, in that it alerts investors here and abroad that Rochester is on the biotech map. Bio Cluster chair Marjorie Hunter says there's a need to create "a critical mass" of companies in the area to attract investment in start-up firms and keep existing companies in town.

            "That is starting to happen here," Hunter says, but it's just beginning. "I don't know that any time in the short-term we'll be either Boston or Silicon Valley," she says, referring to the country's two biggest biotech scenes. "But we'll certainly be competitive with other medium-size centers," such as Houston, Cleveland, and Raleigh, NC.

            Hunter estimates there are between 50 and 75 companies doing biotech work in town, and perhaps just as many businesses providing services to those firms. (Estimates of the number of biotech businesses in Rochester vary greatly, because biotechnology includes a wide array of commercial applications. See the sidebar for a definition and some examples). Hunter hopes the cluster will eventually include as many as 100 biotech firms and service providers.

            For Rochester's biotech industry to blossom, "it takes the support of the community, the support of government, the support of local industry, and the support of academia," Hunter says. "It seems to me we have all those elements in place here."

Hunter is one of those elements herself. As director of the Office of Technology Transfer for the University of Rochester Medical Center, she plays a key role in bringing bioscience discoveries out of the university's research labs and into the marketplace.

            The university created Hunter's office a little over a year ago, and now has almost a dozen staff members devoted to technology transfer --- in 1996, UR only had one. This staffing increase is in keeping with UR's expansion of its medical research facilities. The university has spent over $230 million on the expansion, which includes two new research buildings. On September 23, Governor George Pataki and State Senate Majority Leader Joseph Bruno announced $30 million in funding to help URMC expand it biomedical facilities.

            As detailed in a recent report by the Center for Governmental Research (CGR), the effort has paid off --- big time. According to CGR's study, which was commissioned by the university, the expansion has attracted highly skilled researchers to UR, and federal grant money from the National Institutes of Health has increased dramatically --- from $62 million in 1996 to $107 million last year.

            But the buck doesn't stop there. According to the Office of Technology Transfer, invention disclosures --- that is, when scientists finally yell, "Eureka, I've got it!" and begin the process of patenting their discoveries --- have increased from 52 in the medical center's 2001 fiscal year to 94 during the fiscal year that ended last June. Patent applications have also gone up, as has the number of patents issued to UR scientists.

            Patent licenses in hand, royalty payments are now rolling into the university, which collected $23.6 million in royalties during its 2002 fiscal year. The university and UR researchers who scored a patent for a class of drugs called COX-2 inhibitors stand to cash in Lotto-style if their pending patent infringement suit against drug giants Pharmacia and Pfizer is successful. The two companies market the arthritis drug Celebrex, which earned Pharmacia $2.4 billion in 2001, the report notes.

            The CGR report also shows how bioscience discoveries at UR have made big money for area firms "spun out" of the university. Wyeth-Lederle Vaccines and Pediatrics evolved from Praxis Biologics, a company started by UR medical researchers and doctors in 1983. Its patent for a widely administered vaccine that prevents bacterial infections in children netted the company over $43 million in royalties by 2000, according to the report.

            Wyeth's Henrietta facility has kept roughly 200 researchers employed since the mid-1990s. The company has announced it will leave the Rochester area as part of an internal restructuring, but Wyeth spokesman Doug Petkus says the move probably won't be complete until 2006.

            Praxis' evolution from a few researchers to a biotech facility employing hundreds of people is exemplary of the kind of growth and employment biotech proponents hope Rochester will realize. They say manufacturing plants employing even more people could spring up around Rochester's biotech research firms once that "critical mass" is achieved.

Rochester is well positioned to become a big biotown in years to come, says Kent Gardner, CGR's director of economic analysis and the author of the UR report. "We do have a significant head start over many other communities," he says.

            Of the factors that help make Rochester a player in the biotech industry, Gardner says first and foremost is the leadership of Dr. Jay Stein, CEO of UR's Medical Center.

            "The process of getting a discovery from the laboratory to the market isn't always that easy," Gardner says. "Academics love to do research, but a lot of them could care less whether the things that they think up actually turn into a product. And even if they do care, that's not what they're good at."

            Stein's lead role at a URMC newly dedicated to turning its research into products will foster collaborations between UR researchers and business-minded folks, Gardner says.

            Another key to our biotech success is Rochester Institute of Technology. URMC is a source of biotech discoveries, and RIT is "the next phase," Gardner says, producing grads trained to turn those discoveries into products and manufacture them locally.

            According to Douglas Merrill, the head of biological sciences at RIT, the school was the first in the nation to offer a bachelor's degree in biotechnology, in 1983. These days, about 50 students graduate from RIT's biotech program each year. Merrill says about half of them go on to doctoral programs at other schools, but of those who enter the job market, few stay in Rochester. "Rochester is not yet a prime location," he says, "but that's not to say it doesn't have the potential to become one."

            Merrill has come up with what he calls "the four pillars that support the growth of biotechnology." The first is the presence of a world-class research university, where new ideas are born. In Merrill's opinion, URMC fills that role.

            "Secondly, you need a very well educated, technologically proficient workforce," Merrill says. "This is where the Rochester area excels, because we have RIT."

            In addition to its undergrad program in biotechnology, RIT recently established the Center for Biotechnology Education and Training. The center conducts studies of Western New York's biotech industry and offers development training for workers already in the field. On September 24, State Senator Jim Alesi announced that the center will receive $4 million in state grants to expand its program.

            Merrill says RIT is also developing a certificate program that will help workers laid off in other industries enter the biotech realm. The project could be running as soon as next year.

It's when we get to Merrill's third pillar that Rochester's biotech future gets shaky. In addition to a powerful research engine and a solid workforce, Merrill says a community needs "a real spirit of entrepreneurship" to get its biotech industry off the ground. The UR's expanded technology transfer program is a start, but public and private money must be available to help fledgling companies establish themselves.

            Some private funding for biotech start-ups comes from venture capital funds, but more often than not, it's the so-called "angel investors" who give young companies a leg up. Angel investors may be a family member, a friend, or just some wealthy business patron who's interested in biotech stuff --- and, of course, interested in making more money off said stuff. Angel investors can be hard people to find, and once they're found, the hard part really begins: convincing them to fork over large sums of cash based on little more than an idea and the inventor's will to see it through.

            The Greater Rochester Bio Cluster will help attract venture capital to the area, but the nature of biotechnology still makes nascent biotech companies a hard sell. "In biotechnology, the special problem is you have a very long germination stage before you can harvest your capital," says Jack Huttner, vice president of communications and public affairs for Genencor International, a large biotech firm with operations in Brighton.

            It can typically take as many as seven years before a company realizes profits from a biotech innovation --- if it makes any money at all, Huttner says. That kind of lead time and risk turns off many venture capital fund managers, who often expect returns of as much as 10 times their initial investment within a few years. If you're a venture capitalist, "you want a 10-bagger every round," Huttner says. The lack of venture capital "stands in the way of company formation."

            Huttner, Merrill, and others in the biotech field say government assistance is also a necessity. In particular, they feel state and local governments can help by building a business incubator designed to serve the specific needs of biotech start-ups. So-called "wet lab" space, space equipped for biological lab work, is a commonly expressed need. The URMC has some, but local biotechies say a biotech business incubator like the High Tech Business Council's facility at Rochester Technology Park would best fit the bill.

            "We need a better infrastructure," Dr. Stein says of the Rochester area's biotech facilities. The medical center is pumping out viable biotech ideas, but Stein says the area needs a facility for biotech manufacturing and research. He envisions a $15 million facility, built with government help, that would both employ and train people in the biotech field.

            When it comes to building and retaining biotech businesses, New York is "still playing catch up," Merrill says. Though he acknowledges the benefits of programs like Empire Zones and COMIDA, he says "the state needs to come up with a coordinated plan for growing the bioscience economy.

            "Unless we come up with a coherent, integrated, collaborative plan for growing biosciences, we are going to lose some market share," he continues. "Some states really have their act together. They're working --- with both political parties working together --- to recruit our companies away."

Merrill's fourth pillar of biotech success is perhaps even trickier to realize than the funding pillar: community education.

            One part of that is public school education; particularly in math and science. "Right now, as I look at the national demographics, I'm not very optimistic that we're doing a good enough job encouraging young people to look at math and technical [careers]," Merrill says. Though he didn't single our community out, a look at Monroe County schools' math and science achievement stats wouldn't provide much optimism, either.

            The other part of community education is the media. Television, print, and radio journalism are, in many cases, "acting as the primary source of education for a community when it makes a decision as to whether it will adopt the tremendous opportunities something like biotech brings or reject it," Merrill says.

            "The community can become polarized if it doesn't understand the issues," he continues. Merrill hopes RIT's biotech education center can become a forum for open discussion of controversial aspects of the biotech industry, like stem-cell research and cloning.

            "The cloning issues have been so poorly defined in the press that people haven't been able to distinguish between therapeutic and whole-organism cloning," he says. (In case you were wondering, he's referring to the distinction between creating therapeutic cells by cloning, and cloning an animal like Dolly, the sheep cloned in 1997 from an adult sheep cell.)

            Locally, cloning and stem-cell research haven't been hot-button issues, but there has been concern about genetically engineered food. All the same, the public outcry over so-called "Frankenfoods" hasn't spread very far beyond activist groups.

            In part, that may be because, as Green Party member and Frankenfood critic Jon Greenbaum says, "75 percent of all the food sold in a supermarket contains some genetically engineered products." He's referring to the soy, corn, tomatoes, and other crops used in canned and prepared foods.

            "In agriculture, [biotech companies] tell us it's safe, it's precise. But we know that actually the opposite is true," Greenbaum says. He's concerned about pollen from genetically modified crops drifting into fields where unmodified crops are growing, and what he contends is the unpredictable nature of genetic engineering itself.

            Genetically engineered food "scares me," says Judy Braiman, a local activist who's campaigned against Frankenfoods. "We don't know the long-term effects," she says. "What their tests don't prove is that in the long term, there'll be no harm to humans or the environment."

            "Needless to say, if I didn't have concerns about the biotech industry, I might as well hang it up and die," says Green Party gubernatorial candidate Stanley Aronowitz. "We have a biotech industry that's essentially spinning out of control." Aronowitz says he's in favor of a "moratorium on the products of genetically modified organisms until the scientific evidence is absolutely clear" such products aren't harmful.

            Economist and author Jeremy Rifkin is one of the most vocal critics of the biotech industry. In his 1998 book, The Biotech Century: Harnessing the Gene and Remaking the World, he compares genetically engineered plants and animals to exotic species that have wrecked havoc in North America.

            "Whenever a genetically engineered organism is released, there is always a small chance that it, too, will run amok because, like non-indigenous species, it has been artificially introduced into a complex environment that has developed a web of highly integrated relationships over long periods of evolutionary history," he writes. "Each new synthetic introduction is tantamount to playing ecological roulette. That is, while there is only a small chance of it triggering an environmental explosion, if it does, the consequences could be significant and irreversible."

            When the subject of biotech ethics comes up, "people are very quick to take a side," Merrill says, "but they often don't understand. These issues are complex. They have nuances.

            "There's nothing wrong with a little fear," he continues, "if it's based on the understanding that you lack understanding [of the issue at hand] and want to be educated on it."

            Stein acknowledges that many Rochesterians may have a difficult time accepting the biotech industry. "I know it's hard," he says. "Everybody got used to an economy generated by large manufacturing companies. But in the long-run, if people embrace this work... we'll really have a transformation of Rochester."

            We'll assume he's talking about a city-wide economic, rather than a genetic, transformation.

Bio what?

The Biotechnology Industry Organization, a national lobbying group based in Washington, DC, argues on its website ( that biotechnology should really be called "new biotechnology," since humans have been manipulating living things to make products since the dawn of agriculture and animal husbandry. The distinction these days is that rather than, say, selectively breeding herd animals or choosing seeds, people are now working on a much smaller scale, selectively splicing plant and animal genes together to get similar results.

            BIO defines "new biotechnology" as "the use of cellular and molecular processes to solve problems or make products." Biotech researchers work with DNA (the source of a cell's genetic information), and the proteins DNA instructs the body to make, to carry out specific tasks.

            In the medical field, biotechnology has been used to create diagnostic tests. For example, scientists have identified genes that make certain women predisposed to develop breast cancer. If a patient is found to carry the genes, doctors then monitor the patient more closely and frequently in hopes of catching the cancer at an early stage.

            Gene therapy is another biomedical application. People with diseases caused by defective genes are given new genes that correct the problem. Vaccines based on biotech research are also on the market, such as the vaccine developed by University of Rochester researchers that prevents bacterial infections in children.

            In agriculture, scientists have altered plant genetics to make crops resistant to pests, diseases, drought, and other environmental threats. This is where things can seem really weird. For example, scientists have inserted "antifreeze" genes from flounder into the genetic code of tomatoes to protect against frost damage. The agricultural biotech giant Monsanto has developed seeds that make a crop resistant to a specific herbicide: Monsanto's own Roundup.

            On the livestock front, biotech products are used to improve the health and increase the productivity of farm animals. Biotech-derived animal feeds are also common.

            In industry, biotech-derived enzymes (proteins that perform specific tasks) are used in some manufacturing processes and household products. For example, many laundry detergents contain biotech-derived enzymes that break down blood or plant stains more efficiently than your mother's laundry soap. Locally, Genencor International has a facility that develops enzymes for industrial applications and products.

            The September 11 attacks and the subsequent rush to improve homeland security have boosted the biodefense field dramatically. BIO has a policy against creating bioweapons. It does, however, promote the use of biotechnology to diagnose and treat people exposed to biological weapons. The local biotech start-up Integrated Nano-Technologies is working on a portable device for the military that combines microbiology and microelectronics to diagnose soldiers in the field.

            Finally, perhaps the most widely recognized use of biotechnology is DNA fingerprinting, or DNA typing. The criminal justice system has embraced this technology --- in which, for example, the DNA of a hair cell found at a crime scene is compared to that of a suspect --- to either prosecute or exonerate defendants or inmates.

            DNA fingerprinting is also commonly used to establish paternity, finally and definitely answering the age-old question, "Who's your daddy?"

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