Thursday, October 12, 2006

WBJ Article on NoVa Biotech

Cover story about Northern Virginia Biotech in the Washington Business Journal

Virginia's new biotech formula
As Northern Virginia rolls out the welcome mat for its new $500 million prize -- the Howard Hughes Medical Institute -- business leaders are thinking bigger than proteomics, and looking beyond their own county lines.

Washington Business Journal - October 6, 2006
by Joe Coombs and Vandana Sinha
Staff Reporters

A fort of trees veils it from the traffic-ridden reality of Route 7 on one side. On the other, the banks of the Potomac River quietly cushion it. Between the two lie 689 acres of green seclusion called Janelia Farm Research Campus.

The Loudoun County campus is sliced by meandering roadways that, when finished, will circle two man-made lakes, wild meadows and a veritable greenhouse for science: a glass-walled labyrinth of labs and meeting spaces in a wide staircase of a building burrowed into a hill that, at three football fields long, spans more square footage than Dulles International Airport's main terminal.

Inside that building, along curved hallways and past glass-enclosed office pods, roughly 50 scientists who chose Ashburn over Harvard or Oxford now unpack boxes of equipment and research materials that local economic development officials hope will herald a new era for biotech in Northern Virginia.

Janelia Farm, the Howard Hughes Medical Institute's $500 million retreat, celebrates a quiet public opening Oct. 7. But regional leaders are toasting a different occasion: the baby steps of a Northern Virginia biotech industry that's long been under construction compared with its counterpart across the river.

They hope that in the next generation these high-dollar life sciences projects will spawn the kind of roaring biotech sector Montgomery County has long enjoyed.

But before the celebrations begin, Northern Virginia must still round up some key ingredients -- wet lab space, incubators and gobs of venture capital -- to spur one of the world's costliest and most regulated industries.

"I think it's in its early stages. There's a good energy about it," says Cheryl Moore, chief operating officer for Janelia Farm Research Campus and a board member for VaBio, the state's biotech trade group, and the Virginia Biotechnology Research Park in Richmond. "I wouldn't say it's there yet, but there's a buzz."
'Friendly competitors'

Bound to cause the most buzz are the sudden sounds of regionalism, or at least, semiregionalism.

Cooperation among neighbors is often a foreign concept when it comes to economic development. But three Northern Virginia counties are doing the unthinkable: touting each other's strengths to create the region's -- and perhaps the country's -- next great cluster of bioscience activity.

Only a year old, the Northern Virginia Life Science Communities coalition will use a three-pronged sales pitch to reach its goal:

* The pending delivery of the Hughes campus in Loudoun County;
* A 1,500-acre, rapidly growing business park in Prince William County; and
* The powerful tech-based economy and international connections of Fairfax County.

The group consists of the three counties' economic development agencies, and while they'd all like a big piece of biotech for their own tax rolls, they're not averse to attracting business on a regional level.

"We are indeed competitors, make no bones about it," says Jerry Gordon, president and CEO of the Fairfax County Economic Development Authority. "But we're friendly competitors. This is one industry where we can't compete effectively on our own, or separately."

The wild card for Northern Virginia's biotech hopes is at George Mason University, which doesn't have a tradition rich with research but is increasing those efforts at campuses in Fairfax, Loudoun and Prince William.

Some of the university's current work is focused on two emerging bioscience sectors -- proteomics, the study of protein activity in cells, and theranostics, a combination of therapy and diagnostics that tailors treatments to specific individuals.

For now, the Northern Virginia coalition is just trying to let the industry know what the counties have to offer, says Dorri O'Brien Morin, manager of business investment for Loudoun County's economic development department. They're sending a team to the 2006 Mid-Atlantic Bio, an Oct. 10 trade conference in D.C. expected to attract heavyweights from the bioscience industry.

In November, Loudoun County for the first time will host a three-day international medical automation conference, which will be at the Lansdowne Resort Conference Center. The county ponied up $100,000 to bring the annual conference to Loudoun for the next five years, Morin says.

"That's just one example of the effort that's being made," Morin says. "If we can get the right people here on a regular basis, they're going to be in Loudoun and Northern Virginia and say, 'This place is on fire.'"

A work force study is also in the coalition's plans for early 2007. The goal, Morin says, is to find out "where we have gaps, and where we have strengths."
scientific shift

If there are budding strengths and a buzz in Northern Virginia, then Maryland has been comparatively drunk with biotech success. Virginia has 160 biotech and pharmaceutical players statewide, with a little less than half inhabiting the northern suburbs. In Maryland, more than 200 such companies reside in Montgomery County alone.

While Maryland began collecting biotech companies a quarter of a century ago, Northern Virginia scored what many consider its first biotech company in 1998 with American Type Culture Collection, a not-for-profit corporation that inventories microorganisms for research and christened now-growing Innovation @ Prince William Technology Business Park.

Northern Virginia, however, has lacked the research engines that drove most of Maryland's biotech development: large research universities, such as Johns Hopkins University and University of Maryland, and federal research agencies, such as the National Institutes of Health. The sizable budgets of those organizations fund scientific research, and then scores of their researchers graduate to entrepreneurialism.

Northern Virginia, meanwhile, has stuck with its strengths, banking more on information technology and telecommunications companies. Until now.

The region has captured attention with high-profile bioscience wins in recent years, including a $325 million Eli Lilly manufacturing plant, a $45 million George Mason University biocontainment lab and a $32 million FBI lab, all in Prince William County.

Three years ago, Northern Virginia opened its first biosciences incubator in Springfield, taking a step toward competing with Maryland, whose goal is to have seven incubators by the end of next year.

Earlier in the year, George Mason University hired a full-time licensing executive specifically for life sciences in the university's Office of Technology Transfer. That's already led to two new biotech licensing agreements and one new startup in Prince William County, with two more fledgling companies in the works.

"The goal is to keep these companies in Northern Virginia," says Matthew Kluger, vice president for research and economic development at George Mason. "We hope this will be the first of many."

But Janelia Farm is likely to remain the centerpiece of Northern Virginia's biotech strategy. Local leaders hope the campus will be the re search engine that pushes scientists into the business community.

In more than two decades, Hughes researchers around the country have won 11 Nobel Prizes and launched more than 100 companies, a few bulging to more than 500 employees. Last year, they licensed enough technology to earn $2 million in royalties.

"We improved the probability that some companies will want to locate here. There's no question about that, but we didn't make it 100 percent," says Janelia Farm Director Gerry Rubin. "But just having us is not going to do it."
Lab supplies

The Hughes institute surely can't do it alone. To lure startups, regional and state officials must have more potent biotech bait, including built-out lab space and pockets full of financing.

In Maryland, the state launched its own venture fund, 40 percent of which goes to biotech companies. The state also has subsidized incubators and this summer began offering generous tax breaks to those who invest in the earliest stages of biotech companies.

Northern Virginia companies, on the other hand, often end up paying their own way. In the past decade, that's amounted to $1.6 billion in private investments in the state's biotech communities.

"We are where we are today because we've done it on our own," says Eric Major, CEO of K2M who founded the spinal cord diagnostics company near his Leesburg home and next door to the regional airport. "I'm not saying Virginia is putting any roadblocks in our way. But they could spur this."

Virginia officials say that instead of pinpointing a specific sector to assist, they want to create a low-tax business-friendly climate that's appealing across industries.

Two years ago, however, Gov. Mark Warner commissioned a biotech committee to look at things the state could do to pump up its activity.

As a result, Virginia leaders say they are reviving a state technology research fund this year with $5 million in new funding for public-private academic partnerships and an additional $250,000 for research and development.

"Some of that is likely to be spent on biotech," says Aneesh Chopra, Virginia Secretary of Technology. "I'm not saying we've solved everything, but we've taken a step forward."

Where Northern Virginia continues to lag is in the amount of lab space. There is virtually none today.

The creation of wet lab space, whose price tag can be as much as five times the cost of office space and well beyond a startup's budget, was one of the recommendations of the governor's commission. For this budget cycle, however, it remains in discussion mode in Richmond.

"We have clients who need space now," says Dan Gonzalez, a VaBio board member and executive vice president of commercial real estate firm Scheer Partners. "So their only alternative is, they can go to Maryland. Or they can go down to Richmond."

Eli Lilly -- searching for temporary wet lab space while its 350,000-square-foot insulin manufacturing plant is being built -- has declared it will build its own 10,000-square-foot wet lab in Prince William County.
Within, without

It remains to be seen if the gentlemen's agreement among the members of the Northern Virginia Life Science Communities coalition yields the hoped-for big-time results.

Representatives of all three counties say this is the first time that they've been at the table together vying for the same business, and it's taking some adjustment.

However, there's never been such a confluence of events working in their favor:

* The region's economy is still booming.
* Fairfax County has a well-established, tech-based work force, and its economic development agency is building global contacts through several international offices.
* The Hughes campus in Loudoun will be fully operational in 2007.
* Prince William County's Innovation technology park is already creating a burgeoning bioscience sector, anchored by the Eli Lilly plant that will employ 350 people when it opens in 2009.

The Hughes complex could also have a good neighbor in the One Loudoun development, a proposed 360-acre project on Route 7 in Leesburg with 3.8 million square feet of office and commercial space, a 400-room hotel and 1,935 residences.

The project's partnership has teamed up with the International Association of Science Parks, and a significant portion of One Loudoun's commercial property will be devoted to bioscience companies expected to feed off research conducted at Hughes.

"We want a company to be in the best place possible," says Morin, the business investment manager for Loudoun's economic development department. "We may not have the work force available in Loudoun that Fairfax has, for example, but we've got Hughes and we've got some land. Prince William has the Innovation park and a lot of incentives already in place. We can find the right fit."

Prince William was already targeting life sciences before the coalition was formed, says Jason Grant, a spokesman for the county's Department of Economic Development.

As a targeted industry, bioscience companies are eligible for a fast-track permitting processes that lasts only 30 days and can get a reduction of up to 50 percent in county fees for site development. They also are eligible for assistance from a fund administered by the county's industrial development authority.

Although Prince William had begun taking steps on its own to become a biotech center, it jumped onboard when the idea for a regional coalition was proposed, Grant says.

"We asked the question, 'Are we helping ourselves by only marketing ourselves?,'" he says. "As it turns out, each of the three counties has assets that are substantial, and it's a stronger message for us to send out."

Even with a bioscience stronghold in Montgomery County, coalition members say there's plenty of room for the industry to grow elsewhere in Greater Washington.

"We all know that Virginia, Maryland and D.C. don't play together all that well," says Gordon of Fairfax County's economic development group. "So now we've got a Northern Virginia subset that has plenty to offer. There's a lot we can accomplish with simple marketing. We're still in the early stages, but this industry grows in short steps, too."

Even if Northern Virginia succeeds in expanding its biotech industry, the region still has several more years of baby steps before it nears the Maryland-level leagues.

"It's not a single company. It's not a single building. It's not a single facility," says Robert Skunda, president and CEO of the Virginia Biotechnology Research Park, a $585 million business park and incubator that's a partnership among the city of Richmond, the state and Virginia Commonwealth University. "It's really kind of creating a critical mass of all of those things."

Until then, from the terraced, plant-lined roof of the Janelia Farm Research Campus, Northern Virginia's proudest accomplishment in life sciences to date, the biotech community can get a front-row view of its competitor just miles across the Potomac River.
Economic development = scientific developments

From unlocking the mysteries of the genetic code to following the brain's wiring, the Howard Hughes Medical Institute promises science in Ashburn that's never been explored.

The Chevy Chase-based nonprofit research organization -- whose roughly $16 billion endowment pays for long-term, society-altering science projects not profitable enough for most others to fund -- will focus on two areas at its new Janelia Farm Research Campus in Loudoun County.

In one area of emphasis, researchers will try to gain a better understanding of how the brain works. The second research field will focus on obtaining better images of biological pieces.

Its earliest efforts so far have been in imaging. Inventors Eric Betzig and Harald Hess, new employees at the Loudoun County lab, have created a microscope that uses light to differentiate proteins from one another at a resolution rate 10 to 100 times higher than its counterparts -- the equivalent of the difference between a soccer ball and marble.

The extra visibility from their technology, featured in a recent issue of the online Science Express magazine, could help biologists better determine where diseases formulate and grow.

"When you have that extra resolution, you can begin to ask, 'How do some of these organelles work?'" says Hess, Janelia Farm's director of the applied physics and instrumentation group. "How do proteins work together?"

Hughes constructed the lab in a way that makes it easier for researchers to work together. The lab's architects have carved out considerably wide hallways and open spaces that practically force scientists to bump into one another and share ideas.

Chemists, neurobiologists, geneticists, physicists, computer scientists, mathematicians, biologists and engineers will have access to a 500-square-foot cell culture lab, two equipment machine shops and a data center, among other resources.

Janelia Farm will be the only place where the Hughes Institute clusters its researchers, 300 of whom are now scattered across more than five-dozen universities around the world.

By the end of the decade, when Janelia Farm reaches capacity, more than 300 group leaders, researchers, fellows and visiting foreign scientists will be delving into everything from neurons to nanosensors in what Hughes calls its boldest work.

The Loudoun campus is seeking "people who are picked in the first round of the draft," says Gerry Rubin, director of Janelia Farm, which competes for scientists with the likes of the Massachusetts Institute of Technology and Harvard, Stanford and Oxford universities. "We are getting really ambitious, very talented people who set their sights very high and want to do important things. We want you to bet your career on your ideas."

* Vandana Sinha

Happenstance, not strategy, lured Hughes

Loudoun County can credit its top-billing biotech coup, the Howard Hughes Medical Institute's world-class $500 million Janelia Farm Research Campus, to one thing: near coincidence.

When searching for land six years ago, Hughes leaders knew they wanted at least 80 acres of relatively isolated, untouched expanse. They also wanted an airport nearby for visiting scientists, but no bustling office parks as neighbors. They envisioned a remote university-campus setting, with housing for the scientists and on-site eateries.

That largely left Northern Virginia, but finding the amount of space needed for research and development still proved more difficult than expected -- until the project's then-anonymous real estate adviser, The Mark Winkler Co., now Duke Realty, spotted the perfect proposition in the fields of Ashburn.

The lot's previous owner, Dutch software company Baan, had endured eight straight quarters of losses and was hemorrhaging $1 million a day. Days away from bankruptcy, it had no choice but to sell its land in 2000, only two years after announcing plans to construct 2.5 million square feet of office and training buildings to hold 1,000 people in a location already zoned for research.

At the time of the announcement, Gov. Jim Gilmore had called that $40 million project one of the largest development investments in the county's history.

Through Winkler, which had learned about the struggling software player, the Hughes institute approached Baan with an offer it wasn't able to refuse. For a relatively small $57 million, the institute became the proud owner of the 281-acre property.

Only after the negotiations ended and funds were transferred did Loudoun County officials learn of what would indeed become one of the largest development deals in its history.
The Loudoun County Board of Supervisors, in one of its last moves at the end of 2003, voted to award

$6 million in tax exemptions to the research campus. And they're watching closely for what the regional economic payback will be.

* Vandana Sinha


Northern Virginia vs. Montgomery County: Competitors, or 'complements'?

Start with a handful of huge government research groups. Add a 288-acre piece of property for private-sector development and sprinkle in a couple of universities.

That's how Montgomery County crafted the recipe for its biotechnology industry, which today has about 12,000 workers, 200 companies and hundreds of millions of dollars in research and development activity.

Montgomery County is the place where giants such as MedImmune and Human Genome Sciences got their starts, and it's poised to make room for more: The county is in the preliminary stages of building out a 185-acre plot on its east side for life science companies.

As Northern Virginia tries to find its own identity in bioscience, it can turn to a pretty good blueprint on the other side of the Potomac.

Montgomery County, though, already was starting from a strong point when its effort began about 25 years ago: The National Institutes of Health, the U.S. Food and Drug Administration and the National Institute of Standards and Technology had homes in the county. But Montgomery officials knew they couldn't build a biotech industry on federal agencies alone.

"In the early 1980s, it was really the start of the biotech industry itself," says Joe Shapiro, a spokesman for Montgomery County's economic development department. "We had resources in place. The county leaders at the time realized that in order to attract the private sector, we needed to increase our higher education opportunities."

The county created the Shady Grove Life Sciences Center in 1983. The first two tenants at the 288-acre property in Rockville were Otsuka Pharmaceutical and Microbiological Associates, today known as BioReliance. The center then welcomed divisions of Johns Hopkins University and the University of Maryland. Montgomery County's biotech sector blossomed.

"Having Johns Hopkins and the University of Maryland here created the momentum the county was looking for," Shapiro says. After that, people like Wayne Hockmeyer came from Walter Reed and started MedImmune, and Craig Venter left NIH to create Celera Genomics.

Life science incubator complexes for startup companies have sprung up, and the next big thing is the East County Center for Science and Technology near the new headquarters of the FDA in White Oak, which, when finished in 2008, will house 8,000 employees.

Northern Virginia could be on the cusp of creating its own life sciences community, but "we're not trying to go head-to-head with Maryland," says Dorri O'Brien Morin, manager of business investment for Loudoun County's economic development department. "We know we're just getting started, but we think we'll see the metamorphosis of another industry cluster in our economy. We think we can be a complement to what Maryland already has.

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