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Conversion of medicine and technology inspiring new hopes for economic growth
Monday, March 29, 2004

North Side-based RedPath Integrated Pathology has begun marketing a specialized pathology lab service using a patented process to help doctors more definitively diagnose cancer and better tailor treatments to individual patients.

 
 
Online Chart:

Biomedical Startups

   
 

Parent Plus, based in Hazelwood, plans next month to seek federal Food & Drug Administration approval to market a preparatory "wash" for sperm to fertility clinics that could ultimately help some couples conceive without undergoing the most costly forms of fertility treatment.

Although the two companies have pursued different strategies in different markets, they have one thing in common: Both were among more than 30 biomedical start-ups founded in the region during the past two years.

Few, if any of these companies, have established names or the kinds of businesses that would put them on anyone's corporate map.

Even in aggregate, the revenues and payrolls of the region's biomedical concerns might be lost in rounding the same totals for an industrial titan such as Alcoa or PPG Industries. As of June 30, the Pittsburgh Life Sciences Greenhouse said 64 companies that it considers the biotech industry's "core" in the region together provided 3,856 local jobs.

But it's their collective potential, not current performance, that's put them at the center of an economic development game plan for reversing the region's industrial decline and replacing gritty industrial jobs with ones in a growing, cutting-edge industry.

Political and economic development leaders in the state and region are trying to nurture biomedical start-ups by playing off of the strengths of university research in Pittsburgh, Philadelphia and Central Pennsylvania.

To do so, the state two years ago provided $99 million, split in thirds, to create three life sciences greenhouses -- one each in Pittsburgh, Philadelphia and Harrisburg -- and earmarked another $60 million for venture capital firms that agree to raise private matching money to invest biotech companies across Pennsylvania. All told, the state is expected to invest $2 billion in developing a biotech industry.

Matching money from foundations boosted funding for the Pittsburgh Life Sciences Greenhouse to $99 million. The Greenhouse has used the funds to establish an array of programs, ranging from management support to financing for technology development and collaborative research. It also invested $15 million in Pennsylvania Early Stage, a venture capital firm that said it would add $5 million to the total for investment in biomedical companies in the region.

Dr. Doros Platika, a physician, scientist and biotech entrepreneur who was recruited from Boston in November to head the Greenhouse here, recently said the emergence of more than 30 start-ups in the region in the past two years was evidence that Pittsburgh's biotech industry was "beginning to bubble."

"One of the attractions not just of biotech but of all technology is that it is one of the few industries that are net importers of capital" into states and regions where they reside, Platika said in a recent interview. "Most other industries tend to export or recirculate capital."

When he took the Greenhouse post, "What I saw here was a community that 'gets it,' " he said. Before accepting, he said, he had done his own "due diligence" analysis of the region's technology research strengths and the infrastructure that was being put in place to support development of a biotech industry.

One thing that was lacking was sufficient venture capital. But Platika said the fact that "the state stepped into that breach," and that the region found support from foundations impressed him, as did "cooperation" between local universities that he found unusual if not unique.

Among university research strengths he found most attractive were those in tissue engineering, regenerative medicine and computer research that intersects with biomedical development.

In those areas, "We can be in the top two or three [most prominent positions] in the world," he said.

The newest biotech companies in the region followed in a path cut by several university spinoffs -- TissueInformatics Inc., Cellomics Inc. and Precision Therapeutics.

Executives associated with those forerunners said they too could see evidence that the region's biotech industry had gained momentum in the past couple of years.

Mary Del Brady, for example, who helped launch TissueInformatics and now is Redpath's chief executive officer, said biotech development here was "multiples from where we were."

Among other things, there are more business resources to tap, such as the Greenhouse, she said. In addition, the number of funding sources has grown, taking in more wealthy individual investors interested in backing biomedical companies and more venture capital firms.

Moreover, "There's this whole second wave of companies" creating greater awareness of the potential in biomedical development and a more promising atmosphere for cross-pollination of ideas and talent, Brady said.

Because of that, "There's more of a mind-set" to start companies and to keep them in the region rather than relocating them to cities perceived as having more supportive environments, she said.

"It is a much better environment than when I started Cellomics," said Lansing Taylor, who now serves as the company's chairman.

There also are a handful of companies already generating revenues, including Agentase Inc., which makes sensors for detecting chemicals and biological agents; Fluorous Technologies Inc., which makes fluorine-based chemical reagents to help drug researchers develop and purify new pharmaceutical compounds; and BodyMedia Inc., which makes wearable devices to monitor human health indicators.

Companies that quickly generate revenue could further enhance the region's chances of cultivating an industry if they result in some early payoffs for investors, attracting more financial backers to the region.

By contrast, some of the start-ups as yet are little more than a name on paper, a patent and someone trying to turn it into a product. Many biomedical devices and pharmaceutical products take years to get to market because of the extensive testing and regulatory screening they require. What's more, a large number of biomedical start-ups fail somewhere along the way.

Nonetheless, development experts consider the potential worth the gamble.

One need only look at the growth of the region's oldest homegrown biomedical concerns -- Medrad Inc. and Respironics Inc. -- to understand why. Medrad, founded in 1964 by Dr. M. Stephen Heilman, now employs roughly 1,220, including 890 in the region.

In addition, Heilman has since helped start or sponsor a couple of other ventures, including Lifecor Inc., an O'Hara developer of a wearable cardiac defibrillator.

Murrysville-based Respironics, founded in 1976, now employs more than 2,500 worldwide, including nearly 900 in the region.

Platika, the Greenhouse CEO, said companies at the maturation stage of Medrad and Respironics also sometimes begin spinning off technologies that they develop but don't find compatible to their core businesses.

"That's what happened with Genentech in San Francisco," he said.

First published on March 29, 2004 at 12:00 am
Pamela Gaynor can be reached at pgaynor@post-gazette.com or 412-263-1613.