The Pittsburgh Life Sciences Greenhouse, a high-tech economic development engine, is both an example and victim of the ongoing tug-of-war between the region's powerhouse research institutions and its budding life sciences companies.

Tomorrow's dissection of Pennsylvania's tobacco settlement windfall at a state Senate select committee hearing in Hazelwood could crack the lid on the long-simmering local debate.

	How the money is being spent PITTSBURGH LIFE SCIENCES GREENHOUSE In addition to $33 million from the state's 2001 tobacco settlement, the Greenhouse raised $70 million in matching funds through local foundations. $19 million is earmarked for company investments: $15 million for PA Early Stage Partners to invest in regional life sciences companies, $4 million for other investments averaging about $100,000 for research and startups. About $60 million of the $70 million gift was earmarked for the University of Pittsburgh and Carnegie Mellon University over five years, for faculty recruitment and construction and renovation of facilities, and about $10 million was earmarked for Greenhouse operations, programs and other investments. LIFESCIENCES GREENHOUSE OF CENTRAL PA. Received $32.8 million in funding from the state's 2001 tobacco settlement. Company investments: $18.5 million allocated, $7.5 million spent on 41 companies or university research initiatives. $10 million "Gap Fund" for investments ranging from $250K to $500K, including $3.5 million for seven startups $8.5 million "Technology Development Fund" for proof-of-concept investments to a maximum of $250,000. $4 million invested in 37 small businesses and university initiatives. BIOADVANCE -- THE LIFE SCIENCES GREENHOUSE OF SOUTHEASTERN PA. $33.8 million in funding from the state's 2001 tobacco settlement Company investments: $20 million allocated, $10.5 million invested in 30 start-ups and academic institutions.

The greenhouse, with a $103 million purse that dwarfs its counterparts in other parts of the state, takes a research-heavy approach to giving Pittsburgh's economy a shot in the arm.

Since it was founded in 2002 with $70 million in private funds from local foundations and $33 million from the state's tobacco settlement fund, the greenhouse has directed the bulk of the money -- roughly $60 million -- toward luring top-notch faculty and constructing or renovating research facilities -- including Oakland's biomedical tower -- at the University of Pittsburgh and Carnegie Mellon University.

That was the intent from the start, said Mark Nordenberg and Jared Cohon, who co-chair the greenhouse board and lead Pitt and CMU respectively.

The $70 million gift had been slated for the universities by a group of local foundations, including the Heinz Endowments and the R.K. Mellon Foundation, they said.

As plans to create the greenhouse progressed, "We moved forward with a belief that building a strong research foundation within the two universities was really indispensable to the economic growth that everyone was thinking about," Dr. Nordenberg said.

In turn, the $33 million from the state's tobacco settlement fund has been dedicated to turning research into market-ready products and to investing in upstart life sciences firms, they added.

That includes $19 million set aside for investing in local life sciences startups -- $15 million of which was invested in Wayne-based venture capital firm PA Early Stage Partners. The venture capital firm added $5 million of its own to create a $20 million pot solely dedicated to local life sciences companies.

Earlier this month, PA Early Stage funded its fourth local life sciences startup, drug development firm Logical Therapeutics, with an undisclosed amount.

It is considering investing in up to two more Pittsburgh biotech companies in the next two years, according to managing partner Paul Schmitt.

What was left of the $19 million, plus some foundation funds, the greenhouse poured into local life science startups. That $4.4 million was spent in chunks ranging from $40,000 to $250,000.

The remainder of the tobacco dollars -- about $14 million -- is being used for greenhouse programs and services, such as its Executives-in-Residence mentoring program for startups, incubator space and training seminars on capturing federal research grants, said greenhouse Chief Executive Officer Doros Platika. The greenhouse also has helped to lure seven biotech companies to the region, he said.

But this research-tilted strategy doesn't sit well with some in the local life sciences industry who believe the money would have been put to better use by investing it directly the region's biotech upstarts.

"If you gave the same amount of money to companies directly -- outside of the greenhouse or the universities -- what would be the result?" said Ray Vennare, a biotech entrepreneur and co-founder and acting CEO of ThermalTherapeutic Systems.

Such a tack would have taken money away from the universities, officials countered.

"Foundations don't fund companies," said Donald Smith of the University Partnership, a joint economic development venture between Pitt and CMU. "Our foundations have a history of being very strong supporters of higher education."

At its start in 2002, greenhouse planners said their goals included giving grants to university researchers to turn their work into marketable products, hiring faculty members to guide and produce research that could have market applications, creating an incubator to house young biotech firms, and providing capital to just-out-of-the-lab startups.

The committee charged with developing the greenhouse -- then known as "BioVenture" -- "spent months developing a consensus," said Secretary of the Department of Community and Economic Development Dennis Yablonsky, who spearheaded efforts to raise the $70 million in private funds for the greenhouse and served as its first chief.

"Everybody was comfortable with it," he said

When it debuted in 2002, Mr. Yablonsky promised the "greenhouse would be involved in an average of six startups annually."

Of the 41 investments it has made, the greenhouse declined to say how many are startups it has had a hand in creating, but Dr. Platika said that it has "been the catalyst to help increase the rate of new companies in the region by nearly 1,000 percent, from one to three companies formed per year to 15 to 20 per year."

Despite the Pittsburgh greenhouse's well-endowed coffers, the amount poured into local companies is not much different from that spent by its counterparts in Harrisburg and Philadelphia -- all have allocated about $20 million each. All three greenhouses received about $33 million each from the state. The other two don't have the additional foundation support, although there is a $26 million venture capital fund attached to the Philadelphia greenhouse.

Still, each greenhouse has its own road map for investments, support programs and services, and are tailored to their own strengths and needs, noted Barbara Schilberg, CEO of BioAdvance, the greenhouse based in Philadelphia.

BioAdvance has made $10.5 million in direct investments to startups and the Central Pennsylvania Life Sciences Greenhouse has made $7.5 million. The Pittsburgh greenhouse has spent $4.4 million in direct investments although it did contribute $15 million to PA Early Stage.

"It's like comparing apples and oranges," added Dr. Melvin Billingsley, the head of Central Pennsylvania Life Sciences Greenhouse.

Strategy differences aside, biotech entrepreneur Mr. Vennare said he's optimistic about what will emerge from Monday's forum.

"Finally we're all talking together," he said. "Finally there is direct communication between the main players. In the past it has been a fairly paternalistic approach -- decisions are made and money is allocated."