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(Beacon) BioSTL brings together major institutions & funding to grow bioscience companies
Thursday, 29 September 2011
By David Baugher, Special to the Beacon
Posted 10:07 pm Tue., 9.27.11
“We’re not trying to build an empire here,” he laughs.
A nondescript Clayton storefront on Forsyth Boulevard seems an unlikely place from which to run an imperial entity anyway. Yet for the dozens who gathered Tuesday afternoon to celebrate the birth of the organization Rubin now runs -- BioSTL -- there was plenty of excitement.
“We have lots of companies being formed, lots of things going on,” Dr. William Danforth, chancellor emeritus of Washington University, told the assembled group. “One of the things we lack is sufficient funds to give the right help to companies that are starting up and enough money to invest in those startup companies.”
It’s a dichotomy that has defined St. Louis for some time; and Danforth, along with many others in the room, thinks that the answer may have been launched right there on Forsyth. The unimposing space will house BioSTL, a new joint initiative that has grown out of the Coalition for Plant and Life Sciences, which is chaired by Danforth.
The $30 million effort is funded by the trio of Washington University, BJC HealthCare and the St. Louis Life Sciences Project. It is designed to make St. Louis an attractive site for biotech, life sciences research and related commercialization by presenting a welcoming environment for both fledgling bioscience-based businesses and more well-established companies looking for a new home.
Rubin, who previously headed the 10-year-old plant and life science group, will helm the new organization. He said that much of the attention will revolve around the BioGenerator, an effort founded early last decade to act as an incubator for life science-driven enterprises. In some sense, the BioGenerator, which has invested $3.4 million and leveraged another $39 million in private investment helping to launch 26 companies over its lifetime, has been a victim of its own success. Its its volume has pushed the capacity of its primary funding source, the St. Louis Life Sciences Project. Thus, more dollars and more partners are needed to keep pace with growth.
“That will be unsustainable without additional funding and so that’s an important part of what this announcement is about,” said Rubin in an interview with the Beacon. “We’ve proven that there is a tremendous source of innovation and discovery in St. Louis that can have commercial potential. With that validated, it is clear that more funding is required to nurture those new companies, help them succeed here in our region and not have to go somewhere else.”
BioSTL will not only help shepherd cash to promising ideas directly through the BioGenerator but will also assist in dealing with state, national and even international funding sources by determining the kinds of milestones businesses must meet to be “investible.”
“It’s kind of a dialogue that’s facilitated, almost a shuttle diplomacy between national venture capital investors and young St. Louis companies,” he said.
There will also be a human element to the effort. Aspiring capitalists in the sciences often require advice on business plans, market assessments, patent and intellectual property issues and recruitment, all of which will be available through BioSTL, which will also work to find local residents who might be good candidates for new business owners.
“For example, we’ve identified a number of former scientists from Pfizer who want to be entrepreneurs and start companies,” Rubin said. “We’ve put together a training program so there’s a local component to building our entrepreneurial capacity but there’s also an external one and we are recruiting from outside St. Louis, seasoned experienced entrepreneurs to help lead and transform our early stage companies into a success.”
BioSTL will also act as a coordinating body that helps centralize previously disparate efforts to make the area a biosciences haven. That will include everything from a coherent regional marketing message to a strategic legislative push to a look at more mundane issues like data collection all of which could benefit groups throughout the area like the Center for Emerging Technologies, BRDG Park and the University of Missouri-St. Louis’ Innovative Technology Enterprises incubator.
“It will relieve them of having to divert their own money and their own staff away from their core mission in pursuit of separate strategies,” Rubin said. “We will have a coherent strategy of branding St. Louis biosciences to the world.”
Building a bridge
BRDG Park is a good example of the kind of effort with which BioSTL hopes to mesh. Housed on the Donald Danforth Plant Science Center campus on Warson Road, the facility’s single structure was completed in 2009 but president Sam Fiorello hopes eventually to see the enterprise expand to three buildings. All it needs are tenants – biosciences companies big and small – that either start up or relocate to town.
“Just a couple of weeks ago, we had an announcement that we’ve got a company from Delhi, India, to move their operations here,” said Fiorello, who hopes the first building will be full in another three to six months. “It’s an ag-tech company. They’re well-funded and they were looking for a global headquarters for their research operations. They selected BRDGPark and St. Louis as their home.”
Getting more companies to call the region home is right up BioSTL’s alley, and Fiorello thinks that the new effort will bear fruit in marketing the area nationally to enterprises looking to be on the cutting edge, particularly by promoting capital formation and early-stage seed money.
“All of these are things that are very difficult to do; and those resources and the team they are putting together will be a sort of first phone call for us,” Fiorello said.
And it isn’t just companies that St. Louis’ emerging life sciences industry is pulling from other cities. Rubin notes that some of the elements animating BioSTL were borrowed from examples in other towns. The outreach initiative to venture capital groups looks to replicate an effort that has enjoyed success in Cleveland, while the attempt to increase the base of resident entrepreneurs appears much like a similar idea in Pittsburgh.
“There’s no cookie cutter that works perfectly,” Rubin said. “Everybody’s got to look at their own market, their own community and see what works best. In our case, we have to stay flexible. We want to find people who have some connection to St. Louis because we want people who are likely to stay here and as they build companies those are likely to stay in St. Louis.”
Many of the companies the BioGenerator has in its portfolio are associated with local establishments.
“Roughly half of them came out of our universities and research institutions and the other half come from entrepreneurs who are unaffiliated with any institution,” Rubin said.
Money and infrastructure
One of those institutions is Washington University. The venerable center of learning has committed $10 million to BioSTL. Chancellor Mark S. Wrighton said the initiative’s ethos dovetails perfectly with his school’s mission.
“One reason we are so eager to be involved is that I’ve been discussing with the community here at Washington University how we want to encourage, support and recognize innovation and entrepreneurship and we want to be in a position to attract the most talented faculty and students,” he said. “By developing new enterprises based on the work we do here, we’ll have a better chance of continuing to recruit good people and keeping them in St. Louis.”
He said BioSTL’s “substantial financial resources” give it a sizable ability to transform research into reality.
“You can’t tell where a discovery might occur and what its consequences might be,” said Wrighton. “What we need is an infrastructure that’s there so the leading researchers have an opportunity to move what they are doing into the hands of people who can develop it and commercialize it.”
Commercialization is indeed the name of the game. Celebrating at the small office on Forsyth Tuesday, William Simon is particularly blunt.
“Startup companies need a good idea. They need good people. But most of all they need money,” said Simon, vice president and COO of the Center for Emerging Technologies. “That first million or million and a half that a company gets is essential to their growth.”
CET has assisted in starting four dozen companies over its 14 years in existence. Simon brags his organization has “about a 90 percent batting average.” Not that things are always effortless. Biotech is an expensive business.
“The number one reason some of them didn’t grow fast or didn’t grow at all was that they didn’t have easy money,” he said. “Something like this will help that.”
The center’s founder, Marcia Mellitz, agreed saying the hardest money to raise are the first dollars through the door.
“You haven’t proven the technology,” she said. “You haven’t proven the market and you haven’t proven that you can actually build a company so there’s a lot of risk involved at that stage.”
But the hurdles don’t end there
“The other challenge from the standpoint of the region is having enough experienced entrepreneurs to run these startups,” said Mellitz, who is now vice president of program development for BioSTL. “We see a lot of good technology, but we don’t see a lot of experienced entrepreneurs and that’s lot of what we’re addressing.”
She said much of the high-tech cash and talent still resides in places like Boston, San Diego and San Francisco.
“But we have potential,” she said. “That’s really what BioSTL is about, to tap that potential and build on the successes that we’ve proven over the last decade.”
Gil Bickel is chair of the St. Louis Arch Angels, a group of investors who provide financing for businesses, many of which are in incubators such as CET or the BioGenerator. Such individuals are often referred to as “angel” investors.
“The problem we have now is the disparate number of alternatives that an entrepreneur has,” he said. “It’s very confusing. They don’t know where the resources are or how to access them and this will very much bring together the people, the resources and hopefully the money to help an entrepreneur not only start his company but to develop it and grow it.”
Bickel said that in the five-and-a-half years his group has been in existence, it has invested about $26 million in 29 companies. Still, he notes that across the nation since the onset of the recession a lack of spare cash and a dearth of optimism has made this economy one in which angels sometimes fear to tread.
“When 2008 came along, it scared everybody to death,” said Bickel, “so these people who were making these high-risk investments as an angel investor in smaller companies got scared like everybody else and they withdrew from the marketplace.”
He thinks BioSTL will be a boon to a region often riven with competing interests and plans.
“It’s really an attempt to bring it all together to make sure everybody sees the goal,” he said. “Although we’re not in the same organization, we all are working toward that common goal of developing the sector.”
Steven Lipstein, president and chief executive of BJC, said he believes BioSTL is a great beginning.
“If you create a mass of people who do this kind of activity, it attracts research funding, it attracts investment capital,” he said. “You begin to build companies out of new ideas.”
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