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What Baltimore's biotech industry needs: an "anchor"
July 11, 2010
Young biotech startups hope to grow into major players, fueled by state tax credits and research from Johns Hopkins and University of Maryland
By Gus G. Sentementes, The Baltimore Sun
Baltimore's biotechnology industry has made strides. Two biotech parks by the Johns Hopkins University and the University of Maryland now anchor the east and west sides of the city. A few dozen biotech startups have made their home here.
But Baltimore's nascent biotech industry doesn't yet have a breakout company — a darling of venture capitalists and Wall Street that has grown past the risky and unprofitable startup phase to achieve a steady stream of revenue and products in the pipeline.
A company like MedImmune in Montgomery County, which produces an H1N1 flu virus vaccine, among others.
"There's no giant here, but it would be nice to have one," Aris Melissaratos said about Baltimore. He's a special adviser for enterprise development at Hopkins and a former head of the state Department of Business and Economic Development. "Every company that starts up strives to do that. Very few succeed."
The future of Baltimore's biotechnology industry remains to be seen. Industry observers put the city up to two decades behind the biotech hub that has taken root along the Interstate 270 corridor in Montgomery.
While Baltimore's bioparks are still being built, Montgomery planners are moving forward on a $10 billion "science city" with 17.5 million square feet for research and development. That county has more than 250 of the state's 380 bioscience companies, with such heavy hitters as MedImmune and Human Genome Sciences. Baltimore has about 40 biotech companies.
But Baltimore has scored some wins recently, by landing the new headquarters of the Lieber Institute for Brain Development, with its $100 million endowment, at the Hopkins Science + Technology Park. And the University of Maryland BioPark is planning a third building for young biotech companies.
Another indicator of how well Baltimore is faring in the intrastate biotech race is an annual Maryland tax credit that lets investors recoup half their investment — up to $250,000 — in a biotech company. Over the past year, 14 Maryland companies were able to attract investors who tapped the credit. Five were based in the Baltimore area.
The companies, by virtue of being savvy enough to attract investors in a tough economy, are some of the bright spots in the industry — and potential future breakouts.
In biotech, success can beget success. MedImmune, which was bought by AstraZeneca International in 2007 for more than $15 billion, has spurred new companies to locate nearby, to do business with it or tap into its talent. The company employs 1,400 in Gaithersburg, and several hundred more at a manufacturing facility in Frederick.
"MedImmune is a significant driver of the Montgomery County economy through development and the taxes we pay, and the vendor contracts," said Brian Rosen, senior director of government affairs at MedImmune.
John A. Korpela, director of the Montgomery County Innovation Network, a group of business incubators around the county, equated MedImmune to an "anchor tenant" — like large department stores in malls. "A lot of companies come here to be next to these big companies," he said.
Montgomery County also has benefitted from huge federal institutions, such as the National Institutes of Health, that are based in the county. Researchers and entrepreneurs create advances and launch new companies based on that government research.
Likewise, enterprising biotech startups that want to tap into research generated by the universities are setting up business in the parks, albeit more slowly than anticipated as venture capital investment dried up during the recession.
At the Hopkins Science + Technology Park in East Baltimore, 80 percent of a 280,000-square-foot lab-and-office building has been leased to research institutions and commercial companies, according to Scott Levitan, a senior vice president of Forest City Enterprises, a development firm managing the park. Another two buildings are planned, including one with labs and another for early-stage companies, he said.
The University of Maryland BioPark on the city's west side has one 120,000-square-foot building completely leased and a second building with space available. A third is in the design phase and looking to lure tenants. Ten buildings are ultimately planned for the BioPark, situated in the Poppleton neighborhood.
"We want them to grow here," Jane Shaab, executive director of the UM BioPark, said of the startup tenants. "As they grow from 5,000 square feet to 60,000 square feet to having a large headquarters, they can do it with us."
Among the up-and-coming Baltimore-area biotechs are those looking for novel treatments for cancer, heart disease and other ailments. Here are the stories behind two of them:
Dr. Ginette Serrero discovered and investigated a protein that sparked the growth of cancerous tumors while at a nonprofit research and education center in New York and the University of Maryland in the 1990s. In 2000, she founded A&G Pharmaceuticals in Baltimore at the Emerging Technologies Center, a business incubator.
Now she hopes to receive approval from the Food and Drug Administration to sell two breast cancer diagnostic test kits, which would enable doctors to detect the cancer at its earliest stages.
"One in eight women will develop breast cancer," Serrero said. "I saw there was a real opportunity in breast cancer [treatment]. There's a real need. I've had the drive of trying to find a solution to an unmet need."
Serrero attracted the first investor in 2000 for the company she had planned while working as a professor at the University of Maryland. The next round of investment came two years later when the venture capital arm of MedImmune invested in her company. That's when she focused on her business full time.
"In general, I always wanted my research to become products. I came to Maryland and saw an opportunity to start a product," Serrero said. "I was interested in trying to develop new tools to treat patients. I am passionate about clinical studies."
In 2002, Serrero moved the company, primarily because she couldn't find affordable flexible space in Baltimore. She chose Columbia after finding a place where she could house offices and a lab. At the time, the University of Maryland and Hopkins research parks in Baltimore were only a glimmer in the eyes of economic development officials.
Today, the company has grown from two to 18 employees. With the help of the state biotech tax credit, investors pumped $700,000 into A&G last year, Serrero said. In 2006, the tax credit helped her raise $1 million. In all, she's raised $9.7 million from investors over the past decade, she said.