Biotech’s sweet home: Alabama?


An established biotech ecosystem

Alabama is the 24th largest state in the U.S., home to just under five million people. Rather than having one dominant center, the population of its four largest cities ranges from 180,000 to 212,000 people.

Two of those cities, Birmingham and Huntsville, are considered the main biotech and life science hubs. According to biotech consultant and entrepreneur Jennifer Riggs-Sauthier, it takes about one-and-a-half hours to drive between the two; a comfortable day trip for those that have business in both centers.

The life sciences industry is similarly split, clustering around the local universities, hospitals, non-profits, and established businesses. Statewide, Alabama pulled in $280 million in National Institutes of Health (NIH) funding in 2015 — 10.7 percent more than the previous year. That puts it among the top 10 states in terms of growth, but its per capita NIH haul ($58 million) is still less than the national average ($71 million).

Birmingham is home to the University of Alabama School of Medicine and UAB Hospital, which Riggs-Sauthier said fuels a lot of medical research and clinical trials. That, in turn, has seeded some small biotech companies with a healthcare focus. Caremark Rx (now CVS Caremark) was founded in the city and many healthcare service providers remain, including HealthSouth, Surgical Care Affiliates, and Diagnostic Health Corporation.

Over in Huntsville, the high-tech ecosystem is well-established. Nicknamed ‘the Rocket City,’ it’s home to NASA’s Marshall Space Flight Center and is considered the center for rocket-propulsion research for both NASA and the U.S. Army. The University of Alabama in Huntsville also has a sizeable footprint.

Nektar Therapeutics, one of the largest and longest-standing life science companies in Huntsville, taps into that skill-base for its specialized manufacturing. The company’s proprietary PEGylation technology was developed at the local university and spun-out into a Huntsville startup called Shearwater Polymers. Shearwater merged with Nektar in the early 2000s.

Stephen Doberstein, Nektar’s senior vice president of research & development and chief R&D officer, said the company has repeatedly invested in Alabama, despite being headquartered in San Francisco, California. Along with the low operating costs, he said Nektar has found success hiring and retaining local skilled workers for the high-tech manufacturing and analytical work the company manages in Alabama.

“I can’t imagine relocating that functionality here to the Bay Area. We could never afford to relocate it,” Doberstein said in a phone interview last week.

In 2008, the HudsonAlpha Institute for Biotechnology officially opened its doors, becoming another big anchor for the city’s biotech sector and a key driver of innovation. Riggs-Sauthier has launched several startups in the Institute’s incubator, attracted by its multi-dimensional appeal.

It’s a non-profit research center, with a particular focus on genomics and how to apply genetic insights to advance personalized medicine. It’s also a life science incubator and it puts resources into community outreach and education.

“They do a really good job of not only teaching genetics and current scientific techniques to the teachers in the area but also to the community,” Riggs-Sauthier explained. “Through that educational outreach, the non-profit side has gotten a lot of donations, so they’ve been able to expand greatly beyond the original building.”

Attracting venture dollars

Given its size and longevity, Doberstein said Nektar wasn’t too concerned about the special election.

“The political environment is not a big issue for us,” he said. “It’s all about the quality of the employees and the caliber of the local biotech environment. That certainly supersedes any single politician or any personality.”

Biotech startups, on the other hand, don’t have the same economic security. For all the community support, Riggs-Sauthier said it can still be challenging to raise the necessary funds to develop and advance scientific ideas and technologies.

According to a report from TEConomy Partners and the Biotechnology Innovation Organization (BIO), Alabama bioscience companies pulled in $101 million in venture capital funding from 2012-2016 “with investments focused in human biotechnology and health information technology.”

However, this report likely has a broader focus than the industry standard – the PricewaterhouseCoopers (PwC) and CB Insights MoneyTree Report – which only pointed to one Alabama biotech securing VC investment between Q2 2012 and Q2 2017. The company, Saba Labs, raised $1.2 million in the third-quarter of 2015. It has kept a low profile since and could not be reached by phone. The contact info listed on a second website connects to a law firm.

Even if we go by the BIO report, it’s a drop in the ocean. Big name biotech companies occasionally eclipse that amount with a single raise.

Huntsville has a small but notable angel investor network, Riggs-Sauthier stated, but Alabama is a long way away from the major life science hubs of Boston, San Francisco, and San Diego, where the venture capital tends to cluster. That’s where the political uncertainty hits home.

“I’ve talked to a lot of people throughout this whole special election process and I think that has been a constant concern for most individuals,” she said. “Even before the ‘Roy Moore effect,’ if you will, I think one of the challenges that the biotech community globally in Alabama has had is getting outside funds or external funds from VCs and angel investors from both of the coasts.”

Is all publicity good publicity? Alabama biotech may soon find out. The special election put the state squarely in the national eye. Can startups convert that national attention into venture capital?


See the original article here…