City council OKs research grant: Money goes toward building wet labs

Aug. 21--The Winston-Salem City Council voted last night to give a $125,000 grant to the Piedmont Triad Research Park for a project aimed at attracting biotechnology companies before they go to competing research parks.

The vote highlights how the city's new biotechnology economy has begun feeding itself, as it marks the first time that a company in the research park will provide the money behind the city's investment in a park project.

The economic feeding cycle started in 2001, when the city lent Targacept Inc. $500,000.

The city was taking a big bet on a small company, officials said. There was no way of telling what fortunes -- good or bad -- would follow the startup company or whether the company would be able to pay back the hefty loan.

Some of the city's economic loans have faltered, but this one hasn't.

Targacept now is a publicly traded company that has landed two drug-development deals worth a combined $65 million, not including the possible revenue the company could get if the research produces a pipeline of pharmaceutical drugs.

Mayor Allen Joines said that the city supported Targacept in 2001, after it was spun off from R.J. Reynolds Tobacco Co., because the Piedmont Triad Research Park is the way the city is changing its economic makeup from tobacco and textiles to one based on DNA and biotechnology.

"We're making the change from jeans to genes," Joines said.

Last month, Targacept announced an agreement with the pharmaceutical company GlaxoSmithKline PLC to develop drugs to treat five disorders of the central nervous system. In 2005, it made its first big deal with the pharmaceutical company AstraZeneca PLC to develop and market a drug to treat Alzheimer's disease and schizophrenia.

Targacept reported a net loss of $8.3 million for the quarter ending June 30, but its stock price has remained steadily above $9 since January, and the two development deals have helped keep it in good standing with the city.

Each month, Targacept makes a payment of $9,435 to the city to pay back the $500,000 loan. Since payments have begun, the company has put $42,021 back in the city's treasury; 48 payments remain.

Money coming from Targacept now will be used to finance the city's $125,000 grant to the research park, said Derwick Paige, the deputy city manager.

"Targacept, when it first got the loan, was the same type of company that we're trying to attract now," Paige said.

The research park asked the city to help pay for new labs at the park that can be used as incubator space. The research park plans to spend $626,000 to build three "wet labs" with a combined 5,000 square feet of space.

Wet labs got their name because they have plumbing and an exhaust system for chemicals.

Their purpose is to bring in a company that doesn't have enough money to build its own lab and allow it to use the space for a certain period of time.

"We're hoping these businesses will grow and make room for new ones," Council Member Vivian Burke said.

But there isn't much concern yet for overcrowding.

The park has a lot of empty land, and it hasn't met its 10-year goal for jobs.

About 800 people work there, and 28 companies have set up that are not affiliated with Wake Forest University Health Sciences, which owns the research park. There are about six Wake Forest programs there, including the Wake Forest Institute for Regenerative Medicine.

City officials estimate that the park will have 10,000 jobs by 2014.

-- Bertrand M. Gutierrez can be reached at 727-7283 or at bgutierrez@wsjournal.com

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