Biotech industry flourishing around Pasadena

BYLINE: Elise Kleeman, North County Times, Escondido, Calif.

Nov. 14--The late 1990s were a giddy time for biotechnology and high tech. Investors, flush with cash from a booming economy, leapt to fund budding start-up companies. Cities, excited by the prospect of high-paying jobs and environmentally friendly industry, raced to attract them.

In Pasadena, the City Council debated making South Raymond Avenue a "Biotech Corridor" and pouring redevelopment dollars into the relatively disused stretch between California Boulevard and Glenarm Street. The city also tried combining forces with local research institutes, hospitals and colleges to attract a vast belt of biotech companies between Pasadena and Claremont.

"Back in those days, it was still relatively early in the biotechnology industry," said Bruce Blomstrom, president of the Pasadena Bioscience Collaborative. "People were really optimistic that [startups] would develop into huge companies very quickly."

Then the dot-com market bubble burst.

Investors grew skittish about backing unproven technologies and the sea of start-ups that were to fill the biotech corridor dried up -- along with much of the enthusiasm for the corridor plans.

The years since then have seen a slow reemergence of interest in biotech and high tech in Pasadena and the San Gabriel Valley. Though attracting such companies to Pasadena continues to be a challenge, their numbers are increasing, spurred by a new emphasis on nurturing home-grown start-ups.

Even biologist David Baltimore, who recently retired as the first life-sciences-oriented president of Caltech, is rumored to be considering the area for a new start-up company, though he declined to discuss his plans in detail.

"We're figuring it out," said Stephanie Yanchinski, director of Pasadena Entretech, a support and networking organization for young start-up companies. "After the heady '90s era, when the money was just going to flow, we're figuring out that it's just going to happen more organically."

Organically, in Pasadena, means retaining the spin-off companies coming from the area's research institutions -- Caltech, the Jet Propulsion Laboratory, Huntington Medical Research Institutes and City of Hope -- and letting private investment push growth instead of feeding it with public funds.

"I think we've matured enough to realize it's not the attraction we have to worry about, it's the retention," said Eric Duyshart, economic development manager for the city of Pasadena. "More than half leave Pasadena for Boston or the Bay Area."

That number has improved significantly, however, because of Caltech's more concerted efforts to help professors start their own companies.

"Back in '98, they were just starting that program," Duyshart said, "but at least three-fourths were leaving the city. So we're getting better."

Among the new wave of entrepreneurial professors with companies in Pasadena is Mark Davis, a Caltech chemical engineer who launched the cancer drug companies Insert Therapeutics, Inc. in 2000 and Calando Pharmaceuticals in 2005.

Like many other biotech and high-tech start-ups, Davis' challenges included finding funding and securing laboratory space -- problems exacerbated by the city's infant biotechnology industry.

"Here, nothing's routine," Davis said. "We're still at the stage that every time we're doing something, we're doing it for the first or second time."

Space for new biotech or high-tech start-up companies is especially difficult to find because they require specialized laboratories and equipment -- extravagant expenditures for a new company.

Davis found a home for Calando in Pasadena's east side among a small cluster of start-ups drawn to the area by low rents. Insert is housed in a Hill Avenue building owned by Alexandria Real Estate Equities Inc., which specializes in developing laboratory space.

Though he was glad to keep his companies in the area because of his ties to Pasadena and the ability to rent time on Caltech equipment, "Those reasons start to decline the more mature a company is," Davis said.

He is not alone -- many of the companies that do start in Pasadena eventually contemplate moving elsewhere.

Such has been the case for more than half a century. Though Caltech-related firms from the huge Aerojet to the medium-size Aerovironment began in the city, they ended up putting down roots to the east, in Azusa and Monrovia, where land has always been cheaper. Many biotech firms move even farther.

Finding a way to keep such companies, many said, is Pasadena's next big challenge in developing its biotechnology and high-tech industries.

To that end, plans for development and expansion -- including a renewed focus on Raymond Avenue -- have made industry leaders cautiously optimistic about Pasadena's high-tech future.

Among those with an eye open for larger lab space in Pasadena is Jeff Raber, vice president of the 2-year-old company KinetiChem.

The company, which develops new chemical engineering methods, currently consists of a handful of people -- Raber, a full-time chemist, the CEO and legal advisors -- but is looking to expand in a year or two, Raber said.

"I would like to stay, but I know cost is a consideration," he said. "I really don't know of another space that could suit us if we wanted to be in the area."

KinetiChem is one of seven at the Pasadena Bioscience Collaborative, a unique nonprofit organization nurturing start-up companies by offering relatively inexpensive lab space, equipment donated by pharmaceutical companies and partnerships with area universities.

Though an important piece of Pasadena's slowly emerging biotech industry (and despite its planned expansion a year from now), the Bioscience Collaborative won't be able to support many of its expanding companies much longer.

Enter the return of Raymond Avenue. There, a spate of new buildings are being planned, including the Alexandria Technology Center -- a home for one to three more established start-up companies. Many hope that Raymond Avenue, now dubbed the "Innovation Corridor" by the city, could provide these growing companies a home and draw even more biotech developments to the area.

"Some companies that have been around a while are growing and will need larger facilities for their next step," said Peter Moglia, an Alexandria vice president and the head of its Pasadena operations. "It's just been slow -- but slow growth eventually turns into a new project."

As the biotech industry in Pasadena looks to expand, so do those in other parts of the San Gabriel Valley. But the grand expectations of a biotech beltway stretching out to Claremont have faded somewhat.

"I would say that \ is a great goal, but you'd have to look at the other areas in the country that have life-science clusters -- it's a slow process, it's a gradual process," Moglia said.

One factor dulling the initial fervor over a vast biotech corridor in the San Gabriel Valley is less "matchmaking and dialogue" than in the past, said Bill Opel, executive director of the Huntington Medical Research Institute. Another is the lack of major research institutions in many of those cities that could spin off companies.

Still there are hot spots of activity -- Duarte's City of Hope, and the Claremont Colleges and Keck Graduate Institute.

The City of Hope, one of the leading cancer research facilities in the nation, is itself considering building a new biotechnology park with laboratory spaces for both outside companies and its own spin-offs.

By attracting start-up companies to the area, according to Larry Couture, the head of the hospital's Center for Applied Technology Development, future generations of drugs first envisioned at the City of Hope could reach clinics much faster.

"In many cases they are a much more effective vehicle in developing our technology," Couture said. "That's why we want a biotech park -- we want these companies here."

City of Hope hasn't yet decided if it will go ahead with the project. Even without it, the hospital's potential to draw companies to the area is significant, Couture said.

In the past eight years, it has developed its own manufacturing, regulatory and licensing departments, easing the transition between the hospital's basic research and the start-up companies that could test any resulting new treatments.

If the City of Hope does decide to construct a biotech park, Couture said, he is sure there would be great demand.

"There is no question because I get the calls," he said. "If you build it, they will come."

Just as the City of Hope could someday help fill the need for laboratory space, the Keck Graduate Institute in Claremont could also emerge as another important part in bringing a strong biotech industry to the area.

Though local researchers might be bursting with good ideas for new companies, a significant difficulty for many is navigating the complicated business world of a start-up company. The problem is worsened by a lack of experienced executives.

"The biggest problem that we have in this area is recruiting senior management," Couture said.

Biotech business leaders are reluctant to move from industry hubs where they could more easily find a new job if their company folded, he said.

At KGI, though, students are taught how to translate scientific advances into marketable products.

This new graduate program, which emerged from a $50 million grant from the W. M. Keck Foundation, aims to produce a new generation of entrepreneurs savvy in both science and business.

To see more of the North County Times, or to subscribe to the newspaper, go to http://www.nctimes.com. Copyright (c) 2006, North County Times, Escondido, Calif. Distributed by McClatchy-Tribune Business News. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.