The Buffalo News

DEAL IS NEAR ON MAJOR BIOTECH CENTER

Published on June 3, 2001
Author:    CHET BRIDGER and FRED O. WILLIAMS - News Business
Reporters
© The Buffalo News Inc.

Buffalo is on the verge of landing a major biological research center linked to the emerging realm of human genetics. It would infuse the region with as much as $225 million in public and private money, work with the leading corporation in the field and create an estimated 4,350 jobs over five years.

The biotechnology center, which would require a new building in the High Street medical campus, could have an economic impact of almost $500 million within five years, local officials believe. A University at Buffalo-led consortium is in final negotiations with corporate partners needed to trigger an estimated $75 million in state funding for the new "center of excellence" in bioinformatics. The field involves using supercomputers and recently mapped genome data to study diseases and design drugs to treat them.

"We're in the endgame right now," said Bruce Holm, UB's senior associate vice president for health affairs. "These are real investments. This is not smoke and mirrors. These are people who are interested in trying to do some things with us in Buffalo."

Private corporations in discussions about the project include Celera Genomics Corp., the cutting-edge Maryland biotechnology leader that mapped the human genome.

Another key player is Herbert Hauptman, the Nobel Prize-winning scientist at Buffalo's Hauptman-Woodward Medical Research Institute, who helped develop an algorithm used to determine protein structures.

The potential big fish in the deal, though, is Celera, founded by J. Craig Venter, a former Roswell Park Cancer Institute researcher. If Celera were a private partner, the effort to recruit more scientists and venture capital to Buffalo could be dramatically enhanced.

"His is a name that opens doors," George DeTitta, chief executive officer of the Hauptman-Woodward, said of Venter.

"I think this is very significant. Celera is in the forefront of generating raw data for bioinformatics. Having them as a partner in the work we're doing (could) benefit us greatly," DeTitta added.

UB is lobbying for the $75 million in state money for the biocenter, with the rest coming from the private partners. The local group, led by UB Provost Elizabeth D. Capaldi, has also been talking to several of the nation's leading computer hardware companies and a niche software company about the project.

The new bioinformatics institute would be linked by high-speed cable to UB's supercomputer center, giving scientists a massive amount of processing power to study how genes synthesize human proteins, such as insulin and hemoglobin, and how to design new therapies.

Gov. George E. Pataki is expected to announce the funding and the center as early as mid-June.

Pataki's office late last week declined to discuss details about the status of the project.

"We're working on it. We're getting closer, but it's not done yet," said Michael McKeon, a spokesman for the governor.

Preliminary plans include constructing the facility near the Carlton Street home of Roswell Park's Medical Research Complex.

The state already has committed more than $100 million to similar "centers of excellence" in Rochester, Albany and Long Island in the past two months. The public-funding strategy envisions leveraging intellectual capital at universities to spin off licensed technologies and high-paying jobs.

Businesses spun from university-based research helped fuel the economies of the Silicon Valley, Boston and Raleigh-Durham during the Internet revolution of the past two decades.

UB officials estimate the research center would help generate $54 million in additional federal and private foundation grants, in addition to $44 million in grants already obtained for bioinformatics research.

The spinoff economic impact from all this grant funding is estimated at $150 million, with 4,350 new jobs within five years, according to UB projections. When the grant funding and economic spinoff are added to the initial $150 million to $225 million investment in the center, the total economic impact would hit $500 million.

Cloning a miracle

A media spokeswoman for Rockville, Md.-based Celera did not return phone calls seeking comment.

But a deal between UB and Celera would be in keeping with the gene company's effort to team with research partners that can help it develop commercial products from its trademark Celera Discovery System database of more than 30,000 human genes, an industry analyst said.

"Celera is making this transition from being a pure database company to a drug design company," said James Reddoch, analyst at Banc of America Securities in New York. "In doing drug discovery, it does help to have as many collaborative partners as possible."

In the past year, Celera has signed research agreements with Harvard, Vanderbilt and about a dozen other institutions.

A model for the possible UB deal might be a research partnership signed in January among Celera, Compaq and the U.S. Department of Energy's Sandia National Laboratories in Albuquerque, N.M.

The cooperative research and development agreement focuses on producing next-generation computer hardware and software for computational biology. The three plan to build an immensely powerful computer, processing 100 trillion operations per second, to perform the mathematical heavy lifting of bioinformatics. That's about 100 times more powerful than existing supercomputers that are working on computational biology, experts said.

"It will be the ability to make that kind of computing power affordable that will allow the science to go forward," said Ty Rabe, Compaq Corp.'s director of high-performance computing.

Buffalo business leaders support the proposed bioinformatics center as Buffalo's best hope to clone the economic miracle of Boston and Silicon Valley, said Ronald Schreiber, a founder of local technology ventures including ClientLogic and Reciprocal and a core supporter of the research center.

"This (bioinformatics industry) is going to happen in a big way, and it's going to happen fast," he said.

Some analysts estimate the market for information technology products in the life sciences sector may grow to $43 billion in the next five years.

Russ Miller, director of UB's Center for Computational Research, has been working nonstop on deals with potential corporate partners.

Information technology companies benefit when their technology is used in scientific breakthroughs.

For example, the UB supercomputing center debugged Silicon Graphics machines running test versions of a new Intel chip and refined a "compiler" program to make its software run faster.

IBM Corp. and Sun Microsystems are among the center's other major technology partners, providing deep discounts on their most advanced equipment in return for development help.

Local business acumen

Schreiber is one of several area entrepreneurs who are backing the effort with their combined business clout. In addition to launching the forerunner of ClientLogic and Reciprocal, Schreiber started a technology distribution company in 1981 that formed the nucleus of Ingram Micro's 1,700-job presence in Amherst.

Also involved is Paul Harder, who sold his Buffalo auto parts company to Visteon in 1998; Angelo M. Fata, former president of ACTS Testing Labs in Amherst; and Robert Roth, who built Spectrum Home Mortgage with David Hunter before selling the company to the former Marine Midland Bank.

Those three business leaders were in San Diego, Calif., last week to study economic-development strategies used to license and market research discoveries there. The Scripps Research Institute, a private institute near San Diego with 2,800 employees, has already put together many of the pieces needed for a leading bioinformatics program.

Backers of the Buffalo center are discussing the formation of a development company that would help catapult research breakthroughs into commercial ventures and jobs for Western New York.

Working through existing development agencies and with links to UB, the development company would provide mentoring and financing expertise as well as links to capital sources, and perhaps a dedicated source of seed money.

Some corporate sponsors are being asked to set aside portions of their venture capital funds for regional business start-ups, backers of the initiative said.

Bruce Holm, UB's senior associate vice president for
health affairs.

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