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Perspectives: Pittsburgh good place for biotech

Sunday, July 16, 2000

By Linda Dickerson

Virtually everyone agrees that the region should fan its entrepreneurial flames, but which flames to fan the most vigorously remains under intense debate. One of the areas where Pittsburgh's flames are burning the most brightly is biotech.


Linda A. Dickerson is a principal in Dickerson & Mangus Ink., an issues consulting firm.


ProlX Pharmaceuticals, one of the region's most promising biotech start-ups, may help to ignite the region's interest in other biotech investments. "It may be coming -- the recognition that biotech may be something that the region can focus on," said Lynn Kirkpatrick, chief executive officer of ProlX (pronounced pro-lex), who has a doctorate in medicinal chemistry.

Because of its pre-eminent research powerhouses, Carnegie Mellon University and the University of Pittsburgh, the region distinguishes itself in biotech. And wherever distinctive competencies exist, investment should occur.

Likewise, where the opportunity for return is high, the investment should be equally high. It's that simple. By this measure, biotech also merits substantial investment.

Return is generally a function of risk. Biotech investments are more risky, so they must bear more potential to be attractive to investors. "Because the payoff is longer [in biotech ventures] it is in that respect more risky," said Kirkpatrick.

The total investment to date in biotech here has not yet reflected the potential that Kirkpatrick and others like her see. "The local investors don't understand biotech as well as e-commerce and IT," she explained.

Still, she maintained, "The infrastructure was more promotional here to start a business than elsewhere." The initial lack of local investor understanding didn't deter her. A Saskatchewan, Canada, native, Kirkpatrick was attracted to Pittsburgh because of the academic and research prowess available here. Also, one of the initial partners in ProlX was a Pittsburgher.

"We have a huge resource in the University of Pittsburgh, CMU and Duquesne," Kirkpatrick said. Despite the wealth of academic resources here, she believes that talent is still difficult to locate. "In this region, there's a lack of individuals with the biotech background and the management expertise," she said.

Since supply eventually catches up with demand, this will change over time, assuming that the region makes the necessary strategic investment to build a strong biotech industry. "Critical mass does foster growth," contended Kirkpatrick.

She thinks advice from those who built successful ventures analogous to hers is vital to her own success. "The biggest thing is just talking to them," she said.

Kirkpatrick advised all fledgling entrepreneurs, "If you can, set up a board with expertise." In entrepreneurial ventures always strapped for cash, she says this approach is "certainly more cost-effective."

Even with the counsel of others, Kirkpatrick said, "I don't think that unless you get into it, you actually know what the hurdles will be." For her, the motivation to take the entrepreneurial plunge and set aside her promising academic career at the University of Regina in Saskatchewan was a need for personal growth.

"I think that I was interested in a new challenge," said Kirkpatrick, conceding, "It is difficult to bridge that gap between your lab and the market." She got her wish. ProlX, a developer of anti-cancer drugs, is a monumental challenge.

On an initial capitalization of $3 million, the firm just got its first lead drug in the last stages of preclinical testing. Kirkpatrick is optimistic that the results from their recent IND (Investigational New Drug) application will permit ProlX to test this drug on humans.

"To see this move potentially into human trial is rewarding," said Kirkpatrick. She hopes the funding from venture capitalists also will reward the firm.

ProlX is seeking up to $10 million in venture capital. "We are actively talking with a large number of VCs, and some are local," Kirkpatrick noted. She's encouraged that outside investors see Pittsburgh now as less of a disadvantage.

"Previously, there was a lack of interest in investing in firms not close to the money, meaning the West Coast and the East Cost," contended Kirkpatrick. Fortunately, for her and her counterparts throughout southwestern Pennsylvania, she said, "Now, this is becoming less of an issue."

To take better advantage of the increasing opportunities for funding new ventures, Kirkpatrick said, "Incubator space for small business and biotech would be one of the best things that the region can supply." In addition, she said, "Pittsburgh needs better parking and transportation and basic infrastructure."

Physical and financial resources are essential to all companies, but human resources are often the largest differentiator between a company's success and failure. "In order to hire people, they have to feel comfortable that if this business doesn't succeed, there are other comparable opportunities in the region," she said.

As more individuals such as Lynn Kirkpatrick venture out of their labs in pursuit of the entrepreneurial dream, the region will achieve critical mass. This will supply an important safety net for new recruits.

Although the region must be patient for its return on its investment in a biotech infrastructure, it cannot afford to ignore its substantial competitive advantage in the biotech industry. The region should build on its strengths, and Lynn Kirkpatrick is clearly one of them.

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