Marin, Sonoma and Napa— the names alone conjure images of the good life. People from around the world flock here each year to enjoy the fine weather, the beautiful rolling hills and, of course, world-class wines, all of which contribute to the mystique that makes the North Bay an international destination point. But this is also a region of vibrant industry. The grape and wine businesses alone contribute billions of dollars of capital each year while the tourism, housing and agricultural industries supply jobs and much needed revenue for the city and county governments’ tax bases.
And now a new kid on the block is vying for a piece of the action. Many in the field see the North Bay’s burgeoning biotechnology industry (specifically as it applies to the realm of medicine) as an emerging player that could, in the future, become an important supplier of jobs and revenue.
Unlike industrial and agricultural biotechnology, medical biotechnology is just now hitting its stride. This rise in significance is due to important breakthroughs, which over the past two decades have changed the way doctors and researchers look at disease and its prevention.
Ben Stone is Executive Director of the Sonoma County Economic Development Board. His organization began tracking all aspects of the biotech industry in Sonoma County in 1993. He, like others, thinks the North Bay is already making inroads into the existing biotech market that spans the entire Bay Area.
Stone believes, however, these local biotech companies will have a hard time competing on a manufacturing basis with other parts of the world, due to an emerging pool of cheap labor abroad. This trend is not unique to Sonoma County or to the North Bay in general, but the region’s higher costs of goods and services make manufacturing all the more difficult. This means the area’s long-term advantage lies in innovation, not production. Still, Stone believes biotechnology is nothing less than revolutionary.
“The biotech industry in the North Bay is growing,” he says. “It’s an important emerging field of the future. If you think of the 20th century as the information economy, the 21st century is going to be the bio economy.”
According to Stone, the rising biotech base is important to the region for many reasons. First and foremost, the industry will be a source of high-paying jobs for area households. Second, the products created are exportable, meaning revenue flows into the region as the companies export their products across the globe. Third, the industry is environmentally friendly, and finally, Stone anticipates educational partnerships between companies and schools in the region, which will lead to new learning and career opportunities.
“Think of it this way,” Stone says. “Suppose in 1930, you were fortunate enough to look at one of the early computer models. People had no idea what they were looking at or how it would eventually affect our lives and the economy. The biotech industry is like that right now.”
If you build it…
The medical biotech field is so new to the North Bay that many (if not most) companies are still in the research, development and testing phases of their products. Peter Gombrich is CEO and founder of Diamics, a two-year-old company that’s in the final stages of international testing to perfect a mapping system and screening process to detect cervical cancer. Development of similar systems for ovarian, prostate, lung and bladder cancers is already underway.
Gombrich chose his company’s North Bay location for reasons both practical and economical. The presence of a number of existing startup companies and publicly traded biotech firms already operating in the area was an incentive because it meant the employee base to meet Diamics’ needs was already in place. “The number of biotech companies in the North Bay corridor spurs other companies to locate here,” Gombrich says.
“When you look at the South Bay, it’s almost become too expensive and crowded to find affordable property. When we looked at the amount of space available and the build out costs [in the North Bay], it just made sense. Here in Novato, we can draw from people all over the region. As companies succeed, they begin drawing more and more people into the area.”
He also believes the North Bay is just now beginning to realize the financial potential of the medical uses of biotechnology. With the return of venture capital to the region and interest from both private and corporate entrepreneurs, the outlook for strong growth in the field is to be expected.
Comparing today’s biotech medical scene with that of 25 years ago, Gombrich sees very little common ground, noting that with the Human Genome Project begun in 1986 and the subsequent mapping of the genome, medicine has become a “personalized” science that reflects the individual’s needs rather than a category of people.
“And we’re just in the early stages of understanding the implications of what we’ve discovered,” Gombrich says. “This is an industry in its infancy. The genome opened up new territory that will create new discoveries for the next 10 to 15 years.”
Researchers aren’t the only ones struggling to keep up. The industry also seems to be moving faster than the public can assimilate the new information. Gombrich uses Diamics’ new mapping process, which could be used to diagnose cervical cancer, as an example. The PAP test has been the industry standard for a half century and has become a reliable and accepted form of cancer detection in the United States.
By way of contrast, though, Diamics’ new procedures are less expensive, more efficient and result in more accurate results. In developing countries where some women have never had a PAP test, Gombrich says the acceptance of the new mapping process is easier. But American women, who have a lifelong association with the old test, need to be educated about the potential superiority of Diamics’ new procedure.
“Our test lets doctors know immediately where disease is present,” he says. “The PAP test doesn’t do that. Ours is a see-and-treat system. Doctors know immediately—while the patient is in their office—if treatment is needed.”
You make me feel so young
Located on 488 scenic acres atop Mt. Burdell in Novato is one of the most unique biotech firms to be found anywhere in the world. The Buck Institute for Age Research was founded in 1999 by its now CEO Dr. Dale Bredesen, who was the first to answer a call by the National Institute of Medicine to create 10 independent research facilities around the country to study aging. In a statement on its website, he wrote, “The institute was created with a single purpose: to make life better for all humankind, through interdisciplinary research on the aging process and its associated diseases.”
Dr. James Kovach, president and chief operating officer, sees the work being done there as a vital step in addressing a problem that affects people around the world. “Dale’s vision is quite unique,” Kovach says, speaking of the company’s founder. “He’s very adept at looking out on the horizon to see developing trends. Thirty years ago, you couldn’t get a degree in neuroscience without combining a number of disciplines. In the future, I expect to see schools offering doctoral degrees in aging research.”
Kovach agrees that researchers and institutions around the world are just now tapping into the biotech medical field. He also sees the North Bay as attractive to those companies for a number of reasons, including easy accessibility to San Francisco, an educated workforce and a concentration of influential Baby Boomers who view aging as an important issue in their lives. All these factors add up to what Kovach believes will be a tremendous influence for the North Bay biotech companies in the future.
“The North Bay offers many links to entrepreneurs,” Kovach notes. “Plus, the area’s population is highly educated and very interested in health-related issues. For what we do at the Buck Institute, our local universities are a real asset. Stanford, for instance, has a strong commitment to the neurosciences and is just beginning to focus on age research, which will benefit us all.”
The ability to share information with other research institutions is part of what makes the North Bay such an attractive choice for biotech companies, Kovach says. With 15 principal investigators doing age-related research, they are positioned as leaders in the field to both forge ahead and act as mentors for new employees as they enter the industry.
Today, the biotech field is becoming even more focused as breakthroughs involving therapies and new drugs become more rare. Academic institutions, Kovach notes, are beginning to see the need for restructuring their science and technology departments to cater to the needs of the biotech industry.
As for the North Bay’s prospects in the future, Kovach is realistic but optimistic. “I think we’ll have to work hard to stay competitive with other regions. Life is a Bell curve and things change,” he says. “We do have a lot of things going for us in terms of quality of life, a population strongly committed to a healthy lifestyle and good access from all over the Bay Area. The market, however, is ruthless. Entrepreneurs are looking for the easiest way to make money on their investments.”
The mighty dollar
Kovach brings up an important point (one that nearly everyone interviewed for this article made): money drives the industry—especially when startup companies are concerned. Chris Starr is no stranger to the land of biotech startups. In 1998, he helped cofound the highly successful North Bay biotech firm BioMarin Pharmaceuticals Inc., before setting out on his new venture, Raptor Pharmaceuticals, earlier this year.
Raptor will initially focus on three drugs. One will deal with the treatment of neurodegenerative diseases; a second will treat aggressive forms of tumors and cancers. The third is a new drug that Starr believes will enhance the body’s potential for building bone mass. At the time of this interview, Starr was in the process of moving into Raptor’s new facility in Novato, and his five-person team began the early stages of research and development in mid-May. Like all startups, Raptor must contend with the ever-present need to raise funds to meet the operating expenses of a fledging company.
“Our fundraising is going well,” he says. “We all know fundraising has gone through some changes over the years. Private investors are looking to minimize their risk. You have to convince investors that the science side and the business/economics side will both work. There’s usually a two-year litmus test for startups to prove themselves.”
If Starr is anxious about his company’s prospects, it doesn’t show. In fact, a note of excitement slips into his voice as he speaks of the future. “The startup environment isn’t for everybody,” Starr says. “Some employees work better in a three-piece suit situation, where decisions are made in the boardroom. Others trade in their suits for Hawaiian shirts and making decisions in the hallways. Often when people talk about the ‘good old days,’ they’re talking about the early days of a startup. We do it because it’s a lot of fun.”
Starr’s experiences in the North Bay’s biotech scene make him a reliable source of information on the current status of the industry. He expresses concern about the small employee base that exists in the area and the ongoing scarcity of skilled workers to fill valuable positions. “We have to draw people from all over the Bay Area,” he says. “I’d guess that three out of five workers commute from elsewhere in the Bay Area.”
Unlike others in the industry, Starr sees the stressful commute and the North Bay’s high cost of living as holding back an industry that’s ripe to prosper. On the other hand, he praises industry-friendly city governments that are willing to work with new companies like his own. Ultimately, Starr sees the pros of the North Bay’s biotech industry far outweighing the cons.
Knowledge is power
If money drives the industry, educational opportunities that train or cross-train potential employees are the vehicle that will carry the biotech firms of the North Bay to success. Dr. Saeid Rahimi is dean of the School of Science and Technology at Sonoma State University in Rohnert Park. His vision for the future biotechnology industry—especially medical research and development—takes into consideration the growing importance the industry has in the region.
“There are certain fields, I think, that we cannot do without in the future,” says Rahimi. “Undoubtedly, there will be fluctuations in terms of the market and the economy. In the big picture, however, we can’t live without computer software, telecommunications and other high-tech industries. In the field of medicine, biotechnology is an umbrella covering a variety of disciplines that are very important to our future.”
Rahimi has a laundry list of biotechnology fields he thinks will become more important in coming years. Besides the development of biomedical devices and instrumentation and pharmacological biotechnology, he sees bioethics and regulation of the field growing in importance. He’s especially excited about bioinformatics and hopes to promote it as a career choice at Sonoma State in the future.
Essentially, bioinformatics uses applied mathematics, statistics and computer science to solve biological problems; it’s a tool that’s evolving as the field matures. “All these fields, in my opinion, are going to have a bright future,” Rahimi says.
Rahimi agrees the North Bay is just now emerging as a player on the international biotech scene. He says one sign that the region is on the right track is the presence of not only heavy hitters—companies with billions of dollars in their budgets—but also smaller firms that are competitive due to the talent of the employees.
The presence of such a diverse group of companies, Rahimi believes, shows the North Bay has “the makings of a vibrant biotech industry in place.” But to meet the needs of those companies, he continues, Bay Area educational institutions need to respond quickly by offering more (and often new) forms of training for students. At Sonoma State, the process has already begun. “Educational facilities cannot respond overnight,” Rahimi explains. “We saw this need [for skilled biotech graduates] on the horizon quite a few years ago.”
Training new workers in the field takes time and money. Generally, one to two years of planning is required to write and get approval for new curriculum, says Rahimi. Considering it takes four years for students to earn a degree, this means it will take five to six years before area companies can begin hiring workers who are skilled in the newly developed curriculum.
When planning new curriculum, says Rahimi, educators must take into consideration the cyclical nature of the economy and focus on areas of expertise that are least susceptible to fluctuations. Hopefully, this will ensure that students beginning degree programs this year will still have a chance for employment in the field by the time they graduate.
“Our business [scientific education] is quite different than just producing a product. Graduates must have a basic understanding of a number of disciplines,” Rahimi explains, citing biology, communications, logic, critical thinking, mathematics and electronics to name just a few. “Universities are not known for fast moving, dynamic curriculum. We have to resolve these issues to keep up. Sonoma State is poised to do just that.”
To accomplish these goals, Rahimi says Sonoma State offers various levels of partnerships with companies across the North Bay. The traditional internship is one of the most attractive ways for a student to get hands-on experience while earning a degree. Rahimi says his department has come up with a unique model to give students and employers the chance to enhance the time they spend together. “We go beyond the internship,” he explains. “We like our students to be able to help the employer and maybe even be a part of their research and development process.”
One way Sonoma State partners with biotech firms is to encourage cooperative projects with local companies that can include use of the university’s laboratories and sophisticated equipment. Students and potential employers are thereby brought together for testing products in an educational environment that also has real-world business applications. And the collaborations don’t stop there.
“Last year, Agilent Technologies came to us and offered 10 scholarships of $4,000 each for new undergraduates,” Rahimi says. “The company will mentor the 10 freshmen during the four years of their education. At the end of that time, they’ll know which students are best qualified for the company’s particular needs. Since firms typically pay tens of thousands of dollars for training their new hires, this is a small investment for qualified employees pre-trained to the company’s own standards.”
Beyond the problems biotech firms face procuring funding and navigating the tempestuous waters of a fledging North Bay industry, the rewards and excitement of being a part of an evolving marketplace are incalculable.
Future rewards
“Matching proven science with proven needs” appears on BioMarin Pharmaceutical’s website as a declaration of the company’s commitment to the research and development of products that address the special needs of their clientele. One of the most successful and highly respected biotech firms in the North Bay region, BioMarin specializes in producing therapies for rare genetic disorders. The company currently has two drugs on the market, Naglazyme for MPS VI and Aldurazyme for MPS I (MPS VI and MPS I affect the body’s ability to break down complex carbohydrates and can cause developmental delays, physical problems and even early death), and a third, Phenoptin, for the treatment of PKU (phenylketonuria), the most commonly inherited metabolic disorder. On March 15, BioMarin announced results from the Phase 3 clinical study of Phenoptin. The company plans to file an NDA (new drug application) for Phenoptin with the FDA by early 2007; if approved, it could be available late that same year.
All three products fall under the Orphan Drug act that was signed into law on January 4, 1983. The term “orphan drug” refers to rare diseases that affect 200,000 or fewer patients in the United States. Congress passed the act to encourage companies like BioMarin to research and develop drugs that address these rare diseases.
Susan Ferris, senior manager of corporate communications, and Mark Wood, vice president of human resources for BioMarin, discussed the success and future of the biotech industry in the North Bay.
Neither Ferris nor Mark Wood view the North Bay region as a hotbed for biotechnology—at least not when compared to the greater Bay Area. But they do agree with others interviewed for this article that the region is poised for growth. One key to this expansion, says Wood, is collaboration with local governments and agencies such as the Workforce Investment Board of Marin County. Another necessity, Wood continues (echoing the sentiments of Dr. Rahimi), lies in cultivating relationships with local educational institutions. Encouraging expansion of technological and life science departments will result in graduates who are ready to fill the labs as the industry grows.
Training an inexperienced worker is a long-term investment, he continues. With the general robust biotech market across the Bay Area, seasoned employees are at a premium. This can conflict between the hiring practices of the larger biotech firms and the smaller ones. According to Wood, the largest biotech companies, like Genentech and Amgen, have more entry-level positions that can be filled with new graduates who can be trained over a period of time, but most companies have to depend on more experienced employees to produce results more quickly.
Wood is quick to add, however, that working with a smaller group can have advantages for an experienced worker. There exists greater opportunity, he explains, to make an impact and really “leave your thumbprint on the field.” What’s more, he says, given the number of understudied diseases and patients in need of new treatment options, the biotechnology industry is likely to continue growing into the foreseeable future.
Medical biotech players, entrepreneurs and educators might disagree about how developed the field is in the North Bay at this time, but they all agree the industry is ripe for blossoming in the region. All that’s needed to nurture the process is time and the desire of companies to set down roots and begin the adventure. The fact that the public will reap health benefits from their work and that there are fortunes to be made in coming years for those willing to dive in certainly spells win/win for us all.
