Bioscience sector needs big anchor, more funding

BOULDER — Area economic boosters work hard to create a friendly biotech environment – national polls rank the region high for things like technology and innovation.

But finding financing for a promising new company still can be more of a struggle here than it would be in places like Palo Alto, California, or Boston, according to Rick Whitcomb, chief executive officer at BiOptix Diagnostics Inc. in Boulder.

Whitcomb spoke at the latest Boulder County Business Report CEO Roundtable Tuesday, Nov. 15, which was held at Ehrhardt Keefe Steiner & Hottman PC offices and cosponsored by EKS&H and Holland & Hart LLP.

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BiOptix, a company that makes a bionanosensor detection tool, received $3.92 million in venture capital in first quarter 2011 and continuing investments from the Russian Corporation of Nanotechnologies, including $4.5 million in a recent round.

“We have Nobel winners here, but we have something that’s not quite a critical mass in terms of funding,” Whitcomb said. “Until we have the capital and the talent, I think we’re going to struggle.”

As local biotechnology companies become successful enough to be sold to national companies, they don’t often retain a local presence, Whitcomb said. In addition, there are virtually no Fortune 100 companies that grew here, he pointed out. The problem of finding financing has come up several times at past CEO Roundtable forums across several economic sectors.

On the other side of the coin for the biotechnology world are recent “wins” in attracting large national companies here, however, said Charles Eggert, chief executive of Boulder-based OPX Biotechnologies Inc. For example, General Electric said in October that it plans to build a $300 million solar panel facility in Aurora because of the proximity to related Colorado companies, he said.

OPX has raised $60 million and is working on making biochemicals that are price competitive with traditional petroleum-based products. It has partnered with Dow Chemical Co. (NYSE: DOW) on its BioAcrylic product, an acrylic made from corn and sugar.

Eggert said he and others involved with the Colorado Cleantech Industry Association in Denver created a plan to draw new investment – especially large companies – to the region. The other two pillars of the plan – innovation and human capital – are strong along the Front Range because of support from universities and national laboratories based here, he said. The clean-tech industry is generally seen as anything involving renewable energy.

“We’re trying to build the awareness outside the region of the opportunity to invest in the clean-tech sector. But I definitely agree – large companies or ?anchor tenants’ really are critical, not only to attracting talent, but to building the industry,” Eggert said.

Creating a “super incubator” that could lure talented biotechnology industry people to Colorado from California also might be a good strategy for the industry to follow in its quest to build the sector, said Dave Traylor, managing director at Headwaters MB in Denver, an investment firm.

“We moved there, and it’s expensive and the schools stink,” Traylor said of an earlier career move to California before he moved his family back to Colorado. “In 2010, Colorado was 8th in the total amount of venture capital raised, but fourth per capita. California had 50 percent of all venture capital last year, (but) we have the capability to do it.”

In the meantime, uncertainty continues to face the bioscience industry, with regulatory rules from agencies such as the U.S. Food and Drug Administration potentially slowing investment, participants said. Companies creating drugs go through years of approval processes with the FDA, for example. Other bioscience companies, such as OPX, face numerous regulations on their products.

“It multiplies the level of uncertainty – companies that get burned once don’t want to get burned again,” said Warren Mauter, who works at the Boulder Innovation Center, a nonprofit start-up incubator group.

When it comes to federal government restrictions or help, OPX, BiOptix and other area companies also have received multi-million dollar grants from places like the National Institutes of Health and the Department of Energy that help them get over initial funding hurdles, participants said.