Growing Pittsburgh Life Sciences Greenhouse
Debra Diamond Smit
Wednesday, August 19, 2009
Could Pittsburgh pull it off? Build a thriving life sciences sector here?
The year was 2001. The state was lagging behind others in the medical development sector. Local leaders knew southwestern Pa. had the right stuff— a strong world-class research base, federal research money, a close proximity to major U.S. markets and, most of all, an entrepreneurial spirit. All that was missing was the money to get the early startups off the ground running.
Pittsburgh Life Sciences Greenhouse was born, a public-private initiative, led by then Gov. Tom Ridge, shaped from the state's piece of the tobacco settlement money. Armed with a $33 million share and the support of the University of Pittsburgh, Carnegie Mellon University, UPMC health system and Pittsburgh's regional foundation community, a vision emerged for building the region into a biotechnology powerhouse.
Fast forward eight years, through several years of leadership, to today. PLSG has exceeded expectations, attracting and supporting an impressive array of life science startups. Promising new companies, with names like Cardiorobotics, Separation Design Group, Flexicath and Blue Belt Technologies, are busy developing healthcare products, tools and diagnostics of the future.
Aside from the jobs and new wealth they may bring to the region is the fantastic possibility of unlocking the mysteries of diseases like Alzheimer's and Lou Gehrig's.
"The whole idea was to create a cluster of life sciences here," says Dennis Yablonsky, who was tapped to be the first CEO of PLSG in 2001 and serves on the Board of Directors. "Pittsburgh was always on the map as a life sciences research center, but now it's on as an entrepreneurial and commercial center as well. It's growing faster than we had hoped."
The buzz circulating the Pittsburgh's life sciences community is due, in large part, to the efforts of the PLSG team. CEO John Manzetti joined the incubator as CEO in 2006, following a brief stint with PLSG as an executive-in-residence and COO. He formerly served as president of NOMOS Corp, a leader in radiation therapy treatment solutions.
The incubator fluctuates between 15 and 18 employees in two locations: 13,000 square feet at the Technology Drive corporate headquarters and another 9,000 square feet across the Mon at PLSG West in the South Side. Seven companies work in eight web labs at the corporate center and another five are supported on the South Side.
"We weren't getting recognition for the things we were doing at first," Manzetti says. "We started going to venture capital conferences, making more contacts, promoting Pittsburgh as a good place to raise a company. We now have a reputation that allows us to be a little more selective."
It helped when kidney dialysis innovator Renal Solution, which moved here as an early startup in 2002, made a successful exit. The company was sold to German conglomerate Fresenius Medical Care in 2007 for $200 million.
"We were able to offer these companies what no one else could," Manzetti notes. "Through the executive-in-residence program and the venture capital based model, we are bringing together skill sets to convince funders to invest."
Since its inception, PLSG has invested $14.6 million directly into 60 companies to leverage more than $400 million in additional capital. It was initially hoped that the region would average two to three startups a year. That number has ballooned to 15 to 20 today. Furthermore, six of the 10 top venture capital recipients in 2008 were life sciences companies.
Thirteen companies have relocated to the region, from places like San Francisco and Boston. Three to five venture partners, who are not on the payroll, actively assist PLSG as retained consultants.
"There was a real sense of interest in companies in the pharmaceutical sector, definitely a welcome mat that was very substantial. It made the difference in our decision to come here," says Susan Catalano, chief science officer of Cognition Therapeutics, which moved here from San Francisco to continue its cutting-edge research on a drug to treat Alzheimer's and other neurodegenerative diseases.
Cognition Therapeutics recently closed on a 1.2 million financing round. (For the Pop City story, click here.)
The Executive Program and the venture capital model offers companies a unique incentive and is the driving force behind PLSG, says Lynn Brusco, vice president of marketing. Brusco joined PLSG in 2004 from another major Pittsburgh life science powerhouse, the Pittsburgh Tissue Engineering Initiative.
About 290 clients and companies have moved through the program, which brings high-level executives here to work in residence with a startup management team, providing strategic and tactical guidance during the company's formative stages.
"A goal of the program is to import talent into the region," Brusco explains. "We select people who will move their families here and help grow the talent pool."
The program brought Alan West to Pittsburgh by way of Boston and Detroit. West had an impressive 30-year resume in management with medical device firms. He joined PLSG in 2005 and has since helped to guide 40 startups in Pittsburgh.
"We have a wealth of novel ideas here based on technology, but there's a lack of management talent with experience in life sciences specifically," explains West, who admits to having fallen in love with the city, despite the intensity of local sports fans. "Boston fans are more laid back," he laughs.
While the EIR program allowed him to spend time with different companies, it also gave him an opportunity to work with one company half that time. West is now president and CEO of Carmell Therapeutics, an early stage collaboration that is developing new biomaterials manufactured from blood plasma, a promising product for sports medicine.
Will the struggling economy hamper recent gains? The sector is showing no signs of slowing, Manzetti says.
Parallels to the past are not lost on Manzetti and Brusco, whose offices overlook the river's bend and beyond to brownsfields and the emerging new technology center. All we need is an advanced technology research center, more lab space and a confident venture capital community to keep it going, Manzetti says.
"What makes it all work is the enthusiasm of our people," adds Brusco. "It's like the hard working steel industry, just a different group of workers, trying to get a product out to market. The work ethic here hasn't changed."
Debra Diamond Smit is Pop City's innovation and job growth news editor.
Captions, from the top: John Manzetti; Hank Safferstein of Congition Therapeutics; Lynn Brusco; Alan West of Carmell Therapeutics.
Photographs copyright Brian Cohen