As Philadelphia strives to become one of the nation's top biotechnology hubs, the state of Pennsylvania is investing money into life sciences in an effort to spin out viable companies from promising research.

Hoping to take advantage of university expertise and pharmaceutical experience in the greater Philadelphia area, the state started BioAdvance in 2002 to fund early stage biotech research in the Southeastern Pennsylvania region. BioAdvance now has moved to a third investment cycle - this time offering $20 million to entrepreneurs in a five-county area around the city.

"I think the role of the state in finding money to do this kind of thing is going to be increasingly important, because the private sector is moving away from early stage venture capital," said Barbara Schilberg, managing director and CEO of BioAdvance. "States are going to have to fill in the gap."

The new $20 million fund will provide up to $500,000 per recipient to help life science entrepreneurs build their businesses in therapeutics, medical devices and discovery technologies. It aims to give new companies seed and pre-seed money needed for research until they are able to secure venture capital and corporate funds on their own.

"I think it's absolutely brilliant that Pennsylvania started this a few years ago," Schilberg told BioWorld Today. "And I think other states are looking at what we're doing and seeing the benefits of it."

Indeed, other states are ramping up efforts to attract biotech and to take advantage of existing opportunities. According to a recent report prepared by Battelle Technology Partnership Practice and SSTI for the Biotechnology Industry Organization, Florida committed more than $500 million to recruit the Scripps Florida Biotechnology Research Institute, and Arizona is investing $440 million to construct research and development facilities to be used for biosciences at its universities.

The Michigan legislature also provided $10 million to Western Michigan University to operate a Bioscience Research Commercialization Center, and Missouri's Coalition for Plant and Life Sciences established BioGenerator, a nonprofit entity designed to provide proof-of-concept funding and expertise.

In addition, more states are providing wet-lab-equipped incubators for bioscience companies, up from 15 states in 2001 to 37 states this year, according to the BIO report.

States provide incentives to life sciences companies in hopes of securing future economic benefits of biotechnology.

"The model that we have in our own backyard are the Cephalons and the Centocors in the world," Schilberg said. "They're right here and the economic benefit of those kinds of companies is pretty clear. They have thousands of employees. They attract capital."

Centocor Inc. is located in Malvern, Pa., and Cephalon Inc., is headquartered in West Chester, Pa.

While BioAdvance focuses on the greater Philadelphia area, the Pittsburgh Life Sciences Greenhouse and the Central Pennsylvania Life Sciences Greenhouse are providing opportunities in other regions of the state. Each greenhouse is receiving more than $33 million in start-up funding over five years from the state's tobacco settlement. Still, though, not everyone is able to benefit - in the first two investment cycles, BioAdvance received more than 100 applications, but granted only 15 awards.

"We actually don't have enough money to meet the demand," Schilberg said.

Attracting new biotech companies to the Philadelphia area was not the primary goal of BioAdvance, although the firm has noticed an interest coming from outside the region. The primary goal was to help the state take advantage of technology that already existed.

"It is competitive and we're seeing that once you put a stake in the ground like this, people do start to surface that would not otherwise be visible on the radar," Schilberg said. "There are new companies being formed partly to take advantage of the fact that we exist."

Formed in 2002, BioAdvance has provided $5.5 million in investments for 15 regional companies. Those companies include Acuity Pharmaceuticals Inc., which is moving gene-silencing technology into clinical trials to treat causes of adult blindness, and Protez Pharmaceuticals Inc., which is developing antibiotics to combat drug resistance in difficult-to-treat hospital-based infections.

About 40 percent of the BioAdvance applicants come from universities, while the rest consist of entrepreneurs trying to fund new companies. As one of the top pharmaceutical hubs, Philadelphia has a wealth of industry executives looking to capitalize on new research, Schilberg said.

The Milken Institute, a nonprofit think tank, puts Philadelphia in seventh place nationwide, slightly ahead of San Francisco, for capitalizing on its biotech knowledge and creativity, as well as for creating companies, jobs and products. The institute ranks the top six areas as San Diego; Boston; the Raleigh, N.C. area; San Jose, Calif.; the Seattle area and Washington, D.C. When adding the pharmaceutical and medical device industries to the mix, Philadelphia moves up to the number four spot. The city will host next year's BIO 2005 conference in June.

Southeastern Pennsylvania companies seeking the BioAdvance awards can apply online at the company's website, www.bioadvance.com. Registrations will be accepted July 12 through July 30.

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