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Are We There Yet?
Genaissance's Ruaño believes New Haven has made strides toward transforming itself into a technology hub. Still, he says, we've got a long way to go
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Business New Haven
7/9/2001
By: Lisa Micali
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Doctors have long known that people respond to drugs such as pain-killers, anti-depressants and many blood pressure and asthma medications differently. It turns out these varied reactions stem from small differences in our DNA. In some cases, these changes mean that people require a slightly different dose of medication.
From the discovery of "genomic bar codes" that are predictive of which patients will respond to a particular medication, Gualberto Ruaño saw money to be made in improving the development, marketing and prescribing of drugs.
Thanks in large part to the decoding of the human genome and the expectation that it will lead to revolutionary medical advances, New Haven's biotechnology industry has now garnered more money, people and interest than ever before.
That breakthrough helped New-Haven based Genaissance Pharmaceuticals raise nearly $225 million to date and drive interest in the fledging start-up from the public markets, where it sold nearly $90 million worth of stock when it went public last summer.
Featured in a June Time magazine article as one of the nation's leading companies specializing in the development of personalized drugs, co-founders Gualberto Ruaño and Kevin Rakin are committed to New Haven, the city where they founded the company. A resident of more than 20 years, Ruaño, Genaissance's CEO, looks forward to a future where Connecticut and in particular New Haven has a community of biotechnology firms to rival those in the Boston area.
Launched by 42-year old Ruaño in 1997, the company currently occupies three floors at Science Park, the 80-acre complex that once housed the Winchester firearms plant and is now home to a dozen high-tech firms. Ruaño is one of those who have witnessed the painfully slow transformation of New Haven from a manufacturing and services hub into a cutting-edge research venue fueling new ideas into high-growth enterprises. It hasn't always been that way - nor has the transition been an easy one.
When Ruaño discovered a rapid method of decoding DNA and the genetic code in the late 1980s, with the help of Bob Bickerman, then-director of Yale's Office of Cooperative Research (OCR), he was able to secure U.S. patent number 5,427,911. A recent visit by Connecticut's well-known forensic pathologist Henry Lee had prompted Ruaño to seek out commercialization of his technique. That's where he began to run into problems.
Each of the gene sequencing machines used in Ruaño's work costs upwards of $300,000 and runs nonstop. The university couldn't afford one machine, never mind the dozens he needed to propel his company. He had to seek capital from someone interested in the commercial application of such a discovery, and that wasn't Yale.
Ruaño's early business ventures, coupled with support from Connecticut Innovations Inc. (CII), helped to initially launch the company. CII, a quasi-public agency that has helped finance much of the biotech boom in greater New Haven, helped fund Genaissance's start-up phase and led it into further private equity rounds with such high-profile backers as Canaan Partners, Chase Capital Partners, Johnson & Johnson Development Corp. as well as from existing investors Biomedicine and Dresdner Kleinwort Benson.
"It was very difficult to attract investors in the early, conceptual stages without a technology behind the idea," says the CEO. "We struggled enormously. It was a difficult sell to investors."
Through the application of population genomics and informatics, he established a new field of medicine dubbed "personalized medicine." His vision of the company has remained unchanged since the start: altering the process by which doctors treat diseases, as well as how they discover the particular therapeutics that work best against specific conditions.
To take a promising scientific idea to profitable launch and beyond requires vast sums of money. While great ideas need money behind them, some entrepreneurs, like Ruaño, have to go further afield in their search for the gold. Ruaño went to Switzerland.
"The research we do, the thousands of algorithms and software programs we write, the expensive machines and instrumentation, the talent and resources - all that takes enormous amounts of money," says Ruaño. "We presented to former executives of Hoffmann-LaRoche Inc., a Swiss pharmaceutical company. Professor Dr. Jurgen Drews, then-president of global research and development at Hoffmann-LaRoche and now our chairman, looked at our story and liked our vision."
He got the money and now, his company is booming. In less than five years it has grown from ten employees to more than 180. Still, he believes there is room for further advocacy in the region.
"A lot of credit goes to Yale and to Jon Soderstrom in [Yale's] Office of Cooperative Research. The fact is that the university is investing in infrastructure projects, converting research into marketable products and actively assisting professors in commercializing their ideas. This is exactly what the city and the industry needs to grow," he says.
The greater New Haven bioscience industry includes major research facilities for Bayer and Bristol Myer-Squibb and more than 15 growing bioscience companies. Growth is expected to remain strong as Yale spins off new bioscience companies each year.
Total R&D expenditures by local bioscience companies increased 20 percent in 1999 and has grown by 75 percent over the past four years. R&D employment was up ten percent last year and 42 percent over that four year-period, according to OCR.
Ruaño hopes Connecticut United For Research Excellence Inc. (CURE), together, with CII and the state's Department of Economic & Community Development (DECD) under Commissioner James F. Abromaitis (who led a 30-member delegation to BIO 2001 in June, the industry's biggest conference), is planning more than just an awareness campaign to let people know that biotechnology offers tremendous opportunity for Connecticut.
While a record 15,000 attendees are expected at the conference including many of New Haven's leading biotech companies and supporters, Ruaño believes the event, held the last week in June in San Diego (after BNH went to press), will be a good opportunity to showcase the region and garner interest from out-of-towners.
The delegation participated in the largest trade-show exhibit ever planned by a Connecticut coalition for an out-of-state event. The conference pavilion included 30-foot banners suspended over the pavilion that boldly identifies Connecticut's bioscience "cluster," while each booth header displayed a You Belong in Connecticut logo.
"Connecticut is leveraging its coordinated cluster strategy to show the world all we can offer companies in this industry," Abromaitis said. "This includes two strong research universities; a workforce educated in the sciences; Connecticut-based and internationally known bioscience partners and suppliers, and a strong voice in shaping a business climate that promotes their growth."
Ruaño is convinced more work is still needed to fulfill that vision.
"It's consistent with raising the profile of New Haven for the betterment of all of us," he says. "The next step, which is why I'm on the board of the Connecticut Technology Council, is to make the state and the city take their responsibilities very seriously. Frankly, what we need now is for the state and the city to start doing national and international promotion. This BIO booth is a big step in the right direction." Still, he would like to see a national media campaign including TV and business magazines to get the word out about New Haven.
"The services that technology companies need no longer stop at one local government agency or even one state government; they run from the incubation of an idea, through product development and launch, through commercialization in the global marketplace," Ruaño says. "A broad portfolio of multi-disciplined leadership competencies, integrated with sophisticated political and public-outreach skills is needed to recruit and retain emerging, high-growth ventures in greater New Haven."
Participating biotechnology companies at BIO 2001 included Bayer Corp., Bristol-Myers Squibb, Boehringer Ingelheim Pharmaceuticals and Pfizer Inc. as well as rising local stars such as Achillion Pharmaceuticals, CuraGen Corp., the Institute for Bioanalytics, TurboGenomics and Vion Pharmaceuticals.
The delegation also included biopark developers and others seeking to promote awareness of Connecticut as an important center of bioscience activity and included Acorn Group, LLC, the town of Cheshire, Connecticut's Community Colleges, the Eastern Connecticut Enterprise Corridor (ECEC), Fletcher Thompson, the Hamden Bio-Science Campus, Lyme Properties, LLC, PricewaterhouseCoopers, LLP; the town of Southington, Spaulding &Slye Colliers International, TecHaven (which includes the towns of Branford, Hamden, New Haven, Milford, Orange, Wallingford and West Haven), Tenergy Water, LLC, Winstanley Enterprises, LLC and Yale.
Creating a cluster of bioscience activity that will make New Haven a flagship region in the country for biotechnology is part of Ruaño's goal. Though the venture-capital stream into startups has slowed this year, biotech - and genomics in particular - remains an active investment area. Fast-developing scientific fields like genomics are also straining the region's existing laboratory and work space.
"Our research clearly indicates that biotechnology companies, in their site-selection process, rank the following as the four most important factors: access to a highly educated workforce, proximity to major research universities, adequate laboratory space and access to venture capital," said Arthur H. Diedrick, chairman of CII and Gov. John G. Rowland's development czar.
Ruaño doesn't believe the media hype. "I don't understand it. There is plenty of space. There seems to be a disconnect between developers and science entrepreneurs. If there is a problem with space, than we as a cluster have not conveyed to real-estate folks that you can make money out of our technology," he acknowledges.
Since the biotech boom in the region, the industry has attracted related service companies in accounting, law, public relations and venture capital as well as the need for a knowledge-based workforce, more lab space and improved transportation in the area.
The Elm City's transformation into a biotech hub has produced more than a 1,000 new jobs and brought in $1.1 billion in private equity placement, according to Yale's OCR. Still, transforming New Haven's manufacturing economy into a 21st century highly-skilled brainforce has not yet materialized.
In recent years, the city has been struggling as it continues to redefine itself, pinning its hope on the biotech cluster as its salvation. But, critics argue that pinning your hopes on one industry is a perilous strategy for the city and the region.
While biotech may not be the panacea for New Haven's economy, it has already accumulated a lot of positive buzz for a city faced with multiple urban issues. Projects ranging from the redevelopment of the Broadway area to the construction of a new ten-lane bridge over the Quinnipiac River to expansion and construction of a new downtown commuter train station are currently underway and expected to ease some of the urban strain.
With the strong growth rate of the bioscience cluster, the industry and New Haven should be starting to feel as if the dream might indeed become reality.
New Web Site Promotes High Tech in New Haven
TecHaven (www.techaven.org), a new effort by the Regional Growth Partnership to promote the New Haven region as a tech hub for biotechnology and high technology businesses, officially launched last month.
A directory of technology sites throughout greater New Haven, such as the 300 George Street Technology Center, Acorn Technology Campus and the Hamden BioScience Campus, TecHaven.org showcases the city of New Haven, highlighting sporting events, cultural activities, restaurants and nightlife. The Web site will serve as an advocate, speaking out on issues affecting technology businesses in the region.
Says Regional Growth Partnership President Robert W. Santy: "The New Haven region has a tremendous amount to offer a business and its employees. What TecHaven.org will do is highlight the various efforts, as well as the city of New Haven and the region itself, in an attempt to show just why this is the smart place to be if you are a technology business or if you are looking to be employed by one of those businesses."
The Regional Growth Partnership (RGP) is a non-profit corporation formed in 1996 to act as an economic development arm to 15 communities in south-central Connecticut. The RGP has also assisted with such issues as brownfields reclamation, urban redevelopment, meeting the various needs of regional employers and seizing opportunities to assist companies in the region's burgeoning biotech and informatics industries.
Cook Named Bioscience Legislator of the Year
Mystic State Sen. Catherine W. Cook (R-18), was named State Legislator of the Year by the Biotechnology Industry Organization (BIO), the world's largest association representing the biotechnology industry, at its annual conference held June 24-27 in San Diego.
Cook was honored for her "exemplary support of the growing research-based bioscience cluster in Connecticut and her keen understanding of the value that new and innovative medicines bring to the world," said Patrick Kelly, BIO's director of state government relations, at a ceremony in Hartford during which Cook was formally presented with the award.
Cook is serving her fifth term in the upper chamber, and also serves on the Select Committee on Children. Her district includes Griswold, Groton, Lisbon, North Stonington, Preston, Sprague, Stonington and Voluntown.
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