INVESTMENT PROFILE: NORTH CAROLINA BIOTECH Bankrolling Biotech North Carolina s 10-year, $1-billion commitment pays dividends in the form of startups, spinouts and expansions that foster life-changing breakthroughs. Courtesy of Novozymes b y R O N S TA R N E R r o n . s t a r n e r @ c o n w a y. c o m T argacept s rapid rise in North Carolina is as striking as it is unorthodox. Growing as a biotechnology startup out of a tobacco empire, the Winston-Salem-based company is shattering many of the myths about the Tar Heel State even as the rm helps transform a region into a global player in one of the world s most competitive industries. What began as a subsidiary of R.J. Reynolds Tobacco Company in the mid-1990s has emerged as a leader with a therapeutic focus on central nervous system diseases and disorders. Targacept now has an exclusive global license and research collaboration with AstraZeneca AB for the development and commercialization of a drug to treat Alzheimer s disease, schizophrenia and other cognitive disorders. Targacept s meteoric rise ( rst-half 2008 revenues topped $9.4 million, up from $4.9 million in rst-half 2007) may surprise biotech industry observers, but there was nothing accidental about it, says J. Donald deBethizy, the rm s president and CEO. 892 N OVEMBER 2008 SITE SELECTION We were researching how nicotine interacts with the human body, and by the 1990s we realized that the body s receptor system was much more complex, deBethizy tells Site Selection. We learned how to target certain receptors that were more likely to treat disease, and we learned how not to target the receptors that caused adverse side effects. Targacept became an independent spinout in 2000 and was hailed in the Harvard Business Review as a best practice. With $75 million in public capital and another $123 million in venture capital, the company is well positioned for growth, notes deBethizy. Today, the company occupies 44,000 sq. ft. (4,088 sq. m.) in the 240-acre (97hectare) Piedmont Triad Research Park, where the rm employs 107 workers. It is de nitely safe to say that we are not done growing, he adds. We are a virtually integrated company; we have a blended outsourcing model. We contract out a lot of work. In our eld nicotine receptor work you have to mitigate your risk by having a lot of shots on goal. We have done that. None of this success would have been possible apart from the company s North Carolina location, deBethizy says. The overall support that our company and employees receive in this com- More than 55,000 people are employed in the biotech sector in North Carolina, representing an annual payroll of $3 billion. munity is worth its weight in gold, he says. It is invaluable for recruiting and retaining good employees. We are about 90 miles from Research Triangle Park. And even though the Piedmont Triad area had not been known as a biotech hotbed, we ve been able to recruit and grow because this region is such a great place to live. Payback: $3 Billion in Wages That location message is resounding around North Carolina, a state that began developing its biotech industry in the early 1980s. In just the last 10 years, it has funneled more than $1 billion in state money into various biotech efforts, with more on the way. North Carolina s emergence as a global biotech leader is re ected in a multitude of facts: North Carolina is the third leading biotech state in the nation with 482 companies in the eld. At least 45 biotech rms in the state are based on North Carolina university technologies. Nearly 55,000 North Carolina residents work in biotech, representing an annual payroll of $3 billion. 0811NCProfile5.indd 892 10/21/08 3:44:58 PM