New Haven fosters biotech and reaps rewards

HYURI CHOI / YH

Before the Mayor officially cancelled plans for the Galleria at Long Wharf, there was debate over the place of high-end shopping in the city. With the support of Yale, high technology ventures gained an important foothold in New Haven unbeknownst to many.

By George, they've got it

Late last year, startups Achillion Pharmaceuticals and Molecular Staging became the first tenants in a new biotech facility located at 300 George St. The owner of the property, Winstanley Associates of Concord, Mass., spent a substantial amount of money to make what was once an SNET building attractive to biotech tenants. When the complex is completed, 300 George St. will be home not only to new tech firms, but also to a restaurant and a health club.

The Winstanley project represents a multilateral commitment to biotechnology in New Haven. Winstanley and its tenants did not come to the Elm City by accident—the city's economic development team, Yale's Office of Cooperative Research (OCR), and the state of Connecticut all worked hard to lure investment to the area.

"Initially, we were going to be in Princeton, N.J.," Kevin Eastwood, director of business development at Achillion Pharmaceuticals said. The company, which develops treatments for viral diseases, reconsidered its home when Jon Soderstrom, the current director of OCR, stepped in and touted the benefits of being located in New Haven. Yale created OCR, a relatively new force in town, to help partner the University's technology interests with outside capital.

OCR won over Achill-ion and its investors by capitalizing on a link between Yale and the company's research. "Our company possesses biotechnology discovered at Yale," Eastwood said. The move to New Haven made sense to Achillion because it put the young company in proximity to its roots. With lab space at 300 George St., Achillion is right next to the University's School of Medicine—quite literally in Yale's backyard.

Life outside the valley

While the research presence and prestige of Yale are alluring attractions, there are other reasons for the city's success in recruiting high technology. Southern Connecticut is also the home of such pharmaceuticals giants as Pfizer and Bayer. And while it cannot offer the sunshine of California, New Haven provides perks that are not always found in biotech hotbeds like Silicon Valley.

"I came from San Diego," Eastwood said. "The area has population density issues. But in New Haven, you have a short commute to the suburbs or rural areas if you want. In San Diego, your daily commute can last three hours." This is an important consideration for startups in the biotech industry, many of which are staffed by recent college graduates and parents of small children.

Moreover, the cost of living on the West Coast can be quite expensive. The cost-benefits of locating in New Haven are twofold. "The income tax is five percent higher in California," Eastwood explained. "In Connecticut you get to keep more of your salary," especially because housing and other necessities are cheaper here than in cities around Silicon Valley.

Connecticut Governor John Rowland and DeStefano have enhanced New Haven's appeal for young businesses by providing generous tax breaks at the company level. Although these incentives typically expire after several years, a good "starter" deal can buy time for cash-poor ventures to establish themselves.

And establish they have. According to OCR figures published in the New Haven Register, the combined capitalization of the city's five publicly traded biotech companies is $4.24 billion. In 2000, the city's largest biotech companies—including CuraGen, one of the nation's most distinguished labs—brought hundreds of jobs and more than $1 billion in investment to New Haven. Nineteen firms have emerged out of research at Yale since 1996; eight more are expected in the coming year.

Just this week, Soderstrom attended a biotech conference in San Francisco. "People from around the world are definitely aware of what is going on with biotechnology and companies like Achillion, Curagen, and others here in New Haven. It's really encouraging for us," Soderstrom reported.

Even Science Park has become a success story. The predecessor of 300 George St., Science Park was launched in the '80s with the help of Yale funds but faced debt and vacancy for many years. Now, however, the complex is a vigorous incubator for biotech startups and recently expanded to include 500,000 feet of new space.

If New Haven's first foray into biotechnology left the community with a bad taste, there is little evidence of that now. In listing what it views as the region's "top priorities in 2001," the editorial board of the New Haven Register put biotechnology in the top slot.

Old blue, new green

Yale, of course, is much more than a financier in all of this. It is true that Yale may need biotech more than biotech needs Yale. Under the leadership of President Richard Levin, GRD '74, Yale has set itself on a course to revitalize the sciences. With $1 billion tagged for current construction projects on Science Hill and at the Medical School, it is clear that Yale does not intend to miss a revolution in high technology.

A native of California and a graduate of Stanford, Levin witnessed the tech explosion in Silicon Valley first-hand. He saw how private science could greatly impact a research university. When he became president, Levin knew that Yale could benefit from a similar transformation in New Haven's landscape.

"It's not rocket science," Levin said of Yale's recent actions. "It's just Stanford's formula except in the biosciences and not electrical engineering and physics."

Surely, Levin is pleased to know that people in New Haven have started to utter the words "mini Silicon Valley." For if good things are happening to local biotech, good things are happening to Yale.

"The commitment to science was principally done to guarantee Yale's leadership for the next 50 years," Levin explained. "Yale has always been highly regarded for its law school, humanities, and arts, but now to be a leading university in the top echelon internationally, you need to be in the top group in the sciences." In order to accomplish this goal, Levin believes that Yale needs synergy with a strong local industry. "It provides employment opportunities in science for students and faculty, and makes the University more attractive to talented [individuals]," he said.

As one might guess, the influx of biotech also fattens the figures on Yale's revenue statements. According to the New Haven Register, Soderstrom and OCR have arranged for 270 licensing agreements with outside partners. Last year, these licenses delivered $46 million to the University. And the news only gets better: while biotechnology brings Yale an ever-increasing amount of cash, local firms require little of the school's funding.

"Now the great thing about biotech [for Yale] is that it doesn't need money as much as it needs support," Levin said. "There is so much demand for lab space that commercial developers are in there subsidized by the state; there's no reason for us to spend money on it."

These days, capitalism, not rehabilitation, is the impetus behind much of the money invested in New Haven. Venture capitalists are beginning to show a strong interest in the Elm City. This past summer, Blue Harbor Operations—an affiliate of Village Ventures—opened an office on Elm Street. In an interview with the Register, the director of Blue Harbor's office deemed New Haven "a prime target" for venture capital firms.

Yale believes that as private research groups become more prevalent in the city, so will the services necessary to support them. Venture capitalism, Levin said, "is another industry that could grow here due to biotechnology." Venture capital firms could benefit not only from New Haven's development in the sciences, but also from the city's position between New York and Boston.

Likewise, law and public relations firms may soon join the New Haven community in substantial numbers. In December, Mintz Levin opened a branch office in the city. A law firm dedicated to technology, Mintz Levin's clients include America Online and Compaq.

Yet according to Soderstrom, if one wishes to pinpoint New Haven's best opportunity for growth, one should look at Yale students. "We need to provide opportunities for them to succeed here [in New Haven], because Yale graduates will succeed wherever they are."

However, if Yale and the city of New Haven are expecting the University to meet the biotech industry's demand for skilled graduates, they may be disappointed. As it stands now, few if any undergraduates pursuing degrees in the biomedical engineering program consider New Haven a part of their future.

"Personally, I want to be in California," Anne Kim, MC '02, a biomedical engineering major, said. "That's where most of the experts are." Kim explained that Yale needs to commit more time and money—and department status—to biomedical engineering if the college is to tie students successfully to local firms. "There needs to be more recruiting from the very beginning," Kim said. "I would totally do a summer internship in New Haven, but they don't exist." According to Kim, none of her biomedical engineering classes at Yale has exposed her to the biotechnology possibilities in New Haven.

Looking forward

New Haven may lose the current batch of locally bred talent, but given Yale's commitment to the biosciences and its proven capacity for cooperation with the city, it is unlikely that this hindrance will persist much longer.

Twenty years from now, New Haven may very well be a major center of high-tech innovation. But more importantly, the community may know that it has changed conditions beyond its borders.

"In the future," Eastwood remarked, "it is our hope that the biotechnology industry has affected the quality of peoples' lives." Graphic by Hyura Choi.

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