NEW YORK, NY December 08, 2008 —INTRO: Biotech is to the 21st Century what industrial grade steel and the internal combustion engine were to the 20th Century. So says one local promoter of the high-tech business of turning genes and proteins and enzymes into drugs and therapies and medical devices. New York City is trying to attract what officials hope will be the next Amgen or Pfizer – big firms, they say, that will pump jobs and tax dollars into a faltering economy. WNYC’s Fred Mogul reports.

REPORTER: The East River Science Park is slowly taking shape, north of Bellevue Hospital. At the moment, you have to use your imagination to see them, but if all goes according to plan, scores of scientists within a few years will be scurrying among the labs and offices overlooking the FDR Drive. Seth Pinsky, the president of the city’s Economic Development Corporation, says the credit crunch has slowed down construction of the shiny mid-rise laboratory complex.

PINSKY: We’re not going to pretend that the economy is an easy one, that financing is easy to get, that business is flush. But that’s the time that government and the private sector need most to be investing in the future of the city,

REPORTER: A California-based firm called Alexandria will run the East River Science Park and rent out space to companies small and – they hope -- large. City, state and federal governments will be investing only about 35 out of the 700 million dollars the project is supposed to cost – though both Alexandria and its tenants will get vast tax breaks. Pinsky believes a local biotech industry here is worth the investment. It would take all these talented scientists and prestigious medical institutions, and turn them into thriving companies with lots of high-paying jobs. He’s undaunted by the basic math of biotech -- a strange industry that attracts lots of money from investors but actually turns out few successful products and few profitable companies.

PINSKY: We understand that not every company that comes to an East River Science Park is going to turn out to be a success. We hope that if a larger percentage of companies stay in New York, in fact, when the one or two percent of those a year become successes, they’ll be major New York successes, not New Jersey or Connecticut successes.

REPORTER: Take the Manhattan company Ziopharm. It’s four-years-old, with a few cancer drugs in early and intermediate trials, but it’s not a success just yet. CEO Dr. John Lewis, a former cancer surgeon at Memorial Sloan Kettering, says New York is an ideal place to have located his firm.

LEWIS: There’s multiple medical schools of the highest caliber It’s hugely helpful in terms of being able to immediately access people and bounce ideas off of and get going in the right direction in a very quick way.

REPORTER: Still, it’s a bumpy time for Ziopharm. The stock of the 15-million-dollar company has dropped 75 percent in the last year. Lewis is down to about 25 employees, from 40 a couple years ago. He remains confident, though, that Ziopharm won’t be one of the 40 percent of biotech firms projected to run out of cash in the coming year.

LEWIS: We’ve got a core group of investors, who are more long-term and are more venture capital, so they tend to have deeper pockets right now. It’s still no guarantee. It’s still a very turbulent time right now.

REPORTER: Lewis thinks the biotech industry as a whole will be okay. Biotech investors are always betting on long-shot firms like his, so they’ve got a certain appetite for risk. From venture capitalist Martin Vogelbaum’s point of view, biotech is a good bet at the moment, because as companies get more desperate for cash, he can get a bigger stake at a lower price.

VOGELBAUM: If we can get into a company, and it’s worth $50 million, and someone comes in and says, We’d like to buy it for $150 million, where in the past our entry point would’ve been $100 million – you can see where the difference is.

REPORTER: Vogelbaum is a partner at Rho Venture Capital Fund Investors. The company doesn’t have a stake in Ziopharm or any other biotech company in New York. Vogelbaum says he doesn’t have anything against biotech firms here. It’s just that almost none have ever approached him, and he’s never been drawn by any of them. Most of the action has been in the San Francisco, San Diego and other high-tech areas.

VOGELBAUM: There wasn’t that kind of meteor striking, creating a fully-owned ecosystem here in New York. That’s really why least historically New York has never really been a place to invest.

REPORTER: In other words, it’s a little bit of a Catch-22. Vogelbaum believes you need a couple big, solid firms to attract and sustain a primordial ooze of start-ups and mature companies and the support vendors that serve them all. But those anchor firms want those “ecosystems.” That’s what the city is hoping its East River Science Park will be. And if the labs don’t work out, there’s always river-view condos. Once the real estate market turns around.