Ribomed Biotechnologies Inc., a privately held Phoenix firm that, for the past five years, has operated under U.S. government contracts to develop tests capable of detecting harmful substances in the environment and food supply, is returning to its roots.
Faced with finding laboratory space while its headquarters is demolished and rebuilt, Ribomed said it relocated from downtown Phoenix to Carlsbad to take advantage of a highly talented work force, readily available laboratory space and access to investors capable of moving the company into its next stage , commercialization. The company leased 7,000 square feet at 1989 Palomar Oaks Way.
“Even though Arizona has really begun a major effort to grow biotech … the truth is the resources that are needed for the for-profit biotechs, particularly the startup companies, just don’t compare to what’s in San Diego,” said Michelle Hanna, Ribomed’s chief executive and scientific director.
Ribomed, started in 1999 as Designer Genes Inc., developed a platform technology capable of detecting molecular level changes to DNA and RNA. The technology, called Abscription, aims to catch diseases at an early stage, before symptoms occur.
Following the 2001 terrorist attacks on the United States, a growing interest in bioterrorism detection transformed Ribomed from a company aimed at detecting early-stage cancers to one focused on detecting bacteria, toxins and viruses in the environment and food supply.
Ribomed was tapped by the Department of Defense’s Defense Advance Research Projects Agency, or DARPA, to help build a handheld sensor capable of detecting biological warfare agents, such as the deadly botulinum toxin. The project reached the third of four phases before it was ended.
Opportunity To Relocate
“There was supposed to be a new detector developed by Northrop Grumman and that never happened,” Hanna said. “For us, this provided a window of opportunity to relocate.”
Ribomed was also working with the Department of Homeland Security to develop a system to test for toxins and microbial pathogens in the nation’s food supply, but Hanna said the department selected another firm’s device that was already built. Together, the projects were valued at $10 million, she said.
Ribomed decided it would return to its original plan but was faced with the question of where to go to find the resources it needed.
“The truth is we really didn’t want to work with bioterrorism agents; we had always wanted to work in human detection technologies,” Hanna said.
For the past seven years, Hanna had been building and creating laboratory space in Ribomed’s headquarters to house startup biotech companies without the financial means to supply their own equipment. With the help of her mother, Arlene Knight Kilgore, Hanna formed the Phoenix Biotechnology Accelerator LLC, known as P-Bio. Hanna sold her home to finance the building’s finishing touches.
Last year, Hanna sold the building to The Plaza Cos., which planned to demolish the 30,000-square-foot aging structure to build a 250,000-square-foot biomedical plaza.
“Some financial assistance we thought we’d be receiving from the city failed to materialize,” Hanna said. “Secondly, the companies in the incubator had trouble obtaining funding. Without some contribution from anybody else to maintain the incubator, we needed some financial help.”
Hanna said she had trouble finding adequate laboratory space in the interim and made the decision to move to Carlsbad to take advantage of the area’s burgeoning biotechnology community.
“San Diego provides accessibility to a biotech accessible work force which is not the case yet in Phoenix,” she said. “Over here, you can have proximity to other biotech companies.”
Peter Spier, director of development for The Plaza Cos., said Hanna was invited back at “a very attractive rate.”
“We’re hopeful that Michelle will come back,” he said.
In recent years, Arizona has embarked on some major life sciences initiatives, namely the Translational Genomics Research Institute in Phoenix, Arizona State University’s Biodesign Institute in Tempe and Science Foundation Arizona, a private-public endeavor based in Phoenix. It has a local biotechnology trade organization, which counts 200 members, and an Arizona Technology Council.
A small business investment initiative, known as the angel investment program, signed into law by Gov. Janet Napolitano in 2005, paved the way for Arizona investors to receive tax breaks on their local investments. Qualified investors who invest in one of its certified small businesses can receive an income tax credit equal to 30 percent of the investment. The tax credit percentage increases to 35 percent if the investment is made in rural Arizona or in a bioscience enterprise.
To date, 134 investments have been made in 25 companies totaling more than $8 million, according to the Arizona Department of Commerce.
But a booming biotechnology industry, which has access to $3 billion in state-funded stem cell research along with top venture capital firms, has kept companies such as Ribomed eyeing the coast.
Ted Owen, president and chief executive of the Carlsbad Chamber of Commerce, said the city has attracted life sciences companies because of its proximity to multimillion-dollar golf courses, plentiful resorts and hotels and beachside attractions.
“If you look at areas like Carlsbad, quality of life is the main ingredient,” he said.
Although the life sciences firms bring in higher salaries and add to the city’s sales tax revenues, Owen said the downside is that companies frequently close following failed drug trials.
CancerVax, which merged with German-based biotechnology firm Micromet AG in May 2006 to form Micromet Inc., left Carlsbad last year after its once-promising lead cancer drug Canvaxin failed in human studies.
“The biotech industry is able to acquire plenty of investors, allowing them to have resources to spend on product diversity, unfortunately not many products or drugs make it to market,” Owen said. “There are only a handful of profitable biotech firms in the country as a result of the tough road to success.”
As for Ribomed, Hanna said she plans to grow the company at a slower pace than it has in the past, when the company went from four employees to 18 in a few months after taking on the government contracts.
She said the company expects to receive a grant from the National Cancer Institute in the spring and will rally investors by attending some upcoming conferences.
“We’re very excited,” Hanna said. “It’s really the industry to be in if you’re here.”