Bioworks Foundation Treads Fine Line Of Space, Funding

The Daily News
January 16, 2008
By Scott Shepard

Launching a biotech venture takes technology, scientific talent, a business plan and a basket full of money. But nothing is quite so visible as real estate: Whenever Steve Bares explains the vision for the University of Tennessee-Baptist Research Park, he's got a copy at hand of a rendering to show what the place will look like in 10 years.

Meanwhile, Bares has scientists in need of lab space today.

"You can't separate space from the seed capital that it takes to create companies," said Bares, president of Memphis Bioworks Foundation. "If you go back over the last number of years, we've had a few companies be successful, and that puts a small demand for space. Now, people like Eldon Geisert have trouble finding the space they need."

Geisert is the textbook example of what Bioworks hopes to do many times over. Geisert is a professor at the University of Tennessee Health Science Center, and in researching Hepatitis C, may have stumbled upon a treatment for brain tumors. He created his company, ED Labs, to develop the discovery, but faced the classic dilemma of commercialization - the simultaneous need for talented workers, cash and a place to work.

"I've got a lot of people knocking on my door now asking for lab space," Bares said. "The problem is that many of these companies are still small and don't need perfect, beautiful space - and they can't afford it."

Home sweet temporary home

The solution so far has been to renovate existing buildings. The nine-story Bioworks headquarters at 20 S. Dudley St. has become the temporary home of a series of startups, from the InMotion Musculoskeletal Institute to the local chapter of 25 X '25, focused on biofuel development.

InMotion's two seventh-floor labs cover 3,000 square feet. They are nearly full and plans are to begin renovating the sixth floor for expansion.

Bioworks in April took over two small neighboring buildings with the intent of renovating them for researchers. Geisert's company is now housed in one of them, the 2,500-square-foot 959 Madison Ave., sharing the building with RxBio, a startup of pharmaceutical chemist Duane Miller.

"The building was 100 percent leased within only a few weeks of announcing that the space was going to be renovated for use as a bioscience lab," Bares said. "We don't think those buildings will be there forever, but until we can build new space, it provides something affordable."

Laboratories are the most expensive real estate to build, costing about $400 a square foot mainly because of the massive ventilation and filtration built into them, plus their heavy utility loads. The mechanical systems are so physically large that a lab with 60 percent useable space is considered efficient.

The Research Park already has two such facilities under construction: UT is building the $22 million Regional Biocontainment Lab and animal vivarium - nicknamed the Mouse House - plus a new permanent home for the UT College of Pharmacy, which will combine academics and research. The Department of Homeland Security selected UT for the Biocontainment Lab because local expertise in immunology is considered critical in countering bioterrorism.

That expertise is expected to feed on itself, attracting other scientists to Memphis to work with the current staff, in new, state-of-the-art research space.

'A Catch-22'

Bares already has plans for the Phase I building for Bioworks, and even has much of the space pre-leased to UT, the University of Memphis and Smith & Nephew Orthopaedics, but leases aren't enough to get 100 percent construction financing.

Bioworks has to have some skin in the game, so Bares is now raising capital, while he's also tucking scientists into existing space where he can.

"Steve is in a Catch-22," said Dick Tarr, president and executive director of InMotion. "He wants to help entrepreneurs build their ideas into an enterprise, so he has to squeeze and push wherever he can. We've been fortunate."

InMotion has enjoyed meteoric growth in just a couple years, Tarr said, thanks to community support. But he's been able to recruit a band of top-notch people because he's got lab space to show them.

"This is an older building, but Bioworks has completely remodeled it for us so it's brand new," he said. "We can't give up the charitable side that got us to this point, but now we can say we are a functional research enterprise."

Existing space that Bioworks has considered since 2002 is the 88,000 square feet of vacant space in the Jesse Turner building, part of the Regional Medical Center at Memphis. When The Med built its new burn center12 years ago, the hospital board figured it would need the space eventually, so added four floors of shell space that has never been used.

The Med has been in a state of constant struggle for five years, and no final decision has been made regarding Bioworks. The building illustrates the financial challenge of lab construction.

"Vacant shell space is worth about $50 a square foot," Bares said. "Renovating it and bringing it up to code is still going to cost me $300-$350 a foot."

A separate project by Bioworks is Innova, a business accelerator that will provide early stage cash to new ventures. Scientists with a discovery at the end of their federal research grants often lack the cash to take the first step toward commercialization, Bares said, and venture capital funds rarely get involved so early. Innova will bridge that gap with $2 million a year from MemphisED, an economic development initiative by the Memphis Regional Chamber.