Bend’s bioscience industry growing up

Boosters want to see incubator at OSU-Cascades

By Kathleen McLaughlin, The Bulletin

The people who started Central Oregon’s first two bioscience companies were drawn by the outdoors, rather than the presence of a research institution.

And perhaps because of that, Bend Research Inc. and Grace Bio-Labs lacked nearby industry peers in their early years.

Bend Research founders Harry Lonsdale and Richard Baker arrived in Tumalo in the mid-1970s.

When Grace Bio-Labs co-founders Chuck McGrath and Jennipher Grudzien came from the Detroit area in the mid-1990s, Bend Research was well-established, but it was the only major player in town, Grudzien said.

Now, nearly four decades after Bend Research started, the core companies are still growing, and the region is populated by several startups, a number of them begun by former Bend Research employees.

Bend Research, acquired by capsule-maker Capsugel in 2013, has added manufacturing capacity and 120 jobs since the acquisition and now employs about 320 people in and around Bend.

Grace, which makes lab equipment for academic and private-industry research customers around the world, plans to double the size of its facility in 2017.

The off-shoots are maturing as well.

Agere Pharmaceuticals, started by former Bend Research executive Marshall Crew in 2008, sold in March 2015 to contract manufacturer Patheon for $26 million. Patheon later invested $5.7 million in an expansion of the Bend facility, which specializes in drug-absorption technology, and said it would add 22 jobs.

With Oregon State University-Cascades growing as a four-year university, bioscience boosters want to take the local industry to the next stage. Bend Research has fueled the local industry for four decades, said Jeff Gautschi, an organic chemistry instructor at OSU-Cascades and former employee of Agere. “Let’s get another one of those going,” he said.

Gautschi is spearheading an effort to create a bioscience incubator at OSU-Cascades to foster startups from a variety of disciplines. Gautschi and other bioscience boosters say they want to broaden the industry to create jobs for recent college graduates as well as highly educated experts.

Grace Bio-Labs likes the incubator concept because it will enhance Bend’s reputation as a scientific hub, said Lisa Dzubay, vice president of commercial development. “We have nothing but potential for growing, innovative companies,” she said of Bend.

A stronger bioscience sector could benefit Central Oregon’s economy, according to an economic impact report commissioned by the Oregon Bioscience Association, a statewide trade group backed by industry and academic research centers. On the private industry side alone, bioscience added 4,500 jobs in Oregon from 2002 to 2014 for a total of 13,789, a growth rate of 73 percent, according to the report, which was released May 3.

Growth in bioscience outstripped Oregon’s overall economic growth, said Denise McCarty, executive director of the Oregon Bioscience Association.

Total wages over the same timespan grew 169 percent to $970.3 million, according to the report, prepared by Pinnacle Economics of Camas, Washington.

Average annual wages increased 56 percent to $70,365, the report said.

Nearly half of that growth was outside the Portland area, noted Kate Ryan, a co-founder of the Bend Bioscience Consortium, a volunteer organization that promotes the local industry.

It’s hard to say exactly where bioscience in Central Oregon stands because Pinnacle broke the industry down into segments according to Oregon’s Congressional districts. Bend is in the 2nd Congressional District, which stretches from the Cascades east to the Idaho border and takes in Medford and Grants Pass in Southern Oregon. The district has 154 bioscience firms employing 1,878 people with annual wages of $105.4 million.

Economic Development for Central Oregon estimates the region has 25 medical device, medical software and pharmaceutical-related companies, and they employ 827 people.

Creating a talent pool

BendBio, as the consortium is known, thinks the next logical step for growing the industry in Central Oregon is to create an incubator at OSU-Cascades for bioscience startups, Ryan said.

Unlike software technology, where a company could spring forth in any coffee shop, bioscience requires lab space and equipment that costs $150,000 to $200,000, Gautschi said. That’s why OSU-Cascades wants to include it in the Innovation Center for Entrepreneurship, which is slated to be installed in the renovated Graduate and Research Center building, he said.

The incubator gained some traction last month when funding for the Innovation Center was nailed down, Gautschi said, but he still needs to raise about $400,000 to equip the incubator with laboratory benches and a ventilation system. Equipment could be donated by local companies, he said. OSU-Cascades hopes to have the incubator open by January, he said.

Bioscience startups also need mentors, and BendBio members say Central Oregon has attracted a surprising number of experts from across the industry over the past decade. BendBio member Les Mace, a retired medical device industry executive, said he is meeting more and more executives like himself, who are semi-retired, as well as people who are running their companies remotely.

Gautschi thinks OSU can harness that talent to help startups. While he’s encountered skepticism about whether an incubator could attract enough tenants, he doesn’t think that’s the issue.

“The biotech people want to be here just as much as the outdoor tourism people,” he said. “I think the challenge will be actually growing these companies, giving them a leg up over somebody else, and then graduating them.”

OSU’s model is the Oregon Translational Research and Development Institute incubator in Portland, which has a waiting list. One of the incubator’s client companies, AbSci, is due to graduate and in April landed $5.1 million in venture capital funding to help commercialize its product, which allows for the rapid production of soluble recombinant proteins.

While bioscience entrepreneurs have found their way to Bend, they have trouble attracting highly skilled employees.

When Adam Carroll, chief science officer at Amplion, a startup bioscience software firm, came to Bend 10 years ago to work for Bend Research, he said it felt like a “gamble,” even though it was a good job at a profitable company. If it turned out that he and Bend Research weren’t a good fit, he would have been faced with relocating his family again because there was nowhere else in town for someone with a doctoral degree in biochemistry to work.

More employment options

Today, someone with those qualifications might also find work at Patheon or VR Analytical, another company created by a former Bend Research employee, Carroll said.

Carroll thinks the incubator is a good idea because it could attract scientists from a wider variety of disciplines. While Bend Research has brought many enterprising scientists to the region, their expertise tends to be concentrated in chemical engineering, he said.

Some members of the bioscience community say it’s unrealistic to expect the sector to grow quickly without the presence of a research hospital, university or both. While Amplion, as a software company, could operate anywhere, many bioscience companies are developing products that will eventually require a clinical trial, said Seth Taylor, head of marketing at Amplion.

“For bioscience as a discipline and as a cluster in Central Oregon, it would be better to have a research hospital than not,” he said.

Bend’s bioscience industry does not have to revolve around life sciences, Mace said. Medical device technology and pharmaceuticals are beginning to merge around drug-delivery devices, he said. That could be an opportunity for local software and bioscience entrepreneurs to come together, he said.

Bend’s medical community has been another source of innovation. Dr. Ed Boyle, a cardiothoracic surgeon, invented a device to overcome catheter clogging and helped found ClearFlow, which is now based in California.

Mace is an adviser to E::Space Labs, which teaches classes and rents space to people who want to develop products with a hardware component and need expertise in microprocessing, mechanical engineering or electrical design.

“This whole merging of platforms … clearly that’s the direction it’s headed,” Mace said of the bioscience industry. “Why can’t it happen in Bend with all the entrepreneurial people we have hanging about?”

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