In mid-September the Carilion Biomedical Institute in Roanoke was a nomad, packed in boxes awaiting a move from cramped quarters in a building on South Jefferson Street to offices in the former Roanoke Valley Graduate Center on Church Avenue. It won’t be the last move for the Institute, which today consists of a staff of six and loads of promise.

For this economic development newcomer, the future is wide open. The project could be an economic boon or an expensive bomb. If the year-old project goes as its backers hope, the Institute could eventually turn Roanoke into a biotechnology hub that draws new research and development riches. The mountain city may never be a biotech center on the order of Montgomery County, Md., or the Bay Area in California, but backers expect it to help put Roanoke on the map.

Dennis Fisher was lured from retirement to head up the year-old Carilion Biomedical Institute: "How could I pass up this opportunity?" Photo by Mark Rhodes

That’s a tall order. The Roanoke region lacks a major research hospital, federal health facility or other big, biotech native. What it does have, relative to its size, is a surprisingly high number of the commonwealth’s 162 biotech companies (see chart). The Roanoke and New River valleys are home to 20.4 percent of those companies, thanks in large part to spinoffs from Virginia Tech research. Those include PPL Therapeutics, a branch of the Scottish company famous for cloning Dolly the sheep, and CropTech, a Virginia Tech start-up that’s using tobacco leaves to grow proteins to fight human disease. With a much larger population and a teaching hospital, the Richmond region has 25.3 percent. Northern Virginia has 28.4 percent.

While the Carilion Biomedical Institute’s physical operations may be similar in concept to Richmond’s biotech park and other incubators, one thing makes it stand apart: $20 million in hassle-free cash to move research ideas from petri dish to production. The money, a private gift from Roanoke-based Carilion Health System, is expected to make the difference. "There’s nobody else making that investment," says Jerry Coughter, industry director for biotechnology and medical applications at Virginia’s Center for Innovative Technology. "That plays a big role in what they can do — the ability to move things a little faster, to take what’s being developed and get it to a point where it can be licensed or start a company." The plan is to match up medical and business experts with brainpower from Virginia Tech in Blacksburg less than an hour away and the University of Virginia in Charlottesville less than two hours away. "Money is an essential ingredient," agrees Dennis Fisher, who was lured out of retirement to head the Institute. "If we can provide money easily, we can cut the red tape and energy it takes [for researchers] to go scrounging for support."

Biotech companies nationwide say what they need is early-stage capital. Even in Northern Virginia, where investment money is flowing more freely, biotech start-ups are battling for the same dollars as high-return e-ventures and dot-com wunderkind. For most biotech hopefuls, "the first $500,000 can be the hardest to get," Coughter says. Yet the Institute has already funded early-stage research, and some projects have gone into a second round of financing. The Institute will cherry pick projects with potential, shop ideas and hire experts to negotiate royalties and license fees. Already the Institute has filed a few patent applications and is in the process of incorporating its first start-up. Some say the Institute’s business bent should particularly benefit U.Va. The perception is that U.Va. in Charlottesville — the region has 13.6 percent of the state’s biotech companies — has not been as successful as Tech in commercializing research.

The focus on business and the bottom line came because industry, not government or academia, initiated the idea. Led by Roanoke native Tom Robertson, Carilion Health System is Western Virginia’s largest health-care chain. It includes 14 hospitals and more than 50 physician practices. Accordingly, the Institute’s mission is to develop commercial health products to improve the delivery of care. "The missing link in commercialization of technology is not the technology," Fisher says. "It’s the business." Notably, the Institute is not interested in pharmaceutical research, which requires long-term development, endless dollars and heavy regulatory scrutiny. Rather, the focus is on products (see chart, above).

Carilion Health System hopes the Institute will make money and seed a medical-industrial complex in Southwest Virginia. The Roanoke Valley needs that kind of vision because it has taken some big hits of late. In the early 1980s, it lost Norfolk & Western Railroad when the railroad was taken over by Norfolk-based Norfolk Southern Corp. Another major corporate force left when Charlotte, N.C.-based First Union Corp. bought Dominion Bankshares Inc. in Roanoke. Both Norfolk Southern and First Union have announced recent cuts in the Roanoke area. By contrast, the Institute could be part of a regional renaissance, following a pattern begun by the renovated Hotel Roanoke, the growing fiber maker Optical Cable Corp. and Johnson & Johnson’s expanding Spectacle Lens Group.

The Institute’s most immediate challenge is turning Carilion’s one-time contribution into a regular stream of operating cash. Fisher’s goal is for the Institute to be self-supporting in seven years. In that time, he’s looking at a budget approaching $76 million. In addition to Carilion’s $20 million, which came from the sale of a medical products subsidiary, he expects money from donors, the state and federal governments, contracts, and license fees and royalties.

While the Roanoke region isn’t pinning everything on the Institute, it still represents a big chunk of the economic development landscape. The region is hooking its future to four industry sectors: biotechnology; auto manufacturing and research; plastics companies, of which there are about 20 in the region; and microelectronics and electro-optics, including companies like Optical Cable, Spectacle Lens Group and night-vision expert ITT.

By virtue of location and population, however, the Roanoke Valley is a weak sister to other parts of the state when it comes to economic growth. Northern Virginia, in addition to being the birthplace of the Internet, can draw on the Pentagon and the federal government. Richmond is the center of state government. Hampton Roads has the ports, shipyards and a military complex. "Western Virginia has two economic engines: Roanoke and Virginia Tech. So we’re seeking every opportunity to work more closely in collaboration with Virginia Tech," says Phil Sparks, who heads the Roanoke Valley Economic Partnership. All of the sectors the region is chasing, Sparks notes, have a Virginia Tech tie.

Translation? Roanoke hopes for higher-paying jobs that require academic degrees. The city expects that 200 mostly high-paying technical jobs will result from the Institute and related businesses in the next few years. With schools like Virginia Tech, Radford University, Hollins University and Roanoke College, the region has plenty of potential brainpower. But most graduates look for greener pastures in bigger urban areas — Northern Virginia, Richmond and beyond the state’s borders. "We want to retain the talent we’re educating here, ... create more job opportunity," Sparks says.

The goal is not to recruit a powerhouse, but to create clusters. "Someone can move here in one of those areas and know that they have career opportunities." If their work with the Spectacle Lens Group stagnates, they can look for opportunities at ITT or one of the Institute start-ups.

Besides being an economic catalyst for the Roanoke and New River valleys, the Institute could elevate the health company’s profile. Carilion has a solid reputation as a top-quality regional medical center, but it is only just beginning to break onto the national scene. Its heart program has been ranked in the top 50 nationally by U.S. News and World Report, and it was No. 54 in Modern Healthcare magazine’s list of the top 100 hospital systems in the country.

The Institute could give it additional cachet as national player. That could make it easier for the region to attract top talent to its medical and research teams, as well as biotech execs with an entrepreneurial bent. Medical personnel might see the Institute as a means to offer their patients therapeutic treatments years earlier and at lower costs.

The affiliation with a health-care company is also something many biotech projects can’t match. Carilion hopes to make its clinical laboratory and extensive patient databases available to researchers on a confidential basis, as well as offer applied research in a commercial setting. With independent ethical and medical reviews and patient OKs, Carilion’s patient population could be part of volunteer clinical trials to test prototypes.

By 2003 the Institute’s boxes will be repacked for another move, this time to a campus complex just south of Roanoke’s central business district and a short walk to Carilion Roanoke Memorial and Community hospitals. If all goes as planned, blistered parking lots and industrial space — including a scrap metal yard — will be bulldozed to make room for The Riverside Centre for Research & Technology. As with similar brownfield projects, this one is drawing criticism and mixed reactions from the businesses that will be pushed aside for the biotech park.

Even so, city leaders are optimistic. The first building will be the Institute’s $10 million, 50,000-square-foot home base, which will house administrative offices, a business incubator and research and testing labs.

While its backers believe their model is unique, the Carilion Biomedical Institute still might not be able to distinguish itself even if it succeeds. Rather, it will be sure to have a rash of imitators. Eastern Virginia Medical School in Norfolk is getting more interested in commercialization, CIT’s Coughter notes. Hampton Roads is ready for action: "There are a couple of groups trying to get biotech parks going down there," he says. Northern Virginia, too, could emulate the idea.

For now, however, Carilion’s large investment of $20 million sets the Roanoke project apart. The idea of building a biomedical industry from the ground up is intriguing, and the resources are in place, some believe. "Biotech in Northern Virginia and statewide can be driven by our preeminence in information technology," Coughter says. Medical research today is more related to engineering and computers, and much less to molecular biology. That puts the Institute, working with Tech and U.Va., in an enviable position. "There’s great opportunity there. Can they make it work?" Coughter asks. That’s the $20 million question.