Triangle Business Journal
January 17, 2003

Plant startups feed off the local giants
Author: Jane Paige

RESEARCH TRIANGLE PARK – Agricultural biotechnology is a growing business in the Triangle with several smaller companies taking root alongside the universities and agribusiness corporate giants.
In the past five years, at least a half dozen small startup companies have formed in the area. They are adding to the body of knowledge already being developed at North Carolina State University and at the three huge agribusiness companies, Bayer CropScience, Syngenta Biotechnology and BASF, all located in Research Triangle Park.

"This is one of the best places in the world to have an agricultural biotechnology company," says Eric Ward, a co-founder and chief executive officer of Cropsolution, one of the new smaller companies. "We are right down the road from the headquarters of the giant companies that have more than half the world market. The experience and resources here are hard to beat."
Financial resources for the small companies, however, have slowed to a trickle in the past year. Here's a rundown of what a few of the smaller agbiotech companies in the Triangle are up to and the financing they received last year.

• Athenix, formed in 2001, uses its gene-discovery technology to identify genes with special traits, then it uses those genes to create genetically modified plants including corn. Located in the Research Triangle Park, the company has 30 employees. Members of its senior management team had worked together at Novartis, which is now Syngenta. Athenix raised $8 million in venture capital during its first round of outside funding.

Nadine Carozzi, vice president of product development at Athenix, says the company is hoping to receive its second round of funding in the middle of this year. Intersouth Partners, a Durham venture capital firm, is the lead investor for the company. Other investors include Polaris Venture Partners and Boston Millennia Partners.
"We see the funding as a huge vote of confidence," says Carozzi. "We are all working hard now to make sure we get our series B funding."

• Cropsolution was also formed by former Novartis executives. Ward and Scott Uknes founded the 15-employee company in January 2001. Cropsolution uses a technology called Evolutionary Chemistry that it says reduces the time it takes to discover and optimize a new agrochemical from years to weeks. The technology – which it licenses from Invenux Inc. – enables the rapid synthesis of millions of molecules and the rapid identification of the molecules that interact best with these targets.

In May, 2002, Cropsolution received $6.4 million in funding from investors. Durham's Aurora Funds led the Cropsolution financing. Other investors are Research Triangle Ventures, The Atlantis Group of Durham, ATP Capital of New York and Charlotte Angel Partners.

• Paradigm Genetics was founded in 1997 as an ag biotech company and worked with a plant that is a relative of the mustard plant. The public company is now in the process of shifting its focus into the human health arena, according to Melissa Matson, director of investor relations with Paradigm. Most of the company's current revenue comes from research contracts with Bayer and Monsanto. In October, it landed a $23.8 million federal research contract from the National Institute of Environmental Health Sciences. The five-year NIEHS contract will focus on how toxicants affect organisms at the cellular level. The research will generate a government database that can be used to better assess environmental risks.

While the smaller agricultural biotechnology companies are ramping up, the industry giants are being sold, merged and rearranged.

Germany-based Bayer bought Aventis CropScience in early 2002 and then designated Research Triangle Park as the headquarters of its North American business. In late September, it announced it would move its environmental research unit to Kansas, affecting about 120 of the 600 RTP employees.
Also in late September, Syngenta said it would cut 40 local positions to focus primarily on crop genetics research at RTP. Syngenta was formed in 2000 from the merger of Novartis Agribusiness and Zeneca Agrochemicals. The company has 250 Triangle employees.

All the changes at the big companies has helped open the door for the establishment and future success of smaller firms, according Cropsolution's Ward, a former co-president at Novartis.

"The smaller companies have a singular focus on the product and moving it along," Ward says. "At the larger companies it is human nature to be worrying about all the changes and not focused on bringing the product to the market place. In a small company, we can all be on the same page."

© 2003 American City Business Journals Inc.

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