by Holly Korschun he recent purchase of the 42-acre Georgia Mental Health Institute (GMHI) property, less than a mile from the Emory campus, could provide the missing piece of the puzzle for Emory's future in technology transfer. The new property is a dream come true for chemist-administrator Dennis Liotta, Emory vice president for research and himself a biotech entrepreneur. For nearly a decade, Liotta searched for a location for a university incubator that could nurture fledgling biotechnology companies, but no proposed campus location seemed appropriate. The abundance of space created by Emory's newly acquired acreage off Briarcliff Road offers multiple opportunities. Tentatively referred to as "Emory West" (the equivalent of "Baby Boy Smith"), the new campus eventually will house a number of university programs. The cornerstone of the new campus, however, will be a biotechnology development center (BDC) - a start-up business incubator developed with Georgia Tech that will nurture promising technologies until they are strong enough to become stand-alone businesses.

or anyone used to the space constraints of the main Emory campus, everything at Emory West seems as big as Texas. Building A (234,000 square feet) is the former administration building for the GMHI. Its six floors include wide hallways, spacious offices, empty patient rooms, and two medium-size auditoriums. Building A's sole remaining tenants - administrators, faculty, and lab technicians in Emory psychiatry research programs - quietly continue their work, although without the anonymity they enjoyed before the state's programs moved out this past spring. Building B (65,000 square feet) houses a gymnasium. The eight "cottages" (totaling 146,019 square feet) that ring the two larger buildings once housed living space for adult and pediatric mental patients. Below it all is an underground world of interconnecting tunnels stretching as far as the eye can see.

The prospect of room to grow is encouraging to Emory entrepreneurs, but it may be months before the 42-acre Emory West campus is ready for its new occupants. Seventeen buildings, most in disrepair, and hundreds of parking spaces dot the bucolic, green landscape. Photo by Alicia Hansen, courtesy of the Atlanta Journal-Constitution.

The estate - a designated national historic site - was once home only to the elegant Candler Mansion and greenhouses, built in 1920 by Asa Candler, Jr., son of the Coca-Cola founder. If you close your eyes, you can almost imagine the zoo animals that once roamed the property and eventually became the first occupants of Atlanta's new zoo - an elephant parading by the swimming pool perhaps, a giraffe peering over the long stone wall on Briarcliff Road. In the evening, partygoers frequently danced the night away in the third-floor ballroom. In 1948, the Candlers sold the estate to the General Services Administration for use as a veterans hospital, which never materialized. Instead, the Georgian Clinic (later known as the DeKalb County Addiction Center) opened there as the first alcohol treatment facility in the state. Emory helped the state develop the Georgia Mental Health Institute in the mid-1960s. Today the mansion is scarred and subdivided into bleak hallways with dingy offices and crumbling ceilings. A large, wood-paneled hall and dining room with a lovely mural are the only reminders of the mansion's former splendor. A parking lot obscures what was once a front garden. When Emory acquired the property in the fall of 1998, the bargain price of $2.9 million hinged on three specific terms. First, Emory agreed to accept the property in its present state of disrepair. This was no minor condition, since initial estimates of $28 million needed to repair the buildings grew quickly to almost $90 million - a 17-building, 42-acre fixer-upper. Most of the infrastructure is on its last legs and will require major renovation. The second condition was to establish with Georgia Tech the multidisciplinary biotechnology development center. It is expected to create thousands of new high-tech manufacturing and construction jobs in Georgia with widespread economic impact and millions of dollars in increased local and state tax revenues. Finally, Emory agreed never to resell the property without specific approval of the state. A master plan will determine which buildings will be restored and which buildings will be torn down. While major repairs are under way, some start-up companies may be housed at Yerkes Regional Primate Research Center, which already has many biotech partnerships.

he BDC will be modeled after Georgia Tech's highly successful Advanced Technology Development Center (ATDC), a small-business incubator that has graduated 56 new high-tech companies, including Mindspring and Theragenics. The ATDC currently is home to 28 new start-up companies that focus on computing, communications, and new media. Wayne Hodges, director of the ATDC, sees the new BDC and its biomedical focus as complementary to rather than competitive with the ATDC. Until now, Georgia's dearth of start-up biomedical companies has severely handicapped the state in competing for readily available venture capital funds and government funds. Without small businesses to partner with, Emory has missed out on opportunities like the National Institutes of Health's Small Business Innovation Research (SBIR) program, which awards over 85% of SBIR funds to businesses outside the Southeast. Georgia Tech's new Parker H. Petit Institute for Bioengineering and Bioscience will serve as a potential pipeline for new technologies filtering into the BDC. The Emory-Georgia Tech Department of Biomedical Engineering also will enhance biotech collaborations.

upport from the State of Georgia via the Georgia Research Alliance (GRA) will be key to the success of Emory's incubator. The GRA, a nonprofit, public-private partnership of research universities, business, and state government, aims to grow and develop the technology industry in Georgia through strategic investments in universities. The GRA will donate $1.6 million toward renovation or new construction at the BDC. According to director Bill Todd, the GRA views university technology transfer in Georgia as a tremendous resource just waiting to be tapped and is counting on Emory to do just that. Todd points to upward trends in Georgia high-tech research and development in the last decade. From 1990 to 1996, Georgia led the nation in the growth of high-tech jobs. And research and development in the state are twice what they were when the GRA was founded. The state's investment in university research via the GRA will make a tremendous difference to Emory, says David Blake, associate director of the Woodruff Health Sciences Center. Most states invest directly in start-up companies, even though there is plenty of venture capital money available for that. The GRA invests in universities, in very selective ways, to increase the probability that a major discovery of commercial importance will take place. Blake believes Emory will help push forward a wave of commercial interest in biomedical research in Georgia. "Georgia knows how to do business but has not done it yet in biotechnology and there is a great deal of support for that now."

How a BDC Supports Start-ups: Quality lab space, sophisticated instrumentation, and animal facilities that are costly to duplicate   Seed funding that is difficult for start-ups to obtain   Experienced management teams   A cluster company concept that packages similar technologies   A mutual fund of biotech start-up companies that will diversify risk and attract investors

he BDC's steering committee of Emory and Georgia Tech administrators believes its innovative solution to handling high-risk biotechnology ventures will set it apart from other university incubators. Emory and Georgia Tech will create a limited liability corporation for the BDC, with each university owning a minority interest. A mutual fund of biotech companies will diversify risks for investors, who normally shun high-risk, start-up ventures. "If you invest in just one start-up company and that company goes belly-up," Liotta explains, "you've lost your investment. If you invest in the BDC as a whole, however, you've diversified your risk substantially. If one in ten of those start-up companies is successful, you still make a lot of money." Adding value to technologies will be Emory's ace when it comes to attracting venture capital. By using existing facilities, such as laboratories, animal facilities, libraries, and equipment, all of which are expensive for small companies to duplicate, the BDC can test and prove new technology before cultivating major outside funding. The center will cull technologies that fail this early proof-of-principle research. "Most university incubators are either real estate operations or extensions of universities," explains Liotta. "A real estate incubator takes a laissez faire approach toward its companies, with the goal of simply filling the space in the facility and collecting rent. On the other hand, an incubator tied too closely to a university is prevented from becoming a viable business enterprise." As a for-profit corporation, the BDC will lease space from Emory on the new campus, then selectively sublease the space to early-stage companies. In return for subsidizing businesses and providing them with scientific and management services and access to laboratory space, the BDC will extract equity from each company. Preference will be given to Emory and Georgia Tech technologies, but the BDC will consider outside start-ups with excellent potential.

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Besides bringing worthwhile medical technologies to market and increasing revenue for the university, the BDC has the potential to bolster university programs in more unusual ways. "Think about the potential impact on the business school, where we have an entrepreneurship program," Liotta points out. "If you were an MBA student, would you prefer to read about business plans or would you prefer to write one for a small company? If you were a law student, would you rather read about intellectual property or do research for a small company on intellectual property rights in certain situations? If you were a science student who wanted hands-on experience, you might do a summer internship with one of the start-up companies." Emory and Georgia Tech plan to hire a BDC director and several program directors to manage start-up companies focusing on cancer, virology, neurology, cardiovascular disorders, and vaccines. New programs will require 40,000 to 50,000 square feet of space, including laboratories, shared support space, office space, conference rooms, a library, and animal facilities. The incubator will provide seed funding to eight to ten Phase I companies in the first year. The most promising ones will continue on to Phase II, and will seek venture capital backing. During Phase III, companies will progress to prototype manufacturing or early sales. After about three years, companies will graduate from the BDC and move into facilities off campus with their own management teams. The first companies are expected to come on board in early 1999. The BDC projects about 23 viable start-up companies over the first ten years, generating more than 4,000 new jobs for the state and an annual payroll of $364 million. Holly Korschun is science managing editor in the Communications Office of the Woodruff Health Sciences Center at Emory.