Editor’s note: BioWatch is a regular feature on Fridays.Tenants of the NC Technological Development Authority’s (TDA) LifeScience Center are on month-to-month rentals with their new landlord, Phase 3 Properties of San Diego.

The TDA filed for Chapter 11 bankruptcy protection last week and met with its chief creditor, Phase 3, at the first bankruptcy hearing in the NC Middle District Court Thursday morning.

John Bonanno of Phase 3 says the incubator tenants, including Ribonomics, Vesta Therapeutics, Norcarex, and Kucera, are going on month-to-month rentals. But Bonanno says the fate of the incubator is in doubt unless the state offers some type of subsidy.

“We’re not sure we can continue to operate the incubator,” says Bonanno. “We’re working hard to get some cooperation from the state. I think they have a moral obligation to continue support for the incubator. But without it, the bankability of the individual tenants doesn’t satisfy any investors we’ve been able to find.”

John Draper, TDA director of operations and former director of the LifeScience Center tells Local Tech Wire: “Forgetting operating costs, we were paying a $46,000 a month lease, and still had to provide electricity, security and other things.” Dave Emmett, who formerly ran the NCTDA, resigned recently, The News & Observer reported last week. Before resigning, Emmett had been actively involved in seeking a renewal of state support for the organization.

Draper says the primary purpose of Thursday’s initial bankruptcy hearing was to terminate TDA’s lease obligation. Draper says the TDA wants to protect its assets so that it can keep the First Flight Venture Center in Raleigh open and operating. The First Flight incubator provides space to more than 20 young companies.

The TDA received $19 million in state funding before the Legislature eliminated support for the now private corporation following allegations of mismanagement two years ago. It was founded in 1992 to help develop startup companies.

TDA opened the LifeScience Center in mid-2001. It is a 48,000 square foot state-of-the-art incubator facility offering over 20,000 square feet of office and laboratory space for university research and new business incubation.

Bonanno says a combination of investor and state money paid for $2 million in improvements to build out the state-of-the-art laboratories. “It’s a nice facility and needs a sponsor so we can keep it open,” he says.

Bonanno says Phase 3 hopes to provide current and future tenants of the building with “month to month rent where they can lease just the space they need for just the amount of time they need it and keep the cost affordable.”

He says the building’s space rents in the “low $20s” a square foot plus expenses, which he says is a reasonable rate for the high tech space.

The Center features a card access security system, robust air handling capacity, backup power generation, shared equipment and offices located adjacent to the lab space. The facility has finished laboratory space to accommodate six to ten life science and biotechnology companies.

Bonanno says it’s unfortunate that Phase 3 has to pursue the TDA’s assets. “We’ve been reluctant to do that, but this is what it has come to.”

Capital Success Stories

The CED’s Biotech Forum Monday presents, “Raising Capital and Alternative Financing: Success Stories From Area CEOs.”

The forum, held at the NC Biotechnology Center from 5 p.m. to 8 p.m., offers stories from the CEOs of AlphaVax, etrials, KBI BioPharma, and Voyager Pharmaceuticals.

They’ll talk about how they overcame obstacles to combine cash and equity financing in a difficult economic climate.

CED Biotech Forum: secure.cednc.org/programs/industry_forums/biotech_forum/register.htmls

NCTDA: www.nctda.org