Editor’s note: BioWatch is a regular feature on Fridays.

RESEARCH TRIANGLE … Hatteras BioCapital LLC, formerly BioVista, received a $30 million investment from the Golden Leaf Foundation on Thursday that drew widespread praise from state and biotech industry leaders.

Hatteras is teaming with Swiss-based HBM Partners to create HBM BioCapital, which has already raised $95 million of a projected $200 million fund.

The announcement once again raised a variety of objections to Golden Leaf investing in a fund that clearly notes it may invest anywhere in America or even in Europe. Golden Leaf was formed to invest $2.3 billion of the state’s portion of the national tobacco settlement with the stated mission of creating NC jobs.

But John Hood of the Raleigh-based think tank the John Locke Foundation takes a different tack.

“I don’t think it’s the state’s job to invest in private companies in the first place and these are public sector dollars. They’re owed to the taxpayers of the state, and they’ve been put to this other function.”

Locke says the state would be better off putting its money into infrastructure improvements, whether addressing water quality problems, speeding road improvements, or repairing bridges. “Venture capital and human capital are footloose, physical capital is not. It can’t just get up and run.”

But, says Hood, the answer is to get public dollars out, not to keep them in and insist they all be invested in NC biotech companies. “To call biotech investments risky is being kind and if you insist it be invested only in NC companies, you make it more likely you’ll fail. That wouldn’t be good for the taxpayers either,” Hood says.

Thorpe’s take

Clay Thorpe, who founded BioVista and will be one of four general partners of Hatteras, tells Local Tech Wire, “It’s well known that private equity investing is a human capital business. It takes a lot of effort to do due diligence on these private companies that don’t have to meet disclosure regulations. Because of that, firms located in a region tend to invest in that region.”

Thorpe insists that although Hatteras, HBM and a Philadelphia investment advisor will jointly make final decisions on fund investments, having a strong presence in Durham assures that significant capital is likely to be invested in NC companies.

But he says what Golden Leaf, BioVista and now Hatteras are trying to do is fill one stage of the funding gaps developing biotech companies face in North Carolina.

“Our argument has consistently been that if we bring a later stage investment fund with connections here it means every good NC company will have access to this sort of capital,” Thorpe says. “When we this was looked at initially, there really were no late stage funds in this market. Aurora and Intersouth both invest in earlier stage companies and neither are purely a life science funds.”

Thumbs up

Bob Ingram, vice chairman, GlaxoSmithKline agrees with Thorpe. He said in a statement, “The creation of Hatteras BioCapital and its relationship with an internationally known firm like HBM means that North Carolina life sciences companies will have much greater access to capital than ever before.”

Ken Lee, another of Hatteras general partners and former president of Raleigh-based A.M. Pappas and Associates, the only area fund completely focused on life science investing, says “The Hatteras office will have a special focus on North Carolina and will serve as an express lane to this new source of capital.”

Having access does not mean every company will get funded, Thorpe adds. “It means those with a good story won’t be overlooked because of lack of access.” Next for Hatteras are operational steps to more formally sort through the dealflow list of potential companies in this market and others, he says.

Area executives will get a chance to meet some of HBM’s executives at a Wednesday evening reception during the Biotech Conference at the Sheraton next week, Thorpe says.

Training explained

Dr. Michael Crossin, international business development manager with the N.C. Department of Commerce, will moderate a panel that discusses the biomanufacturing and pharmaceutical training consortium at next week’s Biotechnology Conference at the RTP Sheraton Wednesday and Thursday.

The training consortium is the big project being funded by the Golden Leaf Foundation with industry and government support to the tune of $64 million.

Crossin tells LTW one of the main purposes of the Consortium is to help spread the biotech largesse statewide. “This initiative uniquely positions us relative to other states and clusters for growth in the manufacturing parts of the biotech industry,” he says.

Crossin, a 25-year veteran of the biotech industry, says, “We’re not new at doing this. The industry is 25 years old and we’ve been in it with strong state government support from the start. Other areas are attempting to catch up.”

Progressive does Bio

One of the effects of a biotech cluster such as that in the Research Triangle, which has helped propel North Carolina to the third largest biotech industry in the nation, according to the latest Ernst & Young report, is that specialized service companies evolve.

Progressive Computer Systems Inc. of Chapel Hill, for instance, offers its information technology services primarily to biotech and pharmaceutical companies.

Founded in 1987, Progressive has 16 employees in a 6,000 square foot office and has retained nearly its entire engineering staff since its inception. “Many of our engineers have been with us 15 or 16 years, which is almost unheard of in the industry,” says Lisa Mitchell, chief financial officer.

Mitchell says the company does a wide range of IT services for clients ranging from most of the area’s large pharmaceutical companies to startups and the NC Biotechnology Center. Those services include setting up wide and local area networks, network security audits, hardware and software procurement, technical out-sourcing, centralized email, database management, disaster recovery planning and business risk assessments, among others.

Mitchell says that what differentiates her firm from others offering similar services is “that we bring 17 years of networking experience with diverse systems and a business perspective to the table.”

She says the staff continuity and the company’s experience with the range of biotech and pharmaceutical clients it has served have helped it acquire a reputation in the industry.

She says startups come to the company because “we help them put in a phased approach.”

Mitchell says Progressive’s fees range from $5,000 up several hundred thousand depending on the size and complexity of projects.