argacept's rapid rise in North Carolina is as striking as it is unorthodox.
      Growing as a biotechnology startup out of a tobacco empire, the Winston-Salem-based company is shattering many of the myths about the Tar Heel State even as the firm helps transform a region into a global player in one of the world's most competitive industries.
      What began as a subsidiary of R.J. Reynolds Tobacco Company in the mid-1990s has emerged as a leader with a therapeutic focus on central nervous system diseases and disorders. Targacept now has an exclusive global license and research collaboration with AstraZeneca AB for the development and commercialization of a drug to treat Alzheimer's disease, schizophrenia and other cognitive disorders.
      Targacept's meteoric rise (first-half 2008 revenues topped $9.4 million, up from $4.9 million in first-half 2007) may surprise biotech industry observers, but there was nothing accidental about it, says J. Donald deBethizy, the firm's president and CEO.
      "We were researching how nicotine interacts with the human body, and by the 1990s we realized that the body's receptor system was much more complex," deBethizy tells Site Selection. "We learned how to target certain receptors that were more likely to treat disease, and we learned how not to target the receptors that caused adverse side effects."
      Targacept became an independent spinout in 2000 and was hailed in the Harvard Business Review as a "best practice." With $75 million in public capital and another $123 million in venture capital, the company is well positioned for growth, notes deBethizy. Today, the company occupies 44,000 sq. ft. (4,088 sq. m.) in the 240-acre (97-hectare) Piedmont Triad Research Park, where the firm employs 107 workers.
      "It is definitely safe to say that we are not done growing," he adds. "We are a virtually integrated company; we have a blended outsourcing model. We contract out a lot of work. In our field – nicotine receptor work -– you have to mitigate your risk by having a lot of 'shots on goal.' We have done that."
      None of this success would have been possible apart from the company's North Carolina location, deBethizy says.
      "The overall support that our company and employees receive in this community is worth its weight in gold," he says. "It is invaluable for recruiting and retaining good employees. We are about 90 miles from Research Triangle Park. And even though the Piedmont Triad area had not been known as a biotech hotbed, we've been able to recruit and grow because this region is such a great place to live."       That location message is resounding around North Carolina, a state that began developing its biotech industry in the early 1980s. In just the last 10 years, it has funneled more than $1 billion in state money into various biotech efforts, with more on the way.
      North Carolina's emergence as a global biotech leader is reflected in a multitude of facts:
      • North Carolina is the third leading biotech state in the nation with 482 companies in the field.
      • At least 45 biotech firms in the state are based on North Carolina university technologies.
      • Nearly 55,000 North Carolina residents work in biotech, representing an annual payroll of $3 billion.
      • Major biotech companies with operations in North Carolina include GlaxoSmithKline, Bayer, Catalent Pharma, Novartis, Syngenta, BASF, Biogen Idec, Merck, Novo Nordisk, Wyeth and others.
      Jim Fain, secretary of the North Carolina Department of Commerce, tells Site Selection that state support of biotech will not slow down anytime soon. "The General Assembly last year funded the cancer research center in Chapel Hill for $52 million a year. That is the equivalent of a $1-billion endowment," Fain says. "We have fostered the transition of our economy from labor-intensive manufacturing to knowledge-driven capital investment and employment."
      At the forefront of that effort is the North Carolina Community College System BioNetwork, established in 2004 with the assistance of the Golden LEAF Foundation. BioNetwork is one of the three major pieces of the NCBioImpact partnership, which includes a pilot-scale training facility and a research facility dedicated to improving pharmaceutical science.
      Matt Meyer, director of the NCCCS BioNetwork, says "We assist community colleges in training North Carolina's biotech work force. When a company is new or expanding, we have our bio-pharmaceutical center or bio-processing center come up with a training program before the company has even committed to expand in the state."
      The payoff has been huge, notes Meyer. "Merck and Novartis have both said that it was the training program that convinced them that North Carolina was the place to expand," he says. "We have a lot of success stories. North Carolina is home to some of the world's largest clinical trials and research organizations like Quintiles. We are helping them expand in the state by training their work force."       While North Carolina is known for the technological innovation in the Research Triangle Park, biotechnology is taking hold across the state.
      To ensure that the biotech industry grows in all parts of the state, the North Carolina Biotechnology Center has established six regional offices. Steven Burke, senior vice president of corporate affairs for the Center, says, "We have a state with natural and institutional resources in every region, and each is different. Our goal is to develop these resources, including native plant research, marine resources work, discovering new sources of bio-ethanol and bio-diesel, remediation of environmental impacts, nanotechnology, etc."
      Over time, notes Burke, "we fully expect that every aspect of North Carolina will be closely related to biotechnology. Whether it's developing new crops, new sites for companies, new bio-fuels or other investment possibilities, achieving a state of 100 counties with biotech everywhere is the goal."
      Erskine Bowles, the former White House chief of staff under President Clinton and now president of the University of North Carolina System, tells Site Selection that the state's universities are central to achieving this goal.
      "Our most important role – our core mission – is to produce the kind of graduates North Carolina businesses need to compete in the global economy and solve the challenges they face every day," Bowles notes. "If we don't get that part right, nothing else matters a whole lot."
      Bowles cites real-world successes like BioBlock UD as proof that his state's universities are living up to this mission. An off-the-shelf product developed by Michael Roe, an entomologist at NC State, BioBlock is a DEET-free mosquito and tick repellent with an active ingredient that occurs naturally in tomatoes.
      "We also get to watch some breakthroughs as they are emerging, like the work of Rachel Roper, an immunologist at East Carolina," explains Bowles. "She is working on a unique approach to stop the spread of monkeypox, a cousin of smallpox that has started to show up across the globe. Then there are those rare individuals whose entire life's work is breakthrough material and who pave the way for tomorrow's biotech discoveries – scientists like Oliver Smithies, the Nobel Prize-winning geneticist from UNC-Chapel Hill."
      Targacept's deBethizy echoes Bowles' comments. "With Wake Forest, UNC-Greensboro, UNC-A&T and High Point University all located in the Piedmont Triad region, we are very excited about the future," he says. "Through Wake Forest, we were able to occupy a very nice facility at a very affordable lease rate, and Wake Forest got a very good company in return."
      He adds that the "lifestyle, weather and traffic are all good here. We haven't had any trouble getting quality people to come work here. This is a fabulous place to live and work."