Incentives Deal of the Month
from Site Selection's exclusive New Plant database
LOOKING FOR A PREVIOUS STORY? CHECK THE ARCHIVE.
South Carolina's $17M in Incentives Lure 14-Employee Biotech Firm from North CarolinaBy JACK LYNE Site Selection Executive Editor of Interactive Publishing
CHARLESTON, S.C. Biotech is one hot industry, all right. Biotech funding, however, has moved into the deepfreeze.
That, in a nutshell, tells much of the story behind Pilot Therapeutics' (www.pilotp.com) decision to relocate its headquarters to Charleston, S.C. (www.ci.charleston.sc.us), from Winston Salem, N.C.
A four-year-old bio-pharma player founded in Winston-Salem, Pilot Therapeutics is simultaneously long on promise and short on cash. And that scenario set off a heavy-breathing Battle of the Carolinas, with the two neighboring states laboring to land the company, which is poised to launch an over-the-counter asthma medication.
Incentives were an obvious factor in that locational tug of war. Pilot Therapeutics was direly in need of capital. As of June 30, its capital reserves had dwindled to $118,299. And the U.S. venture capitalists that once so readily fueled the biotech sector have grown cautious, restrained by the economic downturn and increased Federal Drug Administration scrutiny. U.S. venture-capital funding in third-quarter 2002 dropped to US$3.9 billion - the lowest level in more than four years.
With only 14 employees, Pilot Therapeutics might seem an unlikely candidate for multimillion-dollar incentives. The company's Airozin asthma medication, however, is past the long-shot, bad-odds stage. The product has gone through five clinical trials and is scheduled for commercial launch later this year.
Airozin is also entering a ripe market, analysts say. Asthma treatment is a $7-billion-a-year business, with only 2 percent of that total coming from over-the-counter products. By comparison, 31 percent of the arthritis treatment market is in over-the-counter sales. Pilot Therapeutics, in short, is a company that could be poised for very rapid growth.
CEO Lauds Hodges'
"We appreciate South Carolina's recognition of Pilot's potential for future rapid growth and look forward to making South Carolina our new home," said Floyd Chilton, Pilot Therapeutics founder, president and CEO.
"We are grateful to Gov. Jim Hodges for his pioneering vision for biotechnology," Chilton continued. "We also commend his exceptional team for their professionalism, commitment, and innovation to structure an incentive package that enables Pilot to move forward with preparations for the Airozin launch, enjoy increased operating and manufacturing efficiencies, and advance our robust pipeline of over-the-counter and pharmaceutical products."
South Carolina's incentives included free land, a $4-million equity investment, $3 million in grants, and $10 million in performance-based job tax and development credits.
Company Will Add 180 Jobs over Five YearsSouth Carolina's incentives work out to more than $1 million per employee - at least with Pilot Therapeutics' present work force. It's the company's potential future, though, that spurred the incentives, and that future seems as if it will include considerably more employees.
Pilot will build a $2-million headquarters/R&D facility in Charleston and will add 100 research jobs over the next five years, Chairman Glenn Kline said at the project announcement in Charleston. In addition, the company later this year will begin building its $8-million production facility in Charleston, he explained. That plant will take two years to build and will employ 80 workers within five years.
North Carolina, ranked as the No. 1 state business climate in the November Site Selection (for more, see "North Carolina Retains the No. 1 Business Climate Ranking"), worked hard for the project. Pilot had strong roots in the Tarheel State. Chilton, in fact, named the company after North Carolina's Pilot Mountain, the area in which the company's president and CEO grew up.
In the end, though, South Carolina provided more of the subsidies that were the stuff of survival for Pilot. North Carolina's incentives reportedly totaled $8 million. The state legislature earlier this year passed the North Carolina Economic Stimulus and Job Creation Act, which provides cash grants (for more details, see the Sept. 2, 2002 Snapshot from the Field, "North Carolina Proposing $540M in Cash Grants for New Businesses"). The program, however, applies only to new businesses.
Agribusiness Also Gets a BoostPilot's move will also provide a boost for South Carolina's agricultural sector. The company's Airozin medication is derived from borage plants, which will be grown near the company's plant.
"Pilot Therapeutics' innovative products will dramatically impact the state's farming infrastructure, putting hundreds of family farms back to profitability while giving unlimited hope to millions with chronic diseases," Hodges said at the project announcement.
Pilot will relocate before the end of the year, initially occupying temporary quarters on Daniel Island. In addition to Airozin, the company plans to develop products to treat cancer, diabetes heart disease and stroke.
©2002 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.