Has the investment community "bought into" Destination Medical Center?
Not the hotel investment community — we know hotel developers think DMC is the greatest thing since cell division — but the venture capitalists and banks that provide money for biotech startups, such as Vyriad .
Rochester-based Vyriad, which has been nurtured so far by the Mayo business incubator downtown , announced last week it’s ready to build out a $9 million headquarters, research and manufacturing plant at the Rochester Technology Campus, the former IBM Rochester site.
The company, which is developing clinical-stage oncolytic virus therapies for cancer treatment, announced a year ago it had leased space at the IBM site, but it took about a year to line up the financing to get moving. CEO Dr. Stephen Russell says that’s because potential investors wanted him to move the company to Boston, San Francisco or other technology centers, rather than keep growing in Rochester.
That wasn’t for the convenience of investors to visit the premises — it was to assure that Vyriad can find employees to fill jobs, among other reasons, Russell said.
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"Despite the Destination Medical Center idea, I don’t think the investment community has bought into it," Russell told Post Bulletin reporter Jeff Kiger last week.
That’s among the major challenges ahead if DMC’s plan to make Rochester a major biotechnology center is ever to take off. DMC isn’t just about getting more patients to Mayo in Rochester — it’s also about growing the biotech research and manufacturing potential here, in part by harnessing Mayo’s research and bringing products to market.
Lisa Clarke, the DMC Economic Development Agency director, told Executive Editor Jay Furst Monday that the wish by investors to get "companies they invest in to move to the coasts is a common theme that high-potential startup companies consistently hear throughout the middle of the country." She acknowledged it’s a hurdle for DMC, but "this community and this region has been proving that model wrong for the past 150 years."
Vyriad’s announcement is a good start toward proving that model wrong in the DMC era. The company has its roots in breakthroughs developed by Russell, a Mayo researcher, who founded the company in 2012 and moved to the Mayo Clinic Business Accelerator in 2014.
The company’s mission : "to create a single shot to cure cancer using engineered viruses."
In the end, what made it possible for Vyriad to grow here is highly engineered money from local investment sources. According to a company news release , they cobbled together $9 million in secured convertible note financing with participation by Mayo Clinic, Rochester Area Economic Development Inc. and the Southeast Minnesota Capital Fund LLC.
In addition, the state of Minnesota and the city of Rochester agreed to kick in $370,000 in equipment funding.
That shows the importance of having locally controlled and committed capital available for projects that otherwise wouldn’t get off the ground — or would get off the ground and fly elsewhere. But it’s sobering that it took heroic measures to get funding for a highly promising biotech firm to build here.
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Vyriad’s step forward might help blaze a trail for others, but nothing will blaze it like the company’s eventual success. That would prove, as Russell said, "the real value of this company is to remain in Rochester, connected to the engine — Mayo Clinic — where the technology was developed."
For now, though, the company stuck to its guns, as Russell says, and so did local investors who made last week’s news possible. Hopefully it makes "coastal" investors take a fresh look at what Rochester is capable of doing.
