St. Louis waits for Bio-Belt to bloom

ST. LOUIS -- When Internet mania swept the country in the 1990s and every metropolis wanted to be the next Silicon Valley, St. Louis thought it picked the smartest niche of all.

For years this fading industrial center has poured a fortune into the genetic engineering of plants, ignoring critics of the controversial technology and enduring a long stretch with little to show for its investment.

Now, finally, St. Louis is starting to see a payoff, putting some welcome distance between itself and the many other cities trying to hit it big in biotech.

Nearly a decade ago civic boosters here decided that biotech crops were just the thing to help prop up an ailing economic base, overcome political divisions, lift an insular business community out of the shadows and, not incidentally, feed a hungry world. Private investment followed, and as its traditional employers kept slipping away, this hodgepodge of municipalities became the hub of what it dubbed the Bio-Belt.

"No one is saying we're up to Silicon Valley, but for a midtier city, it has put us on the map," said Robert Fraley, chief technology officer at St. Louis-based Monsanto Co., the No. 1 player in plant biotech.

"We're making a huge bet," said John Biggs, a St. Louis native and former chairman of the TIAA-CREF pension fund. "It's on the come." ...

Political obstacles

"A lot of the promise of the technology will be hampered by the political climate," predicted Russ Roberts, an economist at George Mason University in Virginia who formerly worked in St. Louis.

Meantime, Roberts noted, the development effort here has produced no blockbuster companies, or even solid midsize players. "They have a lot of tinkerers," he said.

Yet signs of progress are apparent. Lab space in the area's business incubators is overbooked, and the heavy-hitting Danforth Foundation has just announced another $50 million grant for additional research into plant science.

Monsanto, meantime, is investing 10 times that much each year. All along, the one-time industrial conglomerate has put the real muscle behind St. Louis' foray into crop engineering, and it is finally getting recognized for it.

On Wall Street the former maker of plastics, carpeting and the like now commands the premium valuation of a pure biotech play. Its long-suffering stock has shot up by nearly two-thirds since September. "The strategy has been validated," said Fraley.

Monsanto thought it had a can't-miss strategy when it pushed genetically modified crops on a skeptical world in the 1990s. Instead, it triggered a backlash, playing into the hands of Greenpeace and other non-governmental organizations that have opposed it on health, environmental and even moral grounds.

Monsanto was "so arrogant," recalled Jack Barsanti, a St. Louis lawyer who works with angel investors--individuals who invest in start-ups. "They said, `Here it is, dammit, you better take it.' People rebelled. That cost them 10 years," Barsanti said of Monsanto.

Fraley disputes that characterization, saying the products fell prey to the mad-cow scare in Europe, and what he considers the political opportunism of the Greenpeace crowd.

Whatever the reason, genetically modified plants already were in trouble when St. Louis latched on to them, which made the development bet all the more risky. ...

With so many big employers becoming merger targets, St. Louis took stock of its relative competitive strengths.

Like dozens of other cities across the country, it seized on "life sciences," which encompasses research into plants, animals and--its most lucrative segment by far--human health. St. Louis already had a base, notably at Washington University, a regional center for medical research.

What distinguished St. Louis, however, was its recognition that it could never be better than second-tier in human biotech. Plant biotech, on the other hand, has attracted much less competition.

Divide and conquer

Backed by Monsanto, Washington University and the Danforth Foundation, the charitable arm of a prominent Missouri family, St. Louis consciously went after the niche as a point of differentiation--a divide-and-conquer strategy now gaining currency in other communities such as Phoenix.

St. Louis invented the Bio-Belt brand, launched business incubators, and established a research center named after the Danforths with state-of-the-art lab space.

"We wanted it to be the place to be for plant science," said Peter Raven, who heads the research-oriented Missouri Botanical Garden. "We could be at the top, and the more you're at the top, the more you can benefit."

Then came a long wait for the payoff, which continues.

To a degree, that's just the nature of biotech.

"If you're from this field of discovery, you're acclimated to waiting it out," said Susan Pais of the Nidus Center for Scientific Enterprise, a biotech incubator adjacent to the Danforth center and Monsanto headquarters. "We won't be in a position to judge this for 10 years or more."

In biotech, ambitious timetables typically collide with the realities of patent law. Intellectual property rights define the industry, and much of a company's value is measured by the discoveries that it owns.

The maze of patents makes the field inherently less entrepreneurial. That in turn has compounded the struggle St. Louis faced in convincing a conservative, insular business community to invest in start-ups, as well as in wooing outside venture capital investors.

Regulation poses another barrier, greatly increasing the cost of developing new products, and reducing the number of potential markets with the scale to justify the necessary investment.

It's not just the European Union slapping up trade barriers against biotech crops. Even in the Bio-Belt's home state, conservative legislators are pushing a measure aimed at prohibiting stem-cell research that could discourage much of the gene-based underpinnings of plant and life science.

And, naturally, building an infrastructure takes time. At Wash U, Chancellor Mark Wrighton just concluded a capital campaign that raised a whopping $1.55 billion, but it took nine years.

Looking down from the window of his campus office, Wrighton points out a newly finished lab building just below. He snaps his fingers: "You don't have those resources at your fingertips."

Now, finally, the biology department can expand.

Of course, making progress is not the same as making money, and the benefits of economic development activity can be difficult to measure.

A consultant's report prepared for St. Louis booster organizations cites remarkable growth--187 companies, $400 million in venture funds and 3,676 high-paying jobs created in a single year. ...

•	St. Louis waits for Bio-Belt to bloom Critics have had a field day as money poured into bio-tech plants, but investors say their day is on the way Chicago Tribune, Sunday, May 1, 2005 Byline: Greg Burns, Tribune senior correspondent

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