Company town

Bruce Fellman is managing editor of this magazine.

Christopher Gardner

Christopher Gardner

After years of effort, Science Park has begun to take off as an incubator of new business and as an office complex. A parking garage (at right in photo) is under way, and more of the complex's old factory buildings are slated for renovation. View full image

On a dreary afternoon this past March, Jon Soderstrom had a problem. But it was an excellent problem to have.

Soderstrom is managing director of the Office of Cooperative Research (OCR), Yale's technology transfer department, which helps faculty and others who want to commercialize their research findings. A fledgling water purification company called Oasys had recently secured $10 million in startup capital, and the founders wanted to set up shop in New Haven. But Soderstrom had to turn them away, reluctantly, because New Haven's business incubators were nearly full.

New Haven has about 500,000 square feet of business incubator space in several buildings of the old Winchester firearms factory -- renamed Science Park and renovated, beginning in the 1980s, with funding from Yale, the city, the state, and the Olin Corporation. But most of the available space is currently filled by more than a dozen startups. Another incubator, downtown at 300 George Street, also is almost fully occupied, by eight Yale-connected biotech companies. "I'm back to where I was when I came to Yale in 1996," says Soderstrom. "We had no space then, either."

Back then the lack of space wasn't a problem, because OCR wasn't fostering startups. From its founding in 1982 through the mid-’90s, OCR's job consisted primarily of helping to license Yale discoveries to existing companies. (The most successful was an anti-AIDS drug called Zerit, licensed in 1988 to the company now called Bristol-Myers Squibb.)

But about the time Soderstrom arrived, OCR received a new mandate. In the last ten years, Soderstrom says, his office has helped start at least 34 new companies in New Haven and the surrounding area. The total investment to date in these endeavors is about $3.3 billion. Most of this -- nearly $3.1 billion -- has gone to more-mature biotech companies, such as Alexion Pharmaceuticals, which has raised about $1 billion; and Vion Pharmaceuticals, whose cancer therapy drug development program has raised $271 million.

Yale's research plans seem to guarantee that there will be no lack of spinoffs in the future. The university is emphasizing nanotech, genomics, environmental engineering, and other fields that are promising sources of useful products. And it has recently acquired a huge second campus with state-of-the-art labs, which, says biologist Michael Donoghue, vice president for West Campus planning, "should provide the basis for some interesting partnerships."

Yale sees the startups as part of its larger effort to bolster New Haven's economy. Yet by Soderstrom's estimate, the Yale companies currently operating in New Haven support only about 800 jobs, a small fraction of the city's employment base. Moreover, the companies that survive and grow tend to leave. "Business attraction and retention are big challenges," says Michele Whelley, who heads the Economic Development Corporation of New Haven, a private nonprofit begun last year with a $1.6 million grant from Yale. Of the six companies founded in the past ten years that have gone public, only two -- Vion and Achillion -- remain in New Haven. Curagen and Neurogen are based in nearby Branford. The biggest of the companies, Alexion Pharmaceuticals, which generated nearly $260 million in revenue last year, is headquartered in Cheshire, 15 miles to the north; its manufacturing facility is in Rhode Island.

Whelley points out that growth in the greater New Haven area does benefit the city. But she wants more companies to stay in town, and she attributes the exodus primarily to the fact that the surrounding towns can offer less-expensive lab space.

Given that the Winchester factory complex covers 80 acres, land isn't the problem. Yale vice president Bruce D. Alexander estimates that Science Park, properly developed, could hold more than two million square feet of usable space. But development has been slow. He's working with the Science Park Development Corporation, the nonprofit that oversees the area, to negotiate with developers. Currently, a new parking garage is under construction, and another building is slated for remodeling as office, retail, and apartment space. Downtown, another incubator is in the works. (Other plans are on hold because of the recession.)

The biggest economic question is whether the startups will ever have a serious impact on the employment picture in New Haven. At present, these small companies mainly require people with advanced research degrees, who mostly move in from elsewhere. In the long term, if more startups succeed and if they stay in town, New Haven will see steady growth in jobs for technicians and lab workers.

But the poorest New Haveners, Soderstrom says, are not getting the training to take advantage of these jobs. He argues that the city needs to develop "an educational system aligned with the jobs of tomorrow." In 2007, only 13 percent of the city's tenth graders exceeded the state's goals for math and science competence; statewide, the figures were 45 and 44 percent, respectively.

Mayor John DeStefano Jr. recently suggested that a major overhaul of the public school system is in the works. For its part, Yale, which has been increasingly involved in the public schools for the past 15 years, is working with local school districts on a K-through-12 science program "to create a cohort of students with real interest in science and technology," and help prepare them for college and technical school, says Alexander.

It's possible to discern in all of this activity -- Yale's hands-on involvement in city planning, economic development, and science in the public schools -- the outlines of a large-scale social planning scheme. Since taking office, President Richard Levin, an economist who studies industrial research and development, has often spoken admiringly of the relationship between Silicon Valley and Stanford: how Stanford's computer science research fostered the growth of the valley, and how the valley's successful entrepreneurs benefited the region's economy. (Many of those entrepreneurs have also become Stanford donors.)

Yale missed out on the Internet revolution. But today, it's trying to create the conditions for a biotech/nanotech boom in south central Connecticut -- the research, the infrastructure, even the workforce. Will a Biotech Valley bloom in the Northeast? Well, New Haven's terrain is more of a coastal plain. Call it the Bioshore. 

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