Page 3 of 3 Previous

Continued: CEO says $1B funding for biotech park close to reality

  • Article by: WENDY LEE , Star Tribune
  • Last update: September 15, 2010 - 10:42 PM

After weathering delays and doubts from critics, biotech guru G. Steven Burrill said Wednesday that he's close to securing $1 billion to support a major biobusiness park he envisions on a rural tract north of Rochester.

The investment would be a huge step toward reality for the project, dubbed Elk Run. It began with aspirations to bring biotech companies to a site near the famed Mayo Clinic. But the project has been slowed by a rough economy that made it tougher to secure funding to develop the site and help fund the companies that would operate there.

But Burrill said he thinks he has lined up the $1 billion he'd committed to raising for the project in Pine Island.

"We have a firm commitment for that billion dollars from a single investor," said Burrill, who is the CEO of San Francisco-based life sciences investment firm Burrill & Co. "We have made a lot of progress recently, and we're optimistic that we'll get it done."

Burrill said the investor is a sovereign wealth fund, and he hopes to close the deal by the end of the year. He declined to disclose more detail, but said that in general his team raises money all over the world -- China, India, Malaysia, Russia, the United States and the Middle East.

Officials involved in the project said the timing of the deal will not affect plans for the groundbreaking for the first building in October. The 2,325-acre development would eventually include the biobusiness park, housing, a wellness community as well as other commercial space.

"This is a giant step in the right direction," said Abraham Algadi, Pine Island's city administrator. "Obviously a deal of that magnitude and that amount of money and resources takes time to close."

Adversity strikes

Elk Run, which sits on a former elk farm, has been riddled with delays since it was announced in 2007. Supporters of the project had hoped it would spark more innovation in the state and a boom in biotech -- an area in which officials have placed huge hopes for building on the state's prominence in medical technology.

But as it evolved, skeptical observers criticized the project's location in rural Minnesota, and the rough recession stifled efforts to raise capital. Even plans to keep some of the elk on the property went bad, when federal sharpshooters killed hundreds of them over concern about a fatal brain disease.

Jon Salveson, vice chairman of investment banking at Piper Jaffray & Co., said earlier this summer that the project's success will require buy-in from several groups, including the health science, finance, accounting and legal communities.

"It's innovative, but getting it off the ground will be a big leap of faith," Salveson said.

Elk Run's developer, Tower Investments, said construction is expected to start in October, about a month later than it had predicted earlier this summer.

Tower Vice President John Pierce said during a meeting earlier this month that Elk Run had two tenants lined up for its first building, with both businesses involved in biotech diagnostics.

He said the two tenants will receive financial support, either from the investment Burrill plans to close on, or from Burrill & Co.'s other funds.

Geoff Griffin, Elk Run's project manager, did not respond to a request for comment on Wednesday.

Burrill acknowledged the investor can still back off their commitment, adding "deals are done when they are done."

A collaborative effort

Part of the challenge of the project is that it involves collaboration among several parties, including Tower, Burrill & Co., the city of Pine Island and the Minnesota Department of Transportation.

MnDOT is overseeing the building and construction of an interchange near Elk Run. Tower provided the land to MnDOT for the interchange project and in return, Elk Run needs to meet certain job-creation goals. If it falls short, the city of Pine Island would owe the state a fine.

Burrill said there has been an underlying current of opposition in Minnesota, and he feels as if some people wish he would fail. He said he has been surprised at some Minnesotans' "lack of support, instead of [them] wrapping their arms around us."

Burrill pointed out that his firm has been very financially supportive of Minnesota companies already.

He said his firm has invested in the last year or so a total of about $100 million in Minnesota companies Segetis Inc. and Nora Therapeutics, as well as in Colorado-based Gevo Inc., which recently acquired an ethanol production facility in Luverne, Minn.

Burrill said his firm is working on funding another Minnesota company and potential Elk Run tenant, which he describes as more on the medical device side. The money will come from another fund his firm expects to close by the end of the year, Burrill said.

Burrill will be the keynote speaker on Thursday morning at the Association of University Research Parks International Conference at the Hyatt Regency Minneapolis.

Wendy Lee • 612-673-1712

  • get related content delivered to your inbox

  • manage my email subscriptions

ADVERTISEMENT

Connect with twitterConnect with facebookConnect with Google+Connect with PinterestConnect with PinterestConnect with RssfeedConnect with email newsletters

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

 
Close