A San Francisco-based venture capitalist who manages hundreds of millions of dollars in biotech investments has joined an effort to turn a little-known development in tiny Pine Island, Minn., into a biotech research powerhouse.
The site is known as Elk Run, and these days, it isn't much to look at. It's a fenced stretch of vacant land along Highway 52, about 10 minutes north of Rochester.
The California real estate company that is developing the site has been meeting with state and local officials to tell them it wants to start work on a 1,700 acre mixed-use residential and business development, centered around a biotech business campus.
That firm, Tower Investments, hopes Steven Burrill, the venture capitalist, will fund research there for experimental drugs, treatments for diseases and medical products, sources tell MPR.
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If it works, it could be a huge boost not just to Pine Island, but to the entire state, bringing thousands of well-paying jobs to Minnesota.
Existing centers, like the Mission Bay campus in San Francisco, employ more than 10,000 people and have spun off dozens of medical startups. The Tech Square campus in Boston generates more than $1 billion of research spending annually.
Gov. Tim Pawlenty -- who has long pushed for Minnesota to become a bioscience leader -- confirmed this week that his administration has talked to Burrill and his associates about the project.
"We've had meetings and discussions with them, and it's a hopeful project, and one that they continue to work on," Pawlenty said. "I don't want to speak for them, but if they can get a few more items lined up, that's something you'll be hearing more about in the coming weeks and months."
The project would require millions of dollars worth of groundwork. The state has already committed to more than $1 million worth of sewer and other improvements on the site.
Several legislators say MnDOT is also weighing a $50 million project to improve highway access to the site.
U.S. Rep. Tim Walz, who represents the area, told MPR he met with developers this week to talk about the highway project, including the potential for using federal stimulus funds for highway access.
The developers have included a representative of the Mayo Clinic on the project's board, and sources say the developers would like to get the world-famous medical center to join the venture. Those sources are people who have been provided details of the project, but asked not to be identified before a formal announcement.
Mayo Clinic spokesman Adam Brase confirmed that Mayo is meeting with the developers, but declined to discuss the nature of the talks. The developers declined to talk about the project, saying any announcement would come jointly from them and Mayo.
Venture capitalist Steven Burrill also declined an interview request. But news of the potential billion-dollar development has legislators, University of Minnesota researchers and the venture capital community talking.
The project would be in the district of State Rep. Randy Demmer, R-Hayfield, and he concedes it's hard to imagine the dollar amount that developers want to raise.
"It seems like we're using the billion word more recently, with the federal bailout and that sort of thing," Demmer said. "That's a lot of money. It's hard for many of us to fathom, and I think we have to get our arms around what does that really mean."
"Is there skepticism? Probably. There always is when you're talking about a big project," Demmer said. "But as with anything else, if you make steps along the way, as you get closer, the reality starts setting in that this can be done. And we know these kinds of things are being done. Why not here?"
In fact, outsiders, including Pete McNerney, a Minneapolis-based biotech investor, say the site's proximity to Rochester and the cachet of the Mayo name could put the state on the biotech map.
"If it were known that there were that kind of money available, there would be a lot of people approaching whoever makes the decision," McNerney said. "The trick, of course, would be which ones to invest in and which ones would move to Minnesota."
The state has had a checkered history with medical innovation. It has successes like Medtronic, the large medical device maker based in Fridly. But a $24 million investment in the University Enterprise Laboratories project in St. Paul is foundering.
So McNerney remains skeptical. The economy is sagging, and even companies like pharmaceutical giant Pfizer are laying people off. Good intentions and money don't guarantee success.
"I tend to believe the market works, in the sense that the really best opportunities are probably able to raise money right where they are," said McNerney. "But if you had the billion dollars in place, you'd still have to make sure this effort was run by folks who really understood where the good investment opportunities are."
An announcement on the project could come as early as next week.