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www.HartfordBusiness.com • October 22, 2018 • Hartford Business Journal 11 "sticky" to keep those displaced sci- entists here? Like Smith, she's also optimistic. While the recent churn has been a setback, Froshauer sees it as "part of the normal flow" of the industry, and not "some horrible thing happening locally in our ecosystem." There's been state investment, more networking activities for scientists, and collaboration among schools and companies, Froshauer said, all of which she believes is helping build the industry here to a "critical mass." Dawn Hocevar, who last year suc- ceeded Froshauer as head of the industry association BioCT (formerly CURE), said that both her association's incubator in eastern Connecticut and UConn's incubator are close to capac- ity (with approximately 60 startups between them). She also said many scientists here want to remain in the state if they're able to, and that there's plenty of interest from outside compa- nies sniffing around Connecticut. "We get a call every week from a com- pany wanting to come to Connecticut," Hocevar said. She noted that industry and government offi- cials are working on a new biosci- ence strategy for Connecticut, as ordered by a recent state law. She's hopeful it could lead to more incubators and a sharper focus on building the industry here. One company's loss, another's gain Some recently displaced scientists have found work in a much different environment: a startup. Though it may still be an uncom- mon path, the state's recent invest- ments in incubator lab space aim to make it easier and more accessible for former big pharma employees to start their own company. Out of the recent downsizing wave, Rallybio may be the most striking success story. Besides Uden, 60, its co-founders include 62-year-old Martin Mackay, Alexion's former executive vice presi- dent and global head of research and development, and Jeffrey Fryer, 49, Alexion's former chief tax officer. Besides its Alexion pedigree, Rallybio stands out in another way: It raised $37 million just four months after its founding despite not having any intel- lectual property or a drug pipeline. Its plan is to use that funding to acquire and develop compounds, mol- ecules and other intellectual property into drugs and commercialize them. More than anything, Rallybio's early success is about the experience of its co-founders, said Wurzer of CI, which participated in the investment round in April. "It was a deal we felt we needed to be in," he said. All told, Mackay, Uden and Fryer have worked on a few dozen drugs that have made it to market at companies like Alexion, AstraZeneca, Pfizer and Wyeth. "We've done this and we're going to do it again," said Mackay (a Scot- tish name pronounced Mah-kye), who earned more than $8 million in salary, stock and other benefits last year as one of Alexion's top executives. Indeed, all three co-founders have been successful. None has to work, but they said they felt driven to de- velop more drugs. Mackay and Uden even coaxed Fryer out of retirement over lunch in New Haven to be Rally- bio's financial leader. Fryer said he went home after that meeting and worked on the startup's business plan over an entire weekend. The three men could have launched Rallybio anywhere, but Connecticut seemed like as good a place as any, they said. It has quality schools, is a good place to raise a family, has lots of academic research to draw from, and while it's close in proximity to the biotech hub of Cambridge, Mass., it's less expensive and dense. "It's a really good place to live and it's a really good place to discover medicines," Mackay said. Froshauer, who is currently an en- trepreneur in residence at Yale, said Rallybio's formation may speak to the health of Connecticut's industry. Having a team of senior scientists come out of a single company and form their own venture is a more common occurrence in major biotech hubs, like Boston or San Francisco, she said. There are other spinoff examples in Connecticut as well. BioPharmaWorks, founded four years ago and housed in BioCT's Innovation Commons incubator in Groton, is comprised of nine scien- tists who all came out of Pfizer in recent years, said Robert Volkmann, chief scientific officer, who worked at Pfizer for 35 years, until 2009. He said Pfizer's downsizing since 2011 has been beneficial to him. "Everyone in my organization has graduated from Pfizer," Volkmann said. "Everyone has various feelings about that, but most of us have just moved on." Founded four years ago, BioPhar- maWorks does drug research and discovery. The company had an offer to locate in Rhode Island, but Volkmann, who rides his bicycle to work, said he and his team simply value their Connecticut lifestyle too much. However, he knows that the startup environment isn't for every- one. Scientists who are earlier in their careers or have families might seek out the perceived security of a big employer. Compared to some, Volkmann has a more pessimistic view of the bioscience industry in Connecticut and beyond. He doesn't think the industry is go- ing to grow a lot of jobs here, and says big companies that have left are un- likely to return. Big pharma and other bioscience companies can also tap foreign scientists in other countries, like India, to do contract research for much cheaper, he added. Volkmann, who gives talks at area colleges, worries about what those trends mean for the next genera- tion of scientists. Students have asked him what they can do in their careers to achieve what he has in his. "It's just not clear," Volkmann said. "The whole thing has changed." Pfizer and Alexion both shared comments for this story. Pfizer spokeswoman Samantha Reardon said that when the company downsizes, it offers job-placement assistance to affected workers, as well as a retraining allowance of up to $5,000. She also noted that despite the 100 layoffs this year, Pfizer has added back those jobs plus another 50 in other scientific areas in Groton. Alexion spokeswoman Megan Gou- lart said her company offers displaced workers a similar service. "We recognize that these changes are difficult for people and we're com- mitted to supporting them during the transition," she said. Attracting bioscience VC to CT By Matt Pilon mpilon@hartfordbusiness.com B esides academic research, per- haps the most important factor in building a bioscience hub is the presence of venture capital. Connecticut has some venture capi- tal firms, and Connecticut Innovations invests alongside them in deals, but industry observers say more firms need to establish a beachhead in Connecticut to get the state to the next level. Paul Pescatello, executive director of the Connecticut Bioscience Growth Council, said a little-known state law passed this year could make a difference. Public Act 18-147 creates a personal income tax deduction for income gener- ated by investments in Connecticut bioscience businesses. Only general partners of a venture capital fund estab- lished in 2018 or later are eligible. Pescatello said VCs like to be in close proximity to their investments, so the hope is the new law might entice more VCs to set up a Connecticut office and invest in more companies here. "I'm confident it will have an impact," he said. "That's where we really lack, is access to indigenous venture capital." However, it may not happen right away, since VC investments can take years to pay off, and some VCs might be skeptical. Pescatello said he's talked up the new law to VCs in Boston and San Diego, and some wonder, given Con- necticut's fiscal instability, if the law will still be on the books in 10 years. "The budget uncertainty makes them think it might not be around," he said. David Wurzer, Chief Investment Officer, Connecticut Innovations Susan Froshauer, Entrepreneur in Residence, Yale Dawn Hocevar, President & CEO, BioCT CT's bioscience investment support Of the $40.8 million in equity investments Connecticut Innovations made in fiscal year 2018, 53 percent went to bioscience companies. Here's CI's industry investment breakdown: Bioscience $21.7 million Information Technology $12.7 million Digital Health $5.4 million Other $1 million Source: Connecticut Innovations, the state's quasi-public venture capital arm. Paul Pescatello, executive director of the Connecticut Bioscience Growth Council. PHOTO | HBJ FILE Rallybio's co-founders (from right to left) are: Martin Mackay, Jeffrey Fryer and Dr. Stephen Uden. HBJ PHOTO | STEVE LASCHEVER

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