Economic leaders in Missoula are praising the city’s burgeoning bio-science industry but they question why the Montana Department of Commerce denied one business a grant to create new jobs under a statewide program.
Novoron, a San Diego-based biotech company, announced its plans in September to expand into Missoula, where it sought to open an office and build a team in its pursuit of curing injuries to the central nervous system.
Nichole Rush with the Missoula Economic Partnership said investors at Two Bear Capital helped pique the company’s interest in Montana. But when MEP submitted a job creation grant to the state, it came back declined.
“The Department of Commerce came back with a decision saying they didn’t feel Novoron fit the criteria as a basic-sector company,” said Rush. “They didn’t feel they met that definition because they’re primarily a research and development company.”
As defined by the state, a basic-sector company is one that sells a product or service outside the state of Montana and brings new dollars into the Montana economy.
While it’s the first time MEP has received a decline notice with basic-sector reasoning, it’s the second time the state has denied a local research and development company funding from the state’s job creation grant through the Big Sky Economic Development Trust.
“Novoron certainly intends to become a bigger company, but they will always be a research company,” said Rush. “They hope to develop drug therapies. They’ll patent them and license those drugs to be manufactured by pharmaceutical companies.”
Rush said Missoula is home to a number of research and development companies working in the bioscience industry. In fact, MEP has identified the industry for its growth potential and has labeled it a “best fit” industry for Missoula’s green economy.
Similar companies in Missoula pay high-wage jobs and often hire University of Montana students upon graduation. Rush described the young firms as economic drivers, which has left MEP and Missoula County questioning why the grant was declined by the state.
“It’s hugely disappointing that the Department of Commerce doesn’t seek to invest in a growing industry like bioscience, which has been identified by the Small Business Administration as an industry that’s ripe for investment in Montana,” Rush said “I don’t understand their reasoning.”
The Montana Department of Commerce could be reached on Friday but said Monday it would provide a response.
In September, Dr. Travis Stiles, president and CEO of Novoron, described the company as a biotech firm that spun out of the University of California-San Diego. The company is working on ways to regenerate nerves in the spinal cord and treat other disorders in the central nervous system.
The company’s advisory board includes a long list of doctors and PhDs, and it sought to hire local talent in its proposed Missoula research lab. MEP has worked hard over the last few years to grow the bioscience industry.
“We have some pretty significant capital sources here in western Montana who are excited to invest in these companies,” said MEP president Grant Kier. “We have a critical mass of companies to justify creating a cluster, and we have young adults coming out of our schools who are getting trained to become professionals in this industry. It would be short-sighted if the state weren’t investing in these companies with the types of grants they support other companies with that grow to export ideas and import money.”
Missoula in recent years has slowly emerged as a biotech hub, and the addition of Novoron would further advance those goals. Earlier this year, Stiles said the overhead costs of operating a business like Novoron from Montana were less than California.
Stiles said the company had already identified talent in Missoula. However, by declining the grant, the state isn’t willing to invest in those jobs.
“To be honest, we feel we need a day in Helena at this point to get our ducks in a row,” said Kier. “Maybe this is a technicality where they shouldn’t be granting these grants because of the letter of the law. But if that’s the case, we should find out if they’d be receptive to us proposing changes to the letter of the law so it accommodates this industry.”
The state has directed job-creation grants to other research and development companies, and the University of Montana has joined the sector to grow the local economy and create new jobs.
Jay Evans, the president and CEO of Inimmune and a research professor at the Division of Biological Sciences at the University of Montana, helped launch the university’s Center for Transnational Medicine.
The center serves a bridge between Montana’s public and private biotech sector and it has proven successful in growing young companies and providing jobs for university graduates.
“We have had tremendous success applying for grants in this program and delivering on the jobs that these grants are intended to award,” said Kier. “I genuinely believe the Department of Commerce wants companies in Montana to be successful. I think our goals align very strongly on this, and we can find a path through where we can figure out how to make that work and help these companies grow jobs.”
Novoron intends to license its drugs and work with companies outside the state, meaning it’s not unlike other companies that manufacture a product and sell it outside Montana.
Missoula County joined MEP in their frustrations over the state’s decision to deny the job-creation grant.
“At the very least, we ought to get some clarity,” said Commissioner Dave Strohmaier, saying the state’s basic-sector rules may be outdated in today’s economy. “It’s an antiquated model of economic development by looking myopically at selling things or service for out-of-state customers without really recognizing the multiplying effect of basic R&D and how that really permeates everything else.”