Standing in the main production lab of Penn Bio-Organics, Inc. is decidedly not a high-tech experience. The room, in an unspectacular office park not far from the University Park campus, is filled with well-worn beakers, piping, and tubing and odors too weird to be called bad. But this little start-up business carries high expectations.

The first tenant of Penn State's Zetachron Center for Science and Technology Business Development, Penn Bio-Organics is a year-old business that specializes in the development, production, and marketing of chemicals and biochemicals. They make and sell enzymes like cyclooxy-ganase-2 and 5-LOXorganic compounds that are early links in the biochemical chain reactions that result in such diseases as atherosclerosis, thrombosis, asthma, cancer, and arthritis. Synthesizing the enzymes is essential for research into cures for these diseases, and the precious compounds represent a multibillion-dollar world market.

It's a big job, but it's only part of Penn Bio-Organics' mission. Funded by the Ben Franklin Technology Center of Central and Northern Pennsylvania (with additional funding from the National Institutes of Health and the National Science Foundation), the company was founded by veterinary scientist Channa Reddy and associates when they saw the economic potential in supplying the raw materials for the biotechnology industry.

"We've turned research ideas that we had been working on in the laboratory into a private entrepreneurial venture," Reddy says. "In the laboratory, we are trying to develop an inhibitor for a key enzyme; at Penn Bio-Organics, we look to fill the needs of labs like ours. So we are continuously exchanging information, and we transfer whatever we learn in the laboratory to the incubator. We try to work closely to develop this process. We haven't completed one year yet, but it looks very promising."

G. Ravindra Reddy, president of the company, says that the company ships a constantly changing array of 2,000 compounds to pharmaceutical companies, educational and research institutions, and medical centers for basic research. Prostaglandins are his biggest seller, going for up to $1,000 per gram. "There's a constant demand for these products," he says. "Once we perfect the technology, the outlook for the pharmaceutical industry looks extremely favorable for the next five years. Our prediction for our first year was $100,000, and I think we're right on target."

LSC director Nina Fedoroff has a lot riding on the new company, but not in dollars and cents. Penn Bio-Organics is the guinea pig for the LSC's technology-transfer program, called the Penn State Gateways Program. The principle, she says, is that it shouldn't be hard or unusual for scientists to reap financial benefit from their academic work. "Universities should get better at letting people make businesses out of their ideas, because ultimately that's another income stream," she explains. "We have an enormous idea pool here. But some people who've made successful businesses in this environment say it's been very, very difficult. They just don't get the support that they need when they need it. Often it's a choice between making their business a success or continuing as a faculty member. In principle, it should be possible to do both. If I offer you as a faculty member substantial help, including initial funding in starting a business, and you become successful, you're going to give back to me. So there's a reason to help you, and other universities are getting much more sophisticated at how they do it.

"There are many models," she explains. "Often, the scientists have a large role in starting a company, but as it develops, business professionals come in to run it and scientists remain as part of the advisory group. That's how (biotechnology firm) AMGEN started. It's a good model for technology transfer."

Fedoroff has high hopes for the Gateways Program, which she helped to formulate in association with Dan Leri, director of Penn State's Research Commercialization Office. The program uses a step-by-step process to create a systematic pathway for assistance, market research, management assistance, business and financial support, and operation space for potential Penn State entrepreneurs. Business ideas are sequentially nurtured from vision to reality as entrepreneurs work their way through a series of developmental "gates": all the necessary elements must be present before the business will be allowed to progress to the next stage. Leri says the system has abundant potential.

"We have other clients that we are bringing along through the process," he says, "and, while we can't discuss specific entrepreneurs now, it's safe to say that agricultural sciences is an area with excellent opportunities. We are creating a process that will benefit the entire University."