ON THE COVER North Coast Journal Weekly

A biotech future?

by  BOB DORAN


SIDEBAR: PORTABLE COMPANIES, ANYONE?



IN THE 21ST CENTURY WE WILL FIND A WAY TO LOOK INTO and predict the future -- not with a time machine, but with a computer chip.

We will be able to look at human DNA, the code that shapes us, and read it to find predictors for genetic diseases like cancer. Once we identify the causes of specific cancers, we will be one step closer to finding a cure.

And if Bill Schaser has his way, Humboldt County will play an important role in the manufacturing of these high-tech biochips. If all goes according to plan, 800 to 1,000, high-paying high-tech manufacturing jobs will be created by this venture into the science of the future.

Schaser, a retired Eureka High School science teacher, is an initial investor and the education director for Iris BioTechnologies Inc., a company that is on the ground floor of the new and highly competitive biochip industry. Born in Seattle, Schaser grew up in the Bay Area and moved to Humboldt County when he was 17 to attend Humboldt State University.

"I came to Humboldt as a forestry major, but that didn't take," he said in a conversation at his home at the end of a winding road in Eureka. He and his wife, Kay, built the split shingle-covered house by hand from the bottom up, even milling the wood themselves.

Schaser graduated from HSU with a degree in physical education, with an emphasis on physical therapy, and a zoology minor. At first he put his degree to work teaching physically handicapped kids. Eventually he joined the staff at Eureka High teaching physiology and biology.

If his name and his face seem familiar, it's because he was one of those at the center of last week's Journal cover story. "High School Diplomacy" told of an exchange program that sent Eureka High students to Kaiping, China, and brought 10 high school students and their teachers from China to Eureka. Schaser was instrumental in arranging the exchange. He had previously led student groups on trips to England and Russia and acted as host for visits from those countries.

Twenty-five years ago Schaser and his wife acted as hosts for another exchange program, one that brought a young man by the name of Simon Chin from Burma to Humboldt County.

"Kay was involved in some sort of outreach program that involved getting kids out of the inner city, especially Asian kids," said Schaser. "The idea was for them to see what the rest of America is like. We ended up with Simon Chin and another kid. Simon was 14 or 15. He'd only been in the country for six months. They came up from Chinatown [in San Francisco] on the bus and within 24 hours they were totally at home."


[photo of Schasers with Chin, 1975] Bill and Kay Schaser with Simon Chin in 1975


Simon stayed close to the Schasers over the years, often visiting on vacations.

"He was very bright, a regent scholar working under Glenn Seaborg, the Nobel laureate," Schaser said. "That's Seaborg as in the element, Seaborgium."

(Seaborg, who died in 1999, was chairman of the Atomic Energy Commission in the 1960s and served as an associate director of the Lawrence Berkeley National Laboratory from the '70s until his death. He was the co-discoverer of plutonium and nine other transuranium elements, including Seaborgium.)

Chin graduated at the top of his class at Berkeley with a degree in chemical engineering and initially went to work for a struggling chip manufacturing firm, helping make operations more efficient. When it was bought out by Dupont, he continued under the new ownership.

"He became the kind of a quality control guy for all the Dupont subsidiaries up and down the West Coast," said Schaser. Chin specialized in management restructuring, utilizing team building, something Schaser calls "the Asian way."

Eventually Chin left Dupont and went to work for an American company that was operating overseas building high-powered microscopes designed for examining chips. Two years ago he decided it was time to start his own company. The genome chip business was brand new.


[photo of Bill Schaser and prototype biochip] Bill Schaser, with inset photo of a
prototype biochip, smaller than a quarter.


"I don't think Simon knew much about DNA, but he met with friends at UCSF who knew all about it. He became very knowledgeable," Schaser said.

Recent technological advances have led to rapid advances in knowledge about human DNA. The year 2000 saw two major developments. In March President Clinton and British Prime Minister Tony Blair announced that the data collected by the Human Genome Project will be available to all via the Internet. Then in June Dr. Francis Collins of the Human Genome Project and his counterpart in private business, Dr. Craig Venter of Celera Genomics, made a joint announcement: We now have a rough draft of a map of the human genome.

"Once you can read your genome, you can see the future," said Schaser.

The next step is to take the knowledge and put it to work. Iris and other companies are using this genetic data to create an analysis system that will pinpoint the causes of genetic disease. The key is devising a way to mount representations of gene segments -- called oligos -- on a silicone chip, creating what is called a biochip.

We have all seen models of the DNA molecule showing it as a double helix -- a twisting ladder with 46 chromosomes. The chromosomes are comprised of approximately three billion rungs, or base pairs, made of anywhere from hundreds to thousands of genes.

Imagine the ladder split in two, then further dismantled into microscopic gene segments that are fused into an array of tiny pits on the face of a chip. The result is a biochip.

In Iris' first major project, the arrays will include genes bits corresponding to known anomalies that indicate breast cancer. Matching an individual's DNA against the array, doctors will be able to pinpoint the gene causing the cancer, Schaser explained.

"The key is specificity. You take the cancer cell, look at it and identify what genes are causing the problem. The future in medicine is to tailor treatment to the specific gene," says Schaser.

"At this point they have identified 4,000 to 5,000 genetic diseases. Some are extremely rare, some are fairly common. Our game plan is to focus on something specific and there's a need for a good cheap breast cancer test. The idea -- and for Simon this borders on evangelism -- is to make diagnosis very, very affordable. That is his mission.

"It's a complete revolution in medicine, the ultimate level of diagnosis. Right now we look at effect; with this we'll be looking at cause. Then we can stop the illness at the protein level or at the expression level.

"The biochip will enable us to pinpoint the cause of a disease, at least the genetic basis. My [role], as educational director, is taking that and looking at how you nurture your DNA. In other words, how do you live properly to limit the expression of that gene? Or if it can't be done through nurturing, what kind of drug can eliminate the disease?

"Someone asked me, `What's the sense of knowing if there's nothing you can do about it?' Part of my job as the education director is to say. `Wait a minute, how do you nurture your genes?'

"It's what you eat, what you drink, what you breathe and beyond that, the environment you live in. Is it a stressful environment?

"I believe very strongly that your health is affected by what you think. Good thoughts are good for you. Bad thoughts can go beyond you. If you express bad thoughts, you trigger chemicals that trigger someone else's DNA and make them feel cruddy. You can trace it there. If that's true -- and I think it is -- then on every level your health becomes your own responsibility.

"Health costs are rising. The projection is they'll be 20 percent of the GNP by the end of the decade. We can't afford that. We can't compete globally paying out that much for our health care.

"The bottom line is that the individual has to be more responsible. I absolutely believe the 21st Century is the century of responsibility. It will be bumpy getting there. I'm as evangelical on this as I can be. It fits into everything I teach. Ecologically, population-wise, all issues come down to responsibility."

So why would a business like Iris locate in Humboldt County instead of the Silicon Valley?

"I'm an initial investor and the education director," Schaser continued. "When I looked at the business plan [for Iris], I said, `Can this be in Humboldt County?'"

Schaser answered his own question:

"Absolutely. The only thing we're short on here is the capital. We have investors here, but we need more to insure that it will happen here. We're finishing our prototype, then it all comes down to raising five million bucks.

"We're ramping up, figuring that within five years we'll have 800 to 1,000 employees. This is a perfect place to be. It's a non-polluting industry. In terms of the end product, everything can be flown in and out. The chip is no bigger than the size of your fingernail. It's `value added,' something like Holly Yashi earrings.

"The chips themselves will be made someplace else and shipped in. We just put the oligos on. I don't know for sure that it's going to happen in Humboldt County, but it's going to happen one place or another. If some other community comes up with the venture capital it could move somewhere else. But two of the investors happen to own [property] in McKinleyville. I'd like to see it happen there -- or somewhere in Humboldt County.

"This is my community. I came here when I was 17. I believe it's just the kind of industry this area is looking for. As a teacher I see all these bright kids leave. Some want to leave, but there are a lot who would like to stay if they found the right work. This is a wonderful environment.

"People should be able to make a decent living in Humboldt County using their brains. This is an opportunity where I can be part of creating a business that offers good jobs, a business that will be compatible with this community.

"That's my vision and my mission at this point. If I can do that, I'll know I've done something good."


PORTABLE COMPANIES, ANYONE? by Arno Holschuh

[photo of Nelson and Agredano]IRIS BIOTECHNOLOGIES INC. ISN'T the only company eyeing Humboldt County (see above story). A number of other young entrepreneurs have similar thoughts -- or they have already arrived -- because of quality-of-life factors such as clean air and water, low crime, affordable housing and recreation.

In 1997 Jim Nelson and Rene Agredano, husband and wife, had fast-paced, cosmopolitan lives.

"We were living in San Francisco and working in Silicon Valley," Nelson said.

With good salaries, they had managed to save what they thought was a down payment for their first house. But when they started looking, they found all the homes in their price range fit into one category.

"Crappy," Nelson said.

"Living there, working there, we were spending four hours a day in the car," he recalled.

To relax, they would drive up the coast to Humboldt.

"We were vacationing up here around New Year's 1998 and saw the prices of homes." Nelson decided he could get a few nice buildings and acreage here for the same price as one of the homes in his price range in San Francisco.

So the couple made the move up Highway 101, bringing their marketing communications company with them.

"We're definitely happier up here, and it is definitely the quality of life that brought us here and keeps us here," Nelson said. "People wave and say hi."

Agreda Communications, as their company is called, manufactures large-format graphics, corporate IDs, logos, sales brochures, packaging -- "pretty much anything that has to do with information design and marketing," Nelson said.

They've had a lot of success working right out of their home in Cutten. Nelson said they can sell just about anywhere, "thanks to the internet and Federal Express. The majority of our clients are in the Bay area, back east or overseas."

Peter Shikli sees a similar opportunity for other high-tech businesses to relocate to Humboldt. Shikli owns a business in Newport Beach called "Bizware.com" that produces the nuts and bolts programming that powers business websites, and is interested in moving to Humboldt County for the quality of life -- and the educated workforce that Humboldt State University and College of the Redwoods produce.

It's hard to find good programming help these days, Shikli said, and that's hurting businesses elsewhere in the state.

"The shortage of knowledge workers is kind of endemic. It is critical in the view of my colleagues and competitors.

"What I noticed is that this shortage is not evenly distributed throughout the world." He said because of the educational programs at local institutions, there is a surplus of knowledge workers, those who are trained to work in computer information fields.

Shikli said he thinks a lot of those knowledge workers could be convinced to stay in Humboldt, even if a business owner paid lower wages, because the cost of living is lower on the North Coast than elsewhere in the state.

And of course, there's the the quality of life in Humboldt County.

"They like the place they are residing," Shikli said.

Shikli sees a much bigger opportunity than just relocating his business here. He wants to bring other companies with him.

"When I came to look around at Humboldt, I noticed there were basically two ways to go -- open our own satellite office, which would be very low scale and have very little involvement in the community." The other was to establish a "tech hub" by inviting other high-tech businesses along.

"We'll have over 100 people working out of the tech hub," Shikli said, once the facility is established. A location has not been selected, but a decision is expected very soon, he said.

But a business doesn't have to be high-tech to relocate to Humboldt County.

Kent and Sally Gurley moved to Arcata from Boulder, Colo., earlier this year because Boulder had become too urban and too expensive. They brought their dye and fabric manufacturing business with them.

"Boulder has become a lot like San Francisco -- very high-tech, housing is expensive, commercial-lease space is expensive. It's not very attractive for a manufacturing operation," said Kent. So they began to look for an alternative home for their new dye manufacturing plant and found Humboldt County "fit our lifestyle parameters."

What are those parameters?

"A university, beaches, mountains and the ocean," Sally said.

The mental environment was also important to the Gurleys. Their company, Indigo Troupe, produces non-toxic, environmentally sound dyes and fabrics and hand-woven rugs. They wanted to locate where their values would be appreciated.

"Arcata seems to be a very environmentally conscious community, which is important to us," Sally said.

"It was clear that the only kind of growth the community was interested in supporting right now was environmentally conscious industry. There is a certain mutual respect there between the company and the community," Kent said.

The new group of Humboldt entrepreneurs faces one critical problem: There is an inherent tension between starting new businesses and maintaining quality of existing life. Businesses move here because of the open land, lack of traffic and the small town feel. But each additional enterprise takes Humboldt a step away from the rural heritage entrepreneurs are attracted by.

"We have to find a really balanced approach," said Jim Kimbrell, executive director of the Arcata Economic Development Corp. Kimbrell said one strategy is to "only grow in those areas of our economy that will be compatible with the existing quality of life."

But Kimbrell also said some change is inevitable as the rest of the state gets crowded.

"We have to accept that the growth in California's population will impact us. Maybe it won't be as much as in other parts of the state, but we cannot expect we're not going to be affected."

The Gurleys serve as a reminder of the dangers of overdevelopment. Boulder, they say, became a bad environment for business because it grew to the point where it was too expensive and crowded. When they look at Arcata, Kent said, "It looks a lot like Boulder 10 years ago."

 


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