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Sunday, April 7, 2002 - Page updated at 12:00 AM

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Cash infusion fuels expansion of biodefense industry

Seattle Times business reporter

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Few people had heard of MesoSystems Technology before the anthrax scares in the fall.

Not anymore.

The company is expecting to increase its sales tenfold, triple the number of employees, and go public this year.

MesoSystems can grow that fast because it is in the business of bioterrorism defense, where thousands of entrepreneurs think there is money to be made. Plenty is available: Billions from the U.S. government and investors are being aimed at technologies that include vaccines and biological detectors.

The cash infusion is turning an obscure industry driven by post-Gulf War military threats into something broader and more competitive. One government group that handles bioterrorism purchasing solicited technical ideas in January and got 8,000 responses. Fewer than one in 10 were asked to provide details. Even fewer will come close to succeeding, biodefense-industry veterans say.

Most customers want a detector that can accurately and instantly identify biological-warfare agents as reliably as a smoke detector — something that doesn't exist because it's so difficult to make, industry experts say.

"There are a lot of people trying to get in this business and make some money," said Patricia Irving, chief executive of biodefense company InnovaTek. "(But) we still don't have technology for real-time, definitive analysis. It's not there, and if you lead people to believe it, you're giving them a false sense of security."

Several small companies — such as MesoSystems and InnovaTek, both of the Tri-Cities — will brainstorm with health officials this week at the Biodefense Mobilization Conference in Seattle.

Any serious answer to the bioterrorist threat could generate significant money. Pharmaceutical companies Acambis and Baxter International landed the $428 million federal contract to make more smallpox vaccine in November. MesoSystems, which sells air samplers and detectors to fire departments and government agencies, says the sampler market is worth $1 billion to $2 billion.

More ideas could be fueled by President Bush's proposed 2003 budget, which calls for $5.9 billion for biodefense, four times this year's amount. A significant chunk, $2.4 billion, is being divvied up between the National Institutes of Health, Department of Defense and the Environmental Protection Agency, which will dole out much of it in grants.

The object is to get a better scientific understanding of biological agents, to better detect and identify them and to decontaminate areas.

Some small biodefense companies are skeptical about the newfound business activity. Research International of Woodinville, a private company with 25 employees, has been in the biodefense business since 1995. It has developed a device for the military that takes air samples to detect biological pathogens.

Chief Executive Elric Saaski said his company has turned down venture capital because he wants to maintain control.

Saaski said some of the brightest ideas being floated are at least five years from becoming viable products — if they ever do.

"There's always an initial flurry of excitement that starts an industry," Saaski said. "But five years down the road, there won't be many survivors."

Luke Timmerman can be reached at 206-515-5644 or ltimmerman@seattletimes.com.

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