Pearce Gilbert knew there was something to the complicated research project that crossed his desk on technology that could convert peptides into drugs to treat such conditions as pain and schizophrenia.

Working at the Medical University of South Carolina's Foundation for Research Development six years ago, Gilbert was keeping a close watch for developments that could be patented and spun off into startup biotech businesses. He took MUSC researcher Tom Dix to lunch to discuss his proposal about the peptide drug business.

"I raised the subject with him and he was interested and we wrote a business plan," he remembered. "We submitted some grant applications to bootstrap the company, and looked for a CEO. At one point we found one (but) that didn't really work out."

Bad timing contributed to the brief, nine-month tenure of the CEO whom Dix and Gilbert had hired. A few months after he came on board, the Sept. 11 disaster took place, the economy tanked and venture capital dried up for highly speculative business ventures like theirs. With no money coming in, the CEO left for another job.

The early struggles of the researcher and aspiring businessman tell a story of the biotech industry in South Carolina just a few years ago: There wasn't one. Dix and Gilbert are among a handful of pioneers working to develop a small biotech cluster in the Charleston region.

"We could have thrown up our arms and said, 'This will not work,' " said Gilbert, who left MUSC to run the peptide-drug company himself, though he had no idea his transition to the private sector would so abruptly catapult him to the top. Shortly after their CEO left, some grant money trickled in, and he had no choice but to name himself chief executive. "Suddenly we had a company and it needed somebody to run it. And we decided to make a go of it and I left the medical university to run this company and that's how it came to be."

Rooted in Dix's research, Argolyn Bioscience in North Charleston has two drug candidates advancing toward human clinical trials, a key step to securing approval from the Food and Drug Administration, and earlier this year secured a financial coup: $15.8 million in private equity. "I give our Legislature very high marks for listening to us and taking steps to make South Carolina a more biotech-friendly environment. That being said, we were kind of out in front and didn't get much benefit from the things that have come along behind us," he said.

Those state investments include creation of SC Launch!, an arm of the South Carolina Research Authority, that provides seed money for knowledge-based startups, as well as the private-public partnership that created The South Carolina Biotechnology Incubation Program-or SC Bio-to move the products of academic research from the "bench top to the bedside," or from the lab to the marketplace. Just this year, South Carolina rolled out a venture capital program that will make investments in promising startups, though it's not limited to the biotech field, and comes online behind dozens of other programs already offered by states across the country.

Yet that investment is still not enough, said Grant Brewer, a technology development consultant with SC Bio, noting the vast sums of money required to jumpstart biotech businesses-some $1 billion in investments-and the related risk. "Everybody wants a piece of the biotech pie," he said. "It's growing here, but our state invests in it at an embarrassingly low rate compared to those around us. Neighboring states have incubators and wet labs that the government at the state level allocates money for laboratories to use at a low cost to get off the ground," he said.

"You can have all the elements and ingredients of a great biotech company, but if you don't have the assets to get you off the ground, you're stuck," he said.

Ryan Fiorini, a licensing and technology analyst for MUSC, noted another important reason for growing the biotech industry here. "MUSC is really the hub of the life sciences in the state and we have these students, we're graduating between 20 and 30 Ph.D. students a year, and most have to go elsewhere because there (are) not enough jobs for them. It's a necessity to leave (for someplace) where there's a biotech cluster."

Historically, universities have focused almost exclusively on academic studies, Fironi said, but MUSC and other state colleges and universities are working to act as regional economic engines. Along with organizations such as the Charleston Regional Development Alliance, Fironi said, MUSC is helping to lure biotech firms to South Carolina.

Generating the research isn't the problem, he said, it's capturing it locally. "There's so much coming out of MUSC we can't keep up," he said. MUSC research has led to the creation of eight companies thus far, including Micrus Endovascular, a medical device company that went public in 2005 and is currently traded at $22.50 a share. It is headquartered in San Jose, Calif.

The other businesses are banking on discoveries that could increase the validity of lie-detector tests, turn bacteria into energy and help cancer patients overcome the common resistance to chemo and radiation therapy.

Dix, who remains a pharmaceutical researcher at MUSC though he is a joint partner in Argolyn, said he thinks South Carolina is in a much better position to help new companies than it was when he got started. Now, he said, it's a matter of getting the word out about available programs and getting people to apply.

"We're maturing to a place where we're becoming a better and better research institution and one of the benefits of that is spinning off companies."