Cash-strapped company leaving N.C. after intensive S.C. recruitment effort

A small, cash-strapped biotechnology firm that is trying to bring a new asthma treatment to market is moving its headquarters to Charleston from Winston-Salem, N.C., capping an aggressive recruiting campaign by South Carolina officials.

Pilot Therapeutics Holdings Inc. is relocating its headquarters temporarily to Daniel Island while it seeks a permanent home in the area, sources told The Post and Courier. The company and Gov. Jim Hodges are set to announce the deal today in North Charleston.

The specialty pharmaceutical maker, which declined to comment, is expected to employ up to 100 administrative and research-and-development workers locally as it ramps up production. In addition, an agricultural processing plant that the company needs is likely to go to the Orangeburg area, sources familiar with the deal said.

In addition, Pilot would require 30,000 acres and as many as 400 farmers statewide to grow the special plant its uses to make its asthma medication and others.

Economic development officials in South Carolina induced the company to move by offering land for its processing plant, a $4 million equity investment and $3 million in grants, according to reports in The Winston-Salem (N.C.) Journal.

North Carolina officials countered with an $8.1 million offer, the Journal said, but apparently it was not enough to persuade Pilot to remain there.

South Carolina's decision to offer such a large incentive package on a development-stage company is raising some eyebrows, given the state's potential $331 million budget shortfall, sources familiar with the deal said privately this week.

Pilot is the second startup biotech firm that South Carolina has poached from another state this year, partly by offering property tax breaks, grants and other incentives. CropTech, a Virginia company that makes medical treatments from tobacco plants, broke ground on a $40 million headquarters in Berkeley County last week.

Pilot, which reported a $3.7 million net loss through the first half of the year, had been seeking an infusion of up to $10 million to stave off a severe cash crunch. In an Aug. 14 filing with the U.S. Securities and Exchange Commission, the company said it needed to secure fresh financing to continue operating beyond September 2002.

"We are aggressively pursuing possible sources of capital, including possible equity private placements, debt offerings and expanded strategic alliances or partnerships and public grants," the company said.

Pilot was spun off from Wake Forest University in 1998 and employs 14. One of its main financial backers is a venture capital group, Academy Venture Fund, that invests in North Carolina startups.

Pilot has said it hopes to bring its over-the-counter asthma treatment, Airozin, to market by early 2003. As many as 200 research and manufacturing jobs could follow the launch, according to reports.

The company has described Airozin as a oral "medical food product" that is designed to be taken once daily "as a dietary component of a patient's existing asthma treatment program."

South Carolina officials reportedly starting courting the biotech concern after Kings Inc., a British crop-management company, announced that it was looking to cut a deal with North Carolina farmers to supply the borage seed that Pilot needs to make Airozin. Pilot currently must transport borage, an edible annual plant with large oblong leaves and drooping blue flowers, from growers in North Dakota, the United Kingdom, Canada, South America and New Zealand.

The company recently announced that agricultural tests in North Carolina "provide evidence that the specialty crops Pilot requires for its products can be grown throughout all regions of the Southeast." In addition to Airozin, Pilot is in various stages of developing treatments for conditions that can lead to acne, arthritis, cancer, diabetes, heart attacks and strokes.