Sinapis Pharma, one of the first companies selected to take part in the Start-Up NY tax-incentive program, will set up its headquarters in Atlanta instead of Buffalo if the startup can’t raise enough money here, a top official said this week.
The drug-development company, which is studying a novel treatment for traumatic brain injuries, was drawn to the area by the chance to work with top physicians and researchers at the University at Buffalo and related institutions.
Sinapis Pharma officials say they remain bullish on Buffalo and they still are opening a small lab on the Buffalo Niagara Medical Campus.
But the region could lose the Sinapis Pharma headquarters – and with it the opportunity for further growth if the startup’s technology is a success – unless the company raises $2 million in funding in the next few months to replace a prior deal with local investors that fell through, said Howard “Nick” Chandler, the startup’s chairman.
“We still haven’t closed the door on Buffalo, but we have a short period of time to raise a substantial amount of money in Buffalo,” Chandler said.
The uncertainty over Sinapis Pharma highlights the precarious position of the startup companies on which the region has pinned high hopes for an economic revival.
Business-development and incentive programs such as the Buffalo Billion and Start-Up NY are meant to leverage medical and biotech research into commercial products, drug treatments and the jobs they bring.
Start-Up NY, for example, eliminates sales taxes and property, business and corporate taxes – for up to a decade – for companies that open on or near participating colleges and universities.
UB has been one of the most active schools in the Start-Up NY program in the state, with 20 companies, including Sinapis, agreeing to expand in or relocate to one of the university’s tech incubators, life-sciences research centers or other space.
One company selected for UB’s Start-Up NY program, IFYE Association of the USA, a Colorado-based nonprofit company that operates an international exchange program for young adults, already has withdrawn from the program, according to the university.
And Sinapis’ plans could change, too, though Chandler said the company remains interested in Buffalo.
The company grew out of research conducted at the University of Montana that found methamphetamine, administered in low doses, shows promise in treating traumatic brain injury, or TBI, as well as stroke and TBI-induced epilepsy.
The startup has a handful of employees scattered around the country, including in Montana, Florida and Albany, and jumped at the chance to work with UB neuroscientists and to take part in Start-Up NY.
Sinapis considered several sites on the Medical Campus for its lab space before selecting UB’s Biosciences Incubator, in the same building as Kaleida Health’s Gates Vascular Institute and UB’s Clinical and Translational Research Center.
David Poulsen, Sinapis’ chief scientific officer, is moving to Buffalo after Jan. 1 and planning to hire several lab technicians to support his research. But it’s the company headquarters that is up in the air.
Chandler said the company’s move to Buffalo hinged on winning sufficient local venture-capital support, and he found a syndicate of investors willing to put $3.5 million into Sinapis.
However, two months ago, on the day the deal was closing, Chandler said the investors requested new terms that set a lower value for Sinapis, increased the value of the investors’ stake and give them majority control.
Chandler, who would not name the investment group, said he balked at the terms and was forced to find new financing. A group of investors in Atlanta agreed to invest $2 million, with the promise of another $1.5 million if needed, on Chandler’s preferred terms.
The Atlanta investors are willing, however, to let Sinapis open its headquarters in Buffalo. And Chandler is keeping that option open, he said, as long as he can find local investors willing to put up another $2 million.
The headquarters initially would host just a handful of management and operations workers, but future company growth would happen at the headquarters, not in the lab. Chandler, who already has moved to Atlanta, said he wants to make a decision by March.
He said the experience with his would-be Buffalo investors hasn’t soured him on the area and he praised UB’s efforts throughout the process.
A UB official said startups often make changes when they are getting started.
“It’s not unusual for startups to consider options when planning a move. Through Sinapis’ interaction with Start-Up NY, they were introduced to the many resources at UB and in the area, and the company is planning, at the least, to bring its chief science officer to Buffalo,” Karen M. Utz, director of program administration for UB’s Office of Economic Development, said in an email.
Officials with Empire State Development, which coordinates Start-Up NY, did not respond to a request to comment.