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State to spend $200 million on drug-making facility in Dunkirk for Buffalo biotech firm

The state plans to spend $200 million to build a high-tech drug-manufacturing center in Dunkirk for a Buffalo biotech firm that would create hundreds of jobs, The Buffalo News has learned.

The money is included in Gov. Andrew M. Cuomo’s state budget proposal and is dedicated to Athenex, a specialty cancer-drug startup headquartered on the Buffalo Niagara Medical Campus that would invest hundreds of millions of dollars of its own money in the Dunkirk facility.

The budget line item says only that the money would go toward a project in Chautauqua County led by SUNY Polytechnic, one of the agencies that administers the governor’s Buffalo Billion economic-development initiative. But two sources confirmed the Athenex connection to The News.

The governor’s office and Athenex officials declined comment Friday.

Local elected officials said they know little about the Chautauqua County project but they welcomed a major economic-development proposal of this size in a county hit hard by plant closings at ConAgra and by the mothballing of NRG’s Dunkirk plant.

“I’m aware that the line item is in the budget and, if it is indeed for this project, it would be a game-changer for the entire region,” State Sen. Catharine Young, R-Olean, said Friday.

Athenex began as Kinex Pharmaceuticals, with one promising possible cancer treatment. Local industry leaders have long pointed to the company as a potential biotech powerhouse for the region.

After raising small amounts of money from local investors, the company began to pursue an ambitious, international expansion strategy, fueled by tens of millions of dollars raised from investors in Asia.

The company acquired or made licensing agreements with several small pharmaceutical companies, giving it access to market-ready drug ingredients and drug candidates, and it now has more than 325 employees in Buffalo, Newstead, N.J., Texas, Hong Kong, Taiwan and China.

Athenex in October announced plans to construct two drug manufacturing and distribution plants in China’s Chongqing province. The Chinese government’s capital investment in that project is likely to total $200 million and Athenex will spend $75 million on equipment. Work on the plants should begin early this year.

Athenex traces its roots to cancer research conducted by a longtime University at Buffalo chemistry professor, and the company has been based for much of its existence in the Hauptman-Woodward Medical Research Institute on the medical campus.

Last summer, The News reported that the state and Athenex, then still known as Kinex, had reached agreement on a deal to move its headquarters and some laboratory space to the Conventus building on the medical campus. The state paid to build out the sixth floor and a portion of the first floor of the Conventus building, for use by Athenex, which now has about 45 workers in the facility, Flint Besecker, the company’s chief operating officer, said last month.

Officials from Athenex and New York have been working out the final details of a much larger project, also paid for out of the Buffalo Billion program, for a drug manufacturing facility in the area, which two sources confirmed is slated for Dunkirk.

The News has learned that hundreds of jobs, and as many as 1,000, would be created at all of Athenex’s facilities – in Dunkirk, Conventus and elsewhere in Western New York – over five years, and that Athenex’s investment would reach hundreds of millions of dollars over that period. A third source, who spoke on condition of anonymity, declined comment beyond revealing the code name assigned by state officials to the project: “Little Big Apple.”

As is the case with the other Buffalo Billion projects, the state would build and own the facility through the agencies that administer the program. The company would move in and fill the facility with the workers it commits to hire within a set period of time.

The size of the facility, its address, the exact number of jobs created, the precise amount Athenex will spend as part of its commitment to the project and other details weren’t immediately available. However, Athenex says on its website that it is designing a 325,000-square- foot plant for the manufacture of injectable and oral cancer drugs to be built in this country.

The governor’s budget proposal still must be approved by the State Legislature, and the project is not yet a done deal.

A Buffalo Billion project of this size and scope likely will be announced by the governor in a visit to the region. That was the case with the $900 million SolarCity solar-panel factory in South Buffalo, the $250 million drug-discovery hub in Conventus that has Albany Molecular Research as its anchor tenant and the $55 million the state is spending on an information-technology hub for IBM.

Elected officials in Chautauqua County welcomed news of the $200 million pot of funding, even if they said the governor’s office had offered little information on how the money would be spent.

“That’s not unusual when the budget comes out,” said Assemblyman Andy Goodell, R-Chautauqua.

County Executive Vincent W. Horrigan said the county still is recovering from the closing of ConAgra plants in Dunkirk and Fredonia, which cost about 425 jobs, as well as the uncertain fate of NRG’s power plant in Dunkirk, among other economic blows.

“So any time we see the opportunity for a major investment, well, this would be a tremendous boost for Chautauqua County,” Horrigan said.

Young, the state senator, said she would like to see the Buffalo Billion program pay dividends outside Erie County.

“It would be great to expand into some of the rural counties that are struggling because they need growth and jobs, and it would be wonderful to bring that prosperity across all of Western New York,” she said.

News Albany Bureau Chief Tom Precious contributed to this report. email: swatson@buffnews.com