Headlines of the Week

Cytovance to expand with $22.5M investment
By Brianna Bailey
Journal Record

OKLAHOMA CITY – Local biotech company Cytovance Biologics plans to expand with the help of a $22.5 million investment from a Connecticut private equity firm.

The investment from Greenwich, Conn.-based Great Point Partners LLC will allow the company to keep pace with a growing demand for its clinical trial and pharmaceuticals manufacturing services.

Cytovance specializes in producing therapeutic proteins and monoclonal antibodies from cell cultures. The company manufactures biologic products for biotechnology and pharmaceutical companies.

Cytovance will use the funding to expand its research and manufacturing operations at Oklahoma City’s Presbyterian Health Foundation Research Park. Cytovance will move from its home at 840 Research Pkwy. to the former home of fellow biotech firm Genzyme. Genzyme closed the doors of its Oklahoma City offices in the PHF research park late last year and laid off 26 employees.

As part of a separate transaction, Cytovance has acquired Genzyme’s analytical and bioprocess equipment to outfit its newly expanded operations.

Great Point Managing Directors Dr. Jeffrey R. Jay and David Kroin and Senior Vice President Noah F. Rhodes III will join Cytovance’s board of directors as part of their investment in the company.

“This transaction marks a transition of the company from angel investors to professional investors,” said Dr. William Canfield, Cytovance chairman.

Canfield successfully raised $9 million to bring Cytovance back from the brink of bankruptcy in 2005. The recapitalization was partially funded by Chesapeake Energy Corp. co-founders Aubrey McClendon and Tom Ward.

Canfield founded the company Novazyme, which Genzyme acquired in 2001. Novazyme gained acclaim for its groundbreaking research and treatment of the genetic disorder Pompe disease.

The Presbyterian Health Foundation also will become an equity investor in Cytovance as part of the transaction with Great Point Partners.

“Cytovance is a signature company and brings global prominence to the (Presbyterian Health Foundation Research Park) and Oklahoma City’s biotech industry,” said Carl Edwards, chairman of the Presbyterian Health Foundation, in a written statement. “We are grateful to the local investors who have supported the company to date and we welcome today’s news, which validates that our biotech industry is gaining the attention of respected professional investment firms as a viable place to invest.”

Oklahoma City among nation's top performing cities
BY LAURIE WINSLOW
Tulsa World

Oklahoma City remained among the 20 strongest-performing metropolitan areas based on data from the beginning of the recession through 2010, and the Tulsa metro did well also, according to a report released Monday by the Metropolitan Policy Program at the Brookings Institution.

The March MetroMonitor, which analyzed data through the fourth quarter, is the eighth in a series that tracks the recession and recovery in the nation's 100 largest metros. It looks at various indicators, including changes in employment, the unemployment rate, output and housing prices.

The latest report describes the nation's recovery since the recession began in December 2007 as “slow, uneven and inconsistent.” Technically, the recession ended in June 2009.

Boeing: Relocation from California on track
By April Wilkerson
Journal Record

OKLAHOMA CITY – The second floor of the Oklahoma City Boeing facility is being transformed to welcome the first of several hundred new positions being relocated to the state.

Since Boeing moved into its building at 59th Street and Air Depot Boulevard in 2007, the second floor has remained empty. Now, workers are putting the finishing touches on its 50,000 square feet to house about 225 of the 550 jobs moving from Long Beach, Calif., to Oklahoma City. Those jobs center on upgrades being made to the C-130 Hercules and the B-1 Lancer aircraft.

Jennifer Hogan, spokeswoman for Boeing, said the first program, the C-130 work, will begin transitioning to Oklahoma City next month. About 150 positions are expected to be added this year. All 550 jobs for both programs should be in place by the end of 2012. Relocation offers have been made to existing employees in Long Beach, but the company doesn’t yet know how many will accept and how many positions will be filled locally, she said.

When Boeing built its facility, it didn’t know about the new positions, but it felt like the second floor would be put to use before too long, Hogan said.

“We just knew that this is a low-cost services business here in Oklahoma City, and we were fairly certain that low-cost services were going to grow,” she said. “The Department of Defense budget is not growing, so we’re trying to accommodate that by offering low-cost services for maintenance and defense and government-type services.”

The addition of 550 new positions also means Boeing will have to expand its presence. Hogan said the facility’s second floor will hold about 225 people.

Additional space also will be necessary to hold the full mock-ups of the cockpits that are being upgraded. Until that extra space is determined, personnel will be working with smaller models.

“We’ll have to do something within the next 18 to 24 months,” she said. “Boeing is looking at all its options,” although nothing has been announced.

Boeing’s work on the C-130 aircraft involves turning its old analog cockpit into a digital display with flat-panel, full-color monitors. Boeing also is adding a “head-up display” – a clear piece of glass that folds down in front of the pilot’s face with pertinent data on it. That panel allows the pilot to focus more fully on flying without having to look down at his instruments, Hogan said.

The B-1, which marked its 25th anniversary last year, continues its evolution from nuclear bomber to conventional weapon. The Oklahoma City work will help the B-1 become more proficient in that transformation, Hogan said. Its upgrades include flat-panel displays and a new Link 16 data communication system in the aft cockpit, which will allow officers to receive target coordinates electronically. Previously, coordinates were relayed over the phone, then verified repeatedly to ensure accuracy, Hogan said.

“That takes time, and sometimes the targets would be gone by the time they actually know they’re correct,” she said. “The Link 16 system should save a lot of time and will be very accurate.”

The B-1 also is receiving a new computerized system that monitors everything on the plane and sends alerts if something goes wrong. The planes are equipped with a similar system now, Hogan said, but with the other upgrades it is receiving, an updated version is needed.

Boeing is expanding its work in other ways. Last year, it won an SE2020 contract with the Federal Aviation Administration. That large umbrella contract allows Boeing, along with a handful of other companies, to compete for small orders the FAA needs, Hogan said.

“We’ll be constantly bidding on those proposals the FAA puts out,” she said. “One of the largest FAA facilities is right here in Oklahoma City, and Boeing is starting to look for business there. Our core business for so long has been maintaining the airplanes out here or modifying them like we are on the C-130 and B-1. We also do a lot of sustainment to keep them flying. So branching out into a defense or government service like the FAA is a little different.”

Dave Lopez, secretary of Oklahoma’s Department of Commerce, said the new Boeing positions in Oklahoma are a perfect example of the supplier chain focus that the governor has underscored for the state’s economy.

“With Tinker, we have contractors like Boeing and the quality jobs they bring,” Lopez said. “So it’s not only the number of Boeing jobs that is impressive, but the quality of individuals who will fill them. The education levels and payroll make it a home run, or in this case, it’s closer to a grand slam.”

Some of Boeing’s new hires will be entry level, meaning graduates from Oklahoma’s accredited engineering universities will be considered. Lopez said it’s important for the Commerce Department to continue working with higher and common education to bolster the state’s engineering work force pipeline.

“That will be critical,” Lopez said, “because it will be how we can have another arrow in our quiver when we ask companies that are here to expand or when we go out to recruit.”

Gradual recovery continues in Oklahoma, tax revenue report shows
BY MICHAEL MCNUTT
Oklahoman

State tax revenue continues to outpace expectations and the amount taken in the previous year, but still pales compared with three years ago before effects of the national recession were felt in Oklahoma, according to figures released Monday.

Sales tax revenue for February is up 10.9 percent compared with the same time period a year ago, and it's nearly 5 percent above the official estimate, according to figures released by the state finance office.

“We had double-digit growth again in sales tax receipts, compared with February a year ago, and it came when sales tax collections of other states trailed off,” state Finance Director Preston Doerflinger said.

Monthly state revenue collections have topped previous-year collections for 11 of the past 12 months.

Income tax collections were expected to dip in February, but Doerflinger said personal income tax collections rose by 141 percent in February compared with the previous year. Collections of personal and corporate income taxes brought in $27.7 million, or $16.2 million more than the same month a year ago.

“These numbers should be kept in context, understanding income tax collections are still 32 percent below collections in February of 2008 before the recession,” Doerflinger said.

“They do, however, indicate that we are experiencing a gradual recovery. The figures emphasize the importance of job creation to continued economic growth.”

‘A positive trend'
A report released last week by the Oklahoma Employment Security Commission showed the state's unemployment rate fell to 6.6 percent in January, down from 6.8 percent the previous month.

Oklahoma's unemployment rate peaked at 7.3 percent during the recession.
Doerflinger said high oil prices continue to bring in money for the state's general fund, but the lag in natural gas prices is bringing down total gross production tax receipts.

The general fund, the principal funding source for state government, receives a larger percentage of natural gas taxes than oil taxes.

Collections of gross production taxes on oil produced $31.7 million, or 26.9 percent more than the same month last year; February gross production taxes on natural gas totaled $20.8 million, or 30.7 percent below last year.

“The best thing we can do in government is to be good stewards of taxpayers' money and make sure we do all we can to enact policies that grow our economy,” Gov. Mary Fallin said.

“It's great news that our state is slowly recovering from this recession, but we need to do everything we can to speed up our recovery by continuing to promote growth in Oklahoma.”

The report showed collections for the general fund were $247.1 million in February.

That was $25.7 million, or 11.6 percent above the same month last year, and $8.7 million, or 3.6 percent, above the estimate for the month.

“With yet another month of growth in general revenue collections over the prior year, we are seeing the continuation of a positive trend for Oklahoma's economy,” state Treasurer Ken Miller said.

Boeing starts new $40 million building in Oklahoma City
BY RICHARD MIZE
Oklahoman

Boeing Co. has started building a new place to land in Oklahoma City.

The company said Friday that it had started construction on a second office building at its location near SE 59 and Air Depot. Gardner-Tanenbaum Group is developing the six-story, 320,000-square-foot building, expected to cost nearly $40 million, as a build-to-suit project for Boeing, which will lease the space.

The new building, to open in the second quarter of 2012, is needed to house Boeing's Oklahoma City work force due to company growth and relocations, the company said. Boeing is bringing several hundred mostly high-paying jobs here.

Boeing announced plans last August to move its B-1 program and C-130 Avionics Modernization Program here from Long Beach, Calif. In addition, Boeing said a $1.7 billion Federal Aviation Administration research-and-development contract it was awarded early last year is being managed out of Oklahoma City.

“By moving B-1 and (the) C-130 (program) to Oklahoma City, we are able to lower our operating costs and extend an increased value to our customer,” said Mark Bass, Boeing vice president and general manager of maintenance, modifications and upgrades. “Boeing appreciates the positive business environment created by the state of Oklahoma and its county and city governments. This environment contributes to our affordability, and the well-trained aerospace work force already in place will be key to our success.”

Developer Richard Tanenbaum, who developed Boeing's existing facility here, declined to give details about Boeing's lease.

“It's a good lease. It's a very good lease. The lease terms are very favorable to a developer in these ... times,” he said.