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E M B A R K I N G O N O U R T H I R D D E C A D E O F B I O T E C H N O L O G Y D E V E L O P M E N T A C R O S S N O R T H C A R O L I N A

F ISCAL Y EAR 2004–2005 M ARKED THE BEGINNING of the North Carolina Biotechnology Center’s third decade of supporting biotechnology re-search, education, business and job creation. If the first year is any indi-

cation, this decade promises to be just as busy and productive as the prior two and equally exciting.

While the biotechnology landscape in our state and around the globe has changed dramatically since 984, the Biotechnology Center’s modus operandi has not. Part-nership, innovation and calculated risk-taking continue to drive our activities. In 984, there were few biotechnology companies anywhere, and no state other than North Carolina had identified and committed to biotechnology as a potential source of future jobs and economic transformation. Without other models to turn to, the Biotechnology Center relied on imagination and ingenuity to invent programs that would stimulate biotechnology research, intellectual property creation, business for-mation, and workforce training.

Today some 4,400 biotechnology companies worldwide employ 84,000 people and gen-erate $55 billion in annual revenue. North Carolina has become an internationally rec-ognized leader in biotechnology with more companies operating here than in any other state besides California and Massachusetts. Those companies are growing, and new ones are emerging from our universities and industry faster than in other states.

Despite our enviable position in the global contest for biotechnology companies and jobs, North Carolina cannot slow down or rest easy. The stakes are too high and the competition too fierce. As the state’s main catalyzing agency for biotechnology develop-ment, the Biotechnology Center must continue to lead the way among our many public- and private-sector partners in thinking about new ways to stimulate economic and com-munity development through biotechnology.

Fortunately, we have a strategic plan in place to guide our efforts: New Jobs Across North Carolina: A Strategic Plan for Growing the Economy Statewide through Biotechnology. We must stay focused on implementing the key recommendations in this plan, espe-cially its three immediate priorities: developing biotechnology statewide; targeting the recruitment and expansion of biomanufacturing companies; and attracting and creat-ing companies.

D E V E L O P I N G B I O T E C H N O L O G Y S T A T E W I D E

N O PROJECT EPITOMIZES OUR VALUES of partnership, innovation and calculated risk-taking or supports the strategic plan mandate of statewide expansion more than the Biotechnology Center’s Project to Strengthen

Biotechnology Across North Carolina. This project was initiated three years ago to en-sure that the benefits of biotechnology extend to all regions of our geographically and economically diverse state. Each region has unique niche opportunities and resources for biotechnology development.

At the heart of our statewide efforts are small regional offices of the Biotechnology Cen-ter, each staffed with a full-time director and assistant. The first two offices, located in

Message from the President and Chairman

As the state’s main catalyzing agency for biotechnology development, the Biotechnology Center must continue to lead the way among our many public- and private-sector partners in thinking about new ways to stimulate economic and community development through biotechnology.

TIM MINSALEX A NDRE

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Winston-Salem to serve the Piedmont Triad and in Asheville to serve Western North Carolina, opened in 2003 and 2004 respectively. Each office is supported by a regional advisory committee composed of about two dozen business, academic, government and economic development leaders who generously give their time and talents to help de-velop biotechnology in their communities.

While our regional focus is relatively new, tangible progress has been made. For exam-ple, we established a Regional Development Grant Program to fund strategic planning, marketing, infrastructure-building and other activities fostering regional biotechnol-ogy development. In 2005 four awards totaling $6,250 were made through this new program, including, for example, a $75,000 grant to the North Carolina Arboretum to accelerate development of the natural products industry in Western North Carolina — a logical pursuit for this region due to its great diversity of native plants.

With our Western North Carolina and Piedmont Triad offices up and running, in 2005 we turned our attention to Eastern North Carolina. What we soon learned is that the potential applications of biotechnology in the East are extensive, ranging from human and animal health to agriculture, forestry and marine sciences, and that the geography is too vast to be reasonably served by a single office. Working with leaders throughout the East and carefully assessing available infrastructure and resources, we determined that the best strategy for this region would be to open two offices, one in Greenville to serve the East and another in Wilmington to serve the Southeast. And that is just what we did only weeks before sending this annual report to press.

With well-attended celebrations in both cities, in early fall we grew from two regional offices to four. Our ability to do so was made possible by incredible generosity and pub-lic spirit of university, industrial, economic development and government partners in the East and Southeast. As was true when we established our offices in the Triad and the West, the commitment made by leaders in these communities goes far beyond the re-quired financial support and gives us confidence that together we can accomplish great outcomes. We hope to open a fifth and final office in Greater Charlotte in 2006.

T A R G E T I N G B I O M A N U F A C T U R I N G

I N ADDITION TO DEV ELOPING BIOTECHNOLOGY STATEWIDE, target-ing biomanufacturing is an immediate priority of our strategic plan, New Jobs Across North Carolina. Attracting and retaining biomanufacturing facilities is

strongly dependent on having a highly trained work force to keep these complex plants running efficiently.

This year, Biotechnology Center staff served with our partners in education and in-dustry on key oversight and implementation committees for the Biomanufacturing and Pharmaceutical Training Consortium (BPTC). This unique consortium, funded by Golden LEAF, will prepare new employees at all levels for the biomanufacturing indus-try. To support new curriculum development in BPTC institutions, Biotechnology Cen-ter employees wrote and produced The Model Employee: Preparation for Careers in the Biopharmaceutical Industry. This guide articulates very clearly the qualifications and qualities of the ideal employee for the most common jobs found in biomanufacturing facilities.

Progress was made on all aspects of the BPTC in 2005. The Biotechnology Center par-ticipated in opening ceremonies for a number of the training centers that comprise the

While our regional focus is relatively new, tangible progress has been made. For example, we established a Regional Development Grant Program to fund strategic planning, marketing, infrastructure-building and other activities fostering regional biotechnology development.

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North Carolina Community College System’s BioNetwork and celebrated groundbreak-ings for the Biomanufacturing Training and Education Center at North Carolina State University and the Biomanufacturing Research Institute and Technology Enterprise at North Carolina Central University. When fully operational early in 2007, the BPTC will train thousands of workers every year to staff our growing life science companies.

A T T R A C T I N G A N D C R E A T I N G C O M P A N I E S

G IV EN NORTH CAROLINA’S COM MITMENT TO TR AINING biotechnol-ogy workers from entry-level technicians to post-doctoral scientists, it’s not surprising that our state is rated No. in workforce quality and human capital

by organizations that rank biotechnology clusters along various dimensions. That fact, combined with our low cost of doing life science business, favorable regulatory environ-ment and high quality of life, makes North Carolina a very attractive choice for life sci-ence companies seeking sites for expansion or location.

Ensuring that North Carolina’s value proposition is known and appreciated by life sci-ence companies whose products and stage of development make them good candidates for location here is a high priority for both the Biotechnology Center and our main eco-nomic development partner, the North Carolina Department of Commerce. Together we are implementing what we call the Retention, Expansion and Attraction Plan, or REAP.

We created REAP to refine and strengthen the strategic recommendations for compa-ny recruitment from the statewide strategic plan. The plan seeks to leverage the unique skills and core competencies of the Biotechnology Center, the Department of Commerce and our many other economic development partners across the state in ways that opti-mize our chance of success with future prospects. The implementation of REAP has just begun with visits to targeted companies around the globe.

While attracting companies to North Carolina is a high priority of our strategic plan, so is creating and growing companies from within the state. In 2005 we supported seven start-up companies with $700,000 in loans for product research and business-develop-ment activities. We also provided advice, referrals and networking opportunities to doz-ens of other young companies.

M O V I N G F O R W A R D

W E ARE FORTU NATE TO DO BUSINESS IN A STATE that is enthu-siastic about biotechnology and committed to investing in its develop-ment. We are very thankful for the consistent support we receive from the

Governor, Lt. Governor, General Assembly, and other elected and appointed officials.

With the continued support of our many partners, talented staff and dedicated Board, we are well positioned to continue implementing our statewide strategic plan for bio-technology development throughout the state. We have a great opportunity to improve the state’s economy and quality of life, and we’re prepared to seize it.

Ensuring that North Carolina’s value proposition is known and appreciated by life science companies whose products and stage of development make them good candidates for location here is a high priority for both the Biotechnology Center and our main economic development partner, the North Carolina Department of Commerce. Together we are implementing what we call the Retention, Expansion and Attraction Plan, or REAP.

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B IOTECHNOLOGY MOV ES FROM THE LABOR ATORY to the marketplace and creates jobs only with strong contributions from universities, businesses and educational institutions. The North Carolina

Biotechnology Center strengthens the biotechnology capabilities of these entities statewide through three core programs and related services. Following are activities and accomplishments of those programs and services in 2005.

S C I E N C E A N D T E C H N O L O G Y D E V E L O P M E N T

T HE SCIENCE A ND TECHNOLOGY DEV ELOPMENT PROGR A M stimulates biotechnology research at North Carolina’s universities and institutions through grants and intellectual-exchange

programs. In 2005 the Program:

Awarded 4 grants totaling $2.06 million to help eight North Carolina universities acquire multi-user research facilities and equipment. These awards, made through the Institutional Development Grants Program, are listed on pages 2 and 3.

Awarded $500,000 to support two research collaborations involving multiple investigators. These awards, provided by the Multi-Disciplinary Research Grants Program, are listed on page 3.

Awarded $330,000 to support five research collaborations between universities and biotechnology-related companies. These awards, provided by the Collaborative Funding Assistance Grant Program and cosponsored by the Kenan Institute for Engineering, Technology and Science, are listed on page 3.

Awarded $300,000 to two universities for the recruitment of outstanding faculty members. These awards, provided by the Faculty Recruitment Grants Program, are listed on page 3.

Supported five intellectual-exchange organizations working in key areas of biotechnology: the North Carolina Plant Molecular Biology Consortium, the RNA Society of North Carolina, the Triangle Virology Association, the Smaller Eukaryotes Group, and the Bioprocessing and Process Development Group.

B U S I N E S S A N D T E C H N O L O G Y D E V E L O P M E N T

T HE BUSINESS A ND TECHNOLOGY DEV ELOPMENT PROGR A M helps biotechnology companies with financing, technology assessment, technology transfer, business plans, networking opportunities, venture capital

placements, marketing strategies, strategic partnerships, site locations and professional referrals. In 2005 the Program:

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T I M E L I N E O F E V E N T S , 2 0 0 4 – 0 5

July 04

In a visit to the Biotechnology Center, vice presidential candidate John Edwards calls for stronger government support of research and innovation, including grants and tax credits for companies and greater funding for the National Institutes of Health.

August 04

Four North Carolina bioscience companies raise $30 million in venture capital over the summer.

September 04

Biolex opens a new clinical biomanufacturing facility in Pittsboro

Activities and Accomplishments

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Provided loans totaling $598,473 to four young biotechnology companies for product research and development. These awards, provided through the Small Business Research Award Program, are listed on pages 3 and 4.

Provided a $75,000 loan to help a company carry out its research between funding phases of the federal Small Business Innovation Research program. The award, provided by the SBIR Bridge Fund Program, is listed on page 4.

Awarded loans totaling $30,000 to help two young biotechnology companies with their business-development activities. These loans, provided through the Business Development Award Program, are listed on page 4.

Supported several conferences, symposia and workshops on the sciences underlying biotechnology. These awards, made through the Biotechnology Event Sponsorships Program, are listed on pages 5-7.

Cosponsored Biotech 2005 with the Council for Entrepreneurial Development. This annual meeting of the state’s biotechnology community attracted about 900 people for a day of networking, exhibits and presentations.

Cosponsored the Biotechnology Forum with the Council for Entrepreneurial Development. The Forum is a monthly gathering of biotechnology executives who network and hear panel discussions on business and technology topics.

Provided dozens of biotechnology companies and entrepreneurs with professional referrals, technical and business advice, relocation assistance, technology transfer expertise and other assistance.

Partnered with the North Carolina Department of Commerce and other economic development organizations in life science company recruitment and expansion efforts.

E D U C A T I O N A N D T R A I N I N G

T HE EDUCATION A ND TR AINING PROGR A M promotes workforce preparedness and public understanding of biotechnology through teacher training, teaching materials,

grants programs, needs assessments and other activities at all educational levels throughout North Carolina. In 2005 the Program:

Awarded nine grants totaling $30,072 to strengthen biotechnology education and training programs. These awards, made through the Education Enhancement Grants Program, are listed on page 4.

Awarded six grants totaling $26,089 to develop and incorporate

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October 04

North Carolina receives a $1 million incentive grant from the U.S. Department of Labor to train workers in biotechnology.

Merck & Co. breaks ground in Durham County for a $300 million vaccine-manufacturing plant that will employ up to 200 people.

The Biotechnology Center celebrates its 20-year anniversary with a privately sponsored pig-picking and hoedown attended by about 400 supporters and constituents.

Merck groundbreaking

Squaredancing at the 20th Anniversary Celebration

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biotechnology curricular materials in grades K-2. These awards, made through the Biotechnology Education Mini-Grants Program, are listed on page 5.

Made four awards totaling $20,000 to community colleges to help cover their expenses in teaching open-enrollment BioWork courses. BioWork is an introductory course developed by the Biotechnology Center in cooperation with the community colleges that prepares students for entry-level process technician positions in the bioprocess, pharmaceutical and chemical manufacturing industries. These awards, made through the BioWork Award Program, are listed on page 5.

Sponsored four summer workshops throughout the state that prepared about 75 middle school, high school and college teachers to teach about the science, applications and issues of biotechnology.

Wrote and published The Model Employee: Preparation for Careers in the Biopharmaceutical Industry, a guide articulating the qualifications and qualities of the ideal employee for the most common jobs found in biomanufacturing facilities.

C H A R L E S H A M N E R C O N F E R E N C E C E N T E R

T HE BIOTECHNOLOGY CENTER’S 9,000-SQUARE-foot Charles Hamner Conference Center is a bustling hub for meetings on the science, business and issues of

biotechnology. It also serves clients from outside the biotechnology community. In 2005 the facility provided space, catered meals, and audiovisual support for 30,49 guests at ,34 meetings.

L I B R A R Y A N D I N F O R M A T I O N S E R V I C E S

T HE BIOTECHNOLOGY CENTER’S FULL-SERVICE LIBR ARY and information services unit provides staff and the public with information on all facets of commercial biotechnology. In 2005 the library answered

630 reference/research questions about the biotechnology industry for staff and external clients, and served several hundred visitors. In addition, 74 bioscience-related videotapes were loaned to North Carolina public schools, and various books, articles and periodicals were loaned to other libraries.

C O R P O R A T E C O M M U N I C A T I O N S

T HE BIOTECHNOLOGY CENTER’S Corporate Communications staff informs the public about biotechnology and the Biotechnology Center’s role in developing it, and also promotes the advantages of doing biotechnology

research and business in the state.

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November 04

John Richert is named vice president of the Biotechnology Center’s Business and Technology Development Program.

The Biotechnology Center and the state Department of Commerce announce a joint Retention, Expansion and Attraction Plan (REAP) for industrial recruitment.

Nine bioscience companies from North Carolina present their funding needs at the SEBIO Investor’s Forum in Miami, Florida.

December 04

Gov. Mike Easley and former governors Jim Hunt and Jim Martin gather at the Biotechnology Center with other state leaders to call for further state investment in biotechnology and continued implementation of the state’s biotechnology strategic plan.

RICHERT

6Martin, Easley, and Leslie Alexandre

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In 2005 the staff:

Maintained three Web sites for the Biotechnology Center (www.ncbiotech.org), the Charles Hamner Conference Center (www.hamnercenter.org) and the N.C. Genomics and Bioinformatics Consortium (www.ncgbc.org), drawing tens of thousands of visitors.

Published the industry newsletter BT Catalyst, mailed to about 3,000 subscribers nationwide and also posted on the Biotechnology Center’s Web site.

Distributed a weekly Fast News e-mail digest of the state’s top biotechnology stories to nearly ,000 subscribers.

Collaborated with the North Carolina Department of Commerce to produce a 7-min-ute promotional video on biotechnology in North Carolina.

Provided information and commentary on biotechnology issues to dozens of local, state, national and international reporters and editors.

S P E C I A L I N I T I A T I V E S

I N ADDITION TO ITS ONGOING CORE PROGR A MS A ND SERVICES, the Biotechnology Center staff worked on several special initiatives in 2005. These included strengthening biotechnology statewide, implementing

workforce training programs for biomanufacturing, and recruiting industry — all high priorities of the state’s biotechnology strategic plan.

Strategic Plan

Governor Mike Easley in 2003 charged the Biotechnology Center with leading the development of a comprehensive strategic plan for creating high-paying jobs statewide through biotechnology. The plan, New Jobs Across North Carolina, was crafted by more than 20 leaders across the state and was delivered to the governor in January 2004. It includes 54 strategic recommendations for improving biotechnology research, business, education and workforce training, and identifies three immediate priorities: attracting biomanufacturing companies, encouraging company startups, and spreading the benefits of biotechnology to all parts of the state. The plan’s goal is for North Carolina to have 48,000 biotechnology-related jobs by 203 and 25,000 jobs by 2023. The report is available online at www.ncbiotech.org/strategicplan. Throughout the year, the Biotechnology Center worked with statewide partners to implement various components of the strategic plan. A presentation of the many accomplishments was made by President and CEO Leslie Alexandre at Biotech 2005 in May and also to the Board of Directors in June.

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Two new groups form to promote entrepreneurship and innovation: the North Carolina Innovation Foundation and the North Carolina Entrepreneurial Association.

Golden LEAF approves 13 grants totaling $1.1 million for curriculum development and equipment for BioNetwork, the Community College System’s initiative to train North Carolinians for high-skill biomanufacturing and related jobs.

Nine North Carolina bioscience companies raise $116 million in venture capital during the fall.

January 05

Six North Carolina biomanufacturing companies surpass $4.5 million in total contributions to the Biomanufacturing and Pharmaceutical Training Consortium’s workforce training efforts.

Architectural rendering of the BTEC facility at N.C. State University.

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Project to Strengthen Biotechnology Across North Carolina

Developing biotechnology statewide is a priority of New Jobs Across North Carolina: A Strategic Plan for Growing the Economy Statewide through Biotechnology.

The Biotechnology Center’s Project to Strengthen Biotechnology Across North Carolina works in various ways to strengthen biotechnology communities and capabilities statewide, including establishment of two-person regional offices, administration of advisory committees, and implementation of the Regional Development Grant Program. The first two regional offices were established in Winston-Salem in 2003 to serve the Piedmont Triad and in Asheville in 2004 to serve Western North Carolina. The Biotechnology Center dedicated two more offices in October 2005: the Eastern Office in Greenville and the Southeastern Office in Wilmington. These offices will link to the Biotechnology Center’s programs and resources and work with community leaders to develop biotechnology-based businesses, drawing on each region’s unique strengths, resources and capabilities. One more office is planned to serve Greater Charlotte in 2006.

February 05

Icagen, a Durham biopharmaceutical company, raises $40 million in an initial public offering of stock.

AdvantageWest, Buncombe County and AB Technical Community College collaborate to develop a wet lab incubator at AB Tech near Asheville for young life science companies.

March 05

Six North Carolina bioscience companies raise $47.8 million in venture capital in the winter.

April 05

Fifteen North Carolina bioscience companies present their funding needs to more than 250 investors at Venture 2005, the state’s 22nd annual venture capital conference, in Pinehurst.

May 05

More than 800 people attend Biotech 2005, the 14th annual statewide meeting of North Carolina’s life science industry, near Research Triangle Park.

Robeson Community College dedicates a new BioAg Center for workforce training in agricultural applications of biotechnology in Southeastern North Carolina.

Medical Schools

Universities

BioNetwork Centers

Key

Key Cities

Office Locations Pembroke

Chapel Hill

Elizabeth City

Cullowhee

Boone

Fayetteville

Durham

Charlotte

Rocky Mount

Greensboro

KannapolisBuies Creek

RaleighResearchTriangle Park

Winston-Salem

Wilmington

Asheville

Greenville

Dallas

Lumberton

Enka

Venture 2005 draws a crowd.

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The Project also administers regional advisory committees for the Piedmont Triad and Western North Carolina. Each advisory committee is composed of 20 to 25 people, representing institutions and vantage points key to biotechnology development throughout the Piedmont Triad and Western North Carolina. These committees work for shared activities, strategies, and regional niche capabilities.

Also in support of its statewide efforts, the Biotechnology Center established the Regional Development Grant program to assist economic development

initiatives in biotechnology across North Carolina. Typical projects funded include strategic planning, marketing, infrastructure building and other activities fostering regional and biotechnology collaborations. In 2005 four awards totaling $6,250 were made through this new program. They are listed on page 7.

Workforce Training in Biomanufacturing

North Carolina’s biotechnology industry has matured from a research and development endeavor to a product-manufacturing enterprise. Together with the state’s already strong base of pharmaceutical research and production enterprises, industrial growth in recent years has enabled North Carolina to establish one of the nation’s leading concentrations of biopharmaceutical manufacturing. The Biotechnology Center supports growth and development of this industry sector in several ways.

This year, the Biotechnology Center continued to provide administrative support and coordination for the Biomanufacturing and Pharmaceutical Training Consortium. This unique partnership for workforce development brings together the UNC System, the North Carolina Community College System, the Biotechnology Center, and the biomanufacturing industry as represented through NCBIO and the Biomanufacturing Forum. Funded by $60 million from Golden LEAF and $6 million of in-kind support from industry, the Consortium

June 05

Four North Carolina bioscience companies raise $52.5 million in venture capital in the spring.

Hundreds of biotechnology executives visit North Carolina’s “State of Minds” Pavilion at BIO 2005 in Philadelphia.

Construction of the 91,000-square-foot Biomanufacturing Training and Education Center (BTEC) begins at North Carolina State University in Raleigh.

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Scenes from BIO 2005 including the North Carolina Pavilion

BTEC groundbreaking ceremony

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For the second consecutive year, North Carolina retains its ranking as the nation’s third largest biotechnology state in Ernst and Young’s 2005 report on the industry.

Bioscience entrepreneurs attend a workshop at the Biotechnology Center on how to write successful applications for federal SBIR and STTR grants.

Peter Young, president and CEO of AlphaVax, is elected president of the North Carolina Biosciences Organization (NCBIO), the trade association of the state’s life sciences industry.

July 05

The Advisory Committee for Biotechnology in the Piedmont Triad announces 21 strategic recommendations for strengthening the industry in the Greensboro, Winston-Salem, High Point region.

Six Piedmont Triad leaders are honored for their biotechnology-development work in the region at the first Triad Bionight celebration in Greensboro: Anthony Atala, Roland H. Johnson, Gary M. Green, Lucas Shallua, Gwyn Riddick and Bill Dean.

Seventy-five educators from throughout North Carolina attend five biotechnology workshops sponsored by the Biotechnology Center. More than 1,200 teachers have taken workshops since 1987.

will offer educational programs to prepare the workforce for North Carolina’s growing biomanufacturing and pharmaceutical industries.

The Biotechnology Center’s Education and Training Program staff completed a new publication in support of the Consortium’s curriculum development efforts. The Model Employee: Preparation for Careers in the Biopharmaceutical Industry contains detailed descriptions of the most common entry-level industry jobs. Produced in collaboration with industry, The Model Employee includes descriptions of job qualifications, typical tasks and career paths, as well as a comprehensive listing of the knowledge and skills that employees need.

The North Carolina biomanufacturing research community continues to benefit from the Biotechnology Center’s Bioprocessing and Process Development Intellectual Exchange Group. This seminar series has become a popular forum for scientists and engineers from industry and academia to exchange ideas about new technologies in bioprocessing and pharmaceutical manufacturing.

Retention, Expansion and Attraction Plan

Following recommendations in the state’s strategic plan, Biotechnology Center staff are developing and executing strategies to attract life science companies to North Carolina and to encourage those already here to remain in the state and expand. The Retention, Expansion and Attraction Plan (REAP) is a joint program between the Biotechnology Center, the North Carolina Department of Commerce, and other economic development partners across the state. It involves identifying companies well suited to North Carolina, building relationships with their key executives, and encouraging them to consider North Carolina and its value proposition when they are ready to move or expand. REAP emphasizes companies that are involved in biomanufacturing while also working to attract more research and development facilities to the state.

YOU NG

N O R T H C A R O L I N A I S

Triad BioNight honorees are fêted by Steven Burke, left, and Rosemary Wander, right.

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North Carolina Genomics and Bioinformatics Consortium

The Biotechnology Center created the North Carolina Genomics and Bioinformatics Consortium L.L.C. in 2000 to strengthen the state’s scientific, educational and business resources in genomics, proteomics and bioinformatics. Associates of this wholly owned Biotechnology Center subsidiary include nearly 80 companies, universities, and non-profit and government organizations. The Consortium enables these associates to share information and resources, plan strategic initiatives, and form alliances so they can accomplish together what they could not individually.

In 2005 the Consortium:

Continued with work in the production phase of the North Carolina Grid, which will provide academic and industrial researchers across the state access to high-performance computing for storing, manipulating, analyzing and sharing biological data.

Worked with other members of the Sun Center of Excellence in Bioinformatics and Computational Biology in Research Triangle Park to offer a Computational Biology Conference.

Awarded a $30,000 grant to help Duke University Medical Center develop shared biotechnology facilities in genomics and bioinformatics for academic institutions and industry across North Carolina.

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August 05

Cheryl McMurry begins work as director of the Biotechnology Center’s Western Office, succeed-ing Charles Moreland, who retired.

The General Assembly approves $3 million in additional funding – half recurring and half non-recurring – for the Biotechnology Center in 2005-06, supplementing its baseline appropriation of $9.1 million. Legislators also approve $12 million in initial operational funding for the Biomanufacturing and Pharmaceutical Training Consortium.

September 05

Billionaire David Murdock announces plans in Kannapolis for a 350-acre North Carolina Research Campus, a $1 billion national center for research and business in nutrition, agriculture, health and biotechnology.

October 05

The Biotechnology Center dedicates new offices in Greenville and Wilmington to promote biotechnology development in Eastern North Carolina.

UNC-W Chancellor Rosemary DePaolo speaks at the Southeastern Office dedication in Wilmington.

MCMURRYArchitect’s vision of the North Carolina Research Campus in Kannapolis, announced in September 2005

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Dr. Paul F. Agris, Molecular and Structural Biochemistry • $30,000 • “Differential Scanning Calorimetry: Understanding RNA Structure/Function Relationships”

Dr. Elizabeth G. Loboa, Biomedical Engineering • $200,05 • “Tissue Mechanics Laboratory for Enhancing Biotechnology in North Carolina”

University of North Carolina — Chapel Hill

Dr. Timothy C. Nichols, Pathology and Laboratory Medicine • $250,000 • “New Housing Unit for Hemophilic, von Willebrand Disease, and Normal Blood Donor Dogs for the Animal Resource Center”

Dr. James A. Swenberg, Environmental Sciences and Engineering • $250,000 • “Highly Sensitive LC-MS/MS for Biomarker Detection”

Dr. Larry W. Arnold, Microbiology and Immunology • $9,896 • “Flow Cytometry Sorter”

Dr. Christoph H. Borchers, Biochemistry and Biophysics • $50,000 • “Acquisition of a Ultra-High Resolution Mass Spectrometer”

Dr. Andrew L. Lee, Pharmacy • $50,000 • “Request for an NMR Cryoprobe at 700 MHz”

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T HE BIOTECHNOLOGY CENTER AWARDED 96 grants and loans totaling $4,509,860 to universities, companies and other organizations

in 2005. These awards were made through 3 programs designed to stimulate biotechnology research, business, education, workforce training and regional economic development.

I N S T I T U T I O N A L D E V E L O P M E N T G R A N T S P R O G R A MThe Biotechnology Center awarded 4 Institutional Development Grants totaling $2,066,90.

Duke University Medical Center, Durham

Dr. Guoping Feng, Neurobiology • $50,500 • “Center for Neuro-Transgenic Technology at Duke University”

East Carolina University, Greenville

Dr. Brett D. Keiper, Biochemistry and Microbiology • $0,03 • “Phosphor-Imaging and Fluorescence-Imaging Core Facility”

North Carolina State University, Raleigh

Dr. Bryon R. Sosinski, Genome Research Laboratory • $82,500 • “High-throughput Functional Genomics at the NCSU Genome Research Laboratory, a Multi-User Research Facility”

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Grants and Loans Awarded in 2005

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University of North Carolina — Greensboro

Dr. Vincent C. Henrich, Biology • $29,93 • “A Clinical Genotyping Core Laboratory”

University of North Carolina — Wilmington

Dr. Carmelo R. Tomas, Environmental Protection • $78,050• “Research Quality Fluorescence Microscope with Advanced Imaging System”

Wake Forest University School of Medicine, Winston-Salem

Dr. Jian-Ming Zhu, Radiology • $249,500 • “Small Animal MRI/MRS Imaging Facility”

Western Carolina University, Cullowhee

Dr. Wesley Bonds, Chemistry and Physics • $54,225 • “Sterilization Equipment for Biotechnology Core Facility”

M U L T I - D I S C I P L I N A R Y R E S E A R C H G R A N T S P R O G R A MThe Biotechnology Center awarded two Multi-Disciplinary Research Grants totaling $500,000.

North Carolina State University, Raleigh

Dr. Ross W. Whetten, Forestry • $250,000 • “Rescuing Fraser Fir From An Exotic Insect: Understanding the Mechanisms of Host-Pest Interation”

University of North Carolina — Chapel Hill

Dr. Sha X. Chang, Radiation Oncology • $250,000 • “Development of a Carbon Nanotube Field Emission Electron Micorbeam Array for Single Cell Irradiation”

C O L L A B O R A T I V E F U N D I N G G R A N T P R O G R A MThe Biotechnology Center awarded five Collaborative Funding Grants totaling $330,000.

Duke University Medical Center, Durham

Dr. Daniel J. Kenan, Pathology • $50,000 • “Biophysical Characterizations of Interfacial Biomaterial Peptide Coatings”

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North Carolina State University, Raleigh

Dr. Orlando J. Rojas, Wood and Paper Science • $40,000 • “Novel Methods to Quantify Enzyme Activity in Lignocellulosic Substrates”

Dr. Ralph A. Dean, Plant Pathology • $40,000 • “Resources for Efficient Watermelon Breeding”

University of North Carolina — Chapel Hill

Dr. Thomas H. Fischer, Pathology and Laboratory Medicine • $00,000 • “Rational Matrix Design for Surface Hemostasis”

Dr. Hongbing Wang, Drug Delivery and Disposition • $00,000 • “PXR and CAR as High-Throughput Target for Predicting Drug Interactions”

F A C U L T Y R E C R U I T M E N T G R A N T S P R O G R A MThe Biotechnology Center awarded two Faculty Recruitment Grants for $300,000.

East Carolina University, Greenville

Dr. Ralph Whatley, Medicine • $50,000 • “Director, Program in Lung Cell Biology and Translational Research”

University of North Carolina — Greensboro

Dr. Rosemary C. Wander, Nutrition and Food Service Systems • $50,000 • “Senior Research Professor”

S M A L L B U S I N E S S R E S E A R C H A W A R D P R O G R A MThe Biotechnology Center awarded four Small Business Research Awards totaling $598,473.

ArrayXpress Inc., Raleigh

Dr. Leonel M. van Zyl • $49,858 • “Development of a Microarray-Based Multi-Pathogen Diagnostic Tool for the Swine Industry”

Asklepios Biopharmaceutical Inc., Chapel Hill

Dr. Richard Jude Samulski • $50,000 • “Intravascular AAV Delivery Preclinical Study for Purposes of Selecting the Optimal Chimeric BNP for the Treatment of Congestive Heart Failure”

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Ercole Biotech Inc., Research Triangle Park

Dr. Ryszard Kole • $50,000 • “Oligonucleotide-induced in vivo Production of Enbrel-like Soluble TNFR Receptor”

Qualyst Inc., Research Triangle Park

Dr. Dhiren R. Thakker • $48,65 • “Novel Absorption Enhancers”

S M A L L B U S I N E S S I N N O V A T I O N R E S E A R C H B R I D G E F U N D P R O G R A MThe Biotechnology Center awarded one Small Business Innovation Research award for $75,000.

Bioscience Inc., Durham

Don Rose • $75,000 • “Low-cost Production of Recombinant Peptides”

B U S I N E S S D E V E L O P M E N T A W A R D P R O G R A M The Biotechnology Center awarded two Business Development Awards totaling $30,000.

Advanced Liquid Logic Inc., Research Triangle Park

Dr. Michael G. Pollack • $5,000 • “Advanced Liquid Logic Business Development”

Genesis Molecular Discovery Inc., Asheville

Rebecca Harris • $5,000 • “Preparation for Attracting Capital”

E D U C A T I O N E N H A N C E M E N T G R A N T S P R O G R A MThe Biotechnology Center awarded nine Education Enhancement Grants totaling $30,072.

Appalachian State University, Boone

Dr. Grant N. Holder, Chemistry • $6,000 • “More Tools, More Options: Early Access to Interdisciplinary Ideas and Techniques in Biology and Chemistry via a Multi-Campus Enology Initiative”

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Asheville-Buncombe Technical Community College, Asheville

Dr. Toby L. Mapes, Biology • $26,365 • “A-B Tech Biotechnology Curriculum Laboratory Enhancement Project”

Duke University, Durham

Dr. Robert Mitchell, English • $38,370 • “Reimagining Biocommerce: Owning Body Parts and Information”

Elizabeth City State University, Elizabeth City

Dr. Margaret M. Young, Biology • $37,000 • “Implementation of a Plant Biotechnology Course”

North Carolina State University, Raleigh

Dr. Lisbeth Hamer, Microbiology • $46,575 • “Production of a Compendium of Instructional Industry Cases”

North Carolina A&T State University, Greensboro

Dr. Elizabeth A. Snell, Biology • $5,50 • “Biotechnology Training Enhancement through the Curriculum (BioTEC)”

University of North Carolina — Chapel Hill

Dr. Rebecca J. Laudicina, Allied Health Sciences • $52,90 • “Molecular Diagnostic Science Program”

University of North Carolina — Pembroke

Dr. Leonard Darrow Holmes, Chemistry and Physics • $34,422 • “The Southeastern Consortium for Agricultural Biotechnology Summer Academies”

Wake Forest University, Winston-Salem

Dr. Bernard A. Brown, Chemistry • $8,000 • “Biochemistry through Biotechnology: Undergraduate Laboratory Enhancement”

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B I O T E C H N O L O G Y E D U C A T I O N M I N I - G R A N T S P R O G R A MThe Biotechnology Center awarded six Biotechnology Education Mini-Grants totaling $26,089.

Brunswick Community College, Supply

Kimberly Jones, Transfer and Development Program • $3,200 • “YES to Biotechnology (Youth Explorations for the Summer)”

Burns Middle School, Lawndale

Emily W. Sisk, Biotechnology • $4,402 • “Biotechnology in Focus: A Modular Approach”

Career Center School, Winston-Salem

Sean A. Bennett, Biology • $5,858 • “Protein Fingerprinting and Western Blot Analysis”

Green Hope High School, Cary

Rebecca L. Townsend, Biology • $4,547 • “Protein Expression Patterns in Zebra Fish Embryos and Regenerating Planaria: An Expression of an Honors Research Methods and Techniques Project”

North Mecklenburg High School, Huntersville

Michael P. Kowalski, Science • $5,203 • “An Introductory Course in Biotechnology for High School Students”

West Henderson High School, Hendersonville

Linda V. Paulus, Biology • $2,879 • “Polymerase Chain Reaction for Advanced Placement Biology”

B I O W O R K C O U R S E A W A R DThe Biotechnology Center awarded four BioWork grants totaling $20,000.

Durham Technical Community College, Durham

Phyllis Spray • $5,000 • “Fall 2004 BioWork Course”

Phyllis Spray • $5,000 • “Spring 2005 BioWork Course”

Vance-Granville Community College, Henderson

Garland S. Elliott • $5,000 • “Fall 2004 BioWork Course”

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Garland S. Elliott • $5,000 • “Spring 2005 BioWork Course”

B I O T E C H N O L O G Y E V E N T S P O N S O R S H I P S P R O G R A MThe Biotechnology Center awarded 42 Biotechnology Event Sponsorships totaling $62,066.

Appalachian State University, Boone

Dr. Grant N. Holder, Chemistry • $,34 • “Western North Carolina Wine Conference”

Association for Clinical Research Professionals — Research Triangle Park Chapter

Gail Celik • $,862 • “Sixth Annual Fall Conference: Emerging Trends in Clinical Research”

BioAbility, Research Triangle Park

Dr. Mark D. Dibner • $,000 • “The Laws of Science”

Duke University, Durham

Dr. Ashutosh Chilkoti, Biomedical Engineering • $,500 • “International Symposium on Biointerface Science”

Duke University Medical Center, Durham

Dr. Simon G. Gregory, Center for Human Genetics • $,850 • “Duke Bioinformatics Workshop”

Dr. David Gerber, Surgery • $,500 • “North Carolina Tissue Engineering Interest Group Meeting”

Dr. Brigid Hogan, Cell Biology • $,000 • “Joint Duke/UNC Cell Biology and Genetics Retreat”

Dr. Simon M. Lin, Bioinformatics • $800 • “System Biology: The Next Challenge in Bioinformatics”

Dr. Kenneth N. Kreuzer, Microbiology • $2,000 • “Molecular Dissection of Disease”

Global Automation Partners, Garner

Vince R. Miller • $500 • “Validation as an Engineering Activity: Ruling by the N.C. Board of Examiners”

Institute of Electrical and Electronics Engineers — Eastern N.C. Section, Cary

Thomas C. Jepsen • $,000 • “North Carolina Symposium on Biotechnology and Bioinformatics”

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Integrated Laboratory Systems, Research Triangle Park

Dr. Leslie Recio • $,500 • “Stem Cells: Biology and Toxicological Relevance (GEMS)”

International Fibrinogen Research Society, Chapel Hill

Dr. Jennifer L. Moen • $,500 • “8th International Fibrinogen Workshop”

Kilpatrick Stockton, Raleigh

Linda Hoover • $,000 • “Southeast BioInvestor Forum”

National Humanities Center, Research Triangle Park

Geoffrey Galt Harpham • $,020 • “Mutations of the Human Planning Conference”

North Carolina Association for Biomedical Research, Raleigh

Suzanne C. Wood • $,000 • “Health Risks of Obesity: The Latest in Medical Research”

Suzanne C. Wood • $3,000 • “Talking Bioscience to Non-Scientists”

North Carolina Small Business and Technology Development Center, Raleigh

John P. Ujvari • $,000 • “Fourth-Annual Southeastern SBIR/STTR Biotechnology-focused Conference”

John P. Ujvari • $,500 • “North Carolina Statewide SBIR/STTR Phase and Phase 2 Proposal Training Workshop”

North Carolina State University, Raleigh

Dr. Wendy F. Boss, Botany • $,500 • “International Conference on Plant Lipid-Mediated Signaling: Building Connections”

Dr. George T. Barthalmus, Academic Programs • $3,000 • “State of North Carolina Undergraduate Research Symposium”

North Carolina Task Force on Genomics and Public Health, Raleigh

Donna Spoon • $,965 • “Genomic Epidemiology: Public Health and Research Opportunities in North Carolina”

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North Carolina A&T State University, Greensboro

Dr. Mary A. Smith, Biology • $,500 • “0th Life and Physical Sciences Research Symposium” North Carolina Academy of Science, Raleigh

Dr. Susan Stephenson, Biology and Health Sciences • $,000 • “North Carolina Academy of Science 02nd Annual Meeting”

North Carolina Biosciences Organization, Raleigh

Samuel M. Taylor • $,000 • “NCBIO Emerging Companies Forum — University Technology Transfer: Successes, Opportunities and Business Models”

North Carolina Center for Genome Sciences, Chapel Hill

Mary Sym • $,200 • “Harold Garner: Hardware, Software and Methods for Biomedical Discovery”

Piedmont Entrepreneurs Network, Greensboro

Charles W. Tuttle • $,500 • “Triad Life Sciences Conference 2004”

Research Triangle Institute International, Research Triangle Park

Susan Brown • $2,000 • “Southeast Technology Expo”

North Carolina Arboretum, Asheville

Pamela Daubert • $,000 • “Growing North Carolina’s Natural Products Industry”

University of North Carolina — Chapel Hill

Dr. Frank S. French, Pediatrics • $,500 • “Gene Expression in Development”

Dr. Robert Goldstein, Biology • $700 • “Intracellular Protein Transport”

Dr. Joseph Piven, Psychiatry • $,500 • “Imaging the Developing Brain”

Dr. Susan S. Smyth, Carolina Cardiovascular Biology Center • $,000 • “Carolina Cardiovascular Biology Forum”

Dr. Sharon L. Milgram, Cell and Molecular Physiology • $2,000 • “Cells on the Move: An Integrated Approach to Migration and Motility”

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Dr. Shelton H. Earp, Medicine • $,500 • “29th Annual Scientific Symposium, Genomic Instability and Cancer Progression”

Katherine T.L. Vaughn, Bioinformatics and Pharmacy • $,000 • “A Field Guide to GenBank and NCBI Resources”

Dr. Barry R. Lentz, Biochemistry and Biophysics • $3,000 • “Triangle Biophysics Symposium: Electrons to Proteins: Coupling and Linkage in Biology”

Dr. Robert Goldstein, Biology • $700 • “Ecology’s Role in Shaping Organisms”

University of North Carolina — Charlotte

Mark S. Wdowik • $,500 • “Third Annual Conference: Charlotte’s Biotechnology Industry”

Mark S. Wdowik • $2,500 • “UNC Charlotte Five Venture 2005”

University of North Carolina — Pembroke

Sean J. Dieleman, Biotechnology Business & Training Center • $628 • “GMP Bioreactor & Filtration Validation”

Wake Forest University, Winston-Salem

Dr. Al Claiborne, Biochemistry • $3,000 • “Anthrax: The Biochemistry of Biodefense”

R E G I O N A L D E V E L O P M E N T G R A N T P R O G R A MThe Biotechnology Center awarded four Regional Development Grants totaling $6,250.

Asheville-Buncombe Technical Community College, Asheville

Cheryl M. Shenault • $40,000 • “Laboratory Management”

Greater Winston-Salem Chamber of Commerce

Gayle N. Anderson • $2,250 • “Triad Biotechnology Assessment”

Greensboro Area Chamber of Commerce

Allen W. Purser • $25,000 • “A Biotechnology Academy for Greensboro Business and Community Leaders”

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North Carolina Arboretum, Asheville

George Briggs • $75,000 • “Employing Biotechnology in Building the Natural Products Economy for Western North Carolina”

G E N O M I C S A N D B I O I N F O R M A T I C S G R A N TThe Biotechnology Center awarded one Genomics and Bioinformatics Grant for $30,000.

Duke University Medical Center, Durham

Dr. R. Sanders Williams, School of Medicine • $30,000 • “NC-omics”

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O N C O N T R A C T

Accounting & Purchasing Services

Finance and Accounting ManagementPurchasing and Material ManagementBudget Development and MonitoringAudits and Compliance

Corporate Administration

Board of Directors

Office of the President

Corporate Affairs Science & Business Development

CORE PROGRAMS

NC Genomics & Bioinformatics Consortium, LLC

CORPORATE AFFAIRS CORPORATE ADMINISTRATION

Charles Hamner Conference Center

Conferences and Workshops

Executive Services

Project to Strengthen Biotechnology Across North CarolinaEastern Regional OfficePiedmont Triad Regional OfficeSoutheastern Regional OfficeWestern Regional Office

Graphic Design Services

Graphic Design for Print and WebCorporate IdentityPrint Purchasing

Contracts & Grants

Audits and ComplianceGrant Information Management Grants and ContractsAdministration

Administrative Services

Word Processing

Project and Logistical Support

Reception Area

Business & Technology Development Program

Technology TransferEconomic Development Finance ProgramBusiness Development and RecruitmentBusiness Services

Corporate Communications

Media RelationsPublicationsWeb SitesProjects and Strategies

Library & Information Services

Information CollectionInformation RetrievalInformation Dissemination

Science & Technology Development Program

University DevelopmentGrants Programs Intellectual Exchange Programs

Education & Training Program

Grants ProgramsK-12 and Undergraduate Education ProgramsWorkforce DevelopmentPublic Education

Coordination and OversightFiduciary ManagementSubsidiary Operations

Information Management

Network Administration and Maintenance

Training

Internet

Database Services

Application Management

Statewide AffairsGovernment and Corporate RelationsPolicy and IssuesInternational, Special and Strategic Projects

Human Resources

Personnel ManagementCompensation and Benefits Management Legal and Regulatory Compliance

Operations & Technology

Facility Management

Facilities Maintenance and Security

19

O N C O N T R A C T

Accounting & Purchasing Services

Finance and Accounting ManagementPurchasing and Material ManagementBudget Development and MonitoringAudits and Compliance

Corporate Administration

Board of Directors

Office of the President

Corporate Affairs Science & Business Development

CORE PROGRAMS

NC Genomics & Bioinformatics Consortium, LLC

CORPORATE AFFAIRS CORPORATE ADMINISTRATION

Charles Hamner Conference Center

Conferences and Workshops

Executive Services

Project to Strengthen Biotechnology Across North CarolinaEastern Regional OfficePiedmont Triad Regional OfficeSoutheastern Regional OfficeWestern Regional Office

Graphic Design Services

Graphic Design for Print and WebCorporate IdentityPrint Purchasing

Contracts & Grants

Audits and ComplianceGrant Information Management Grants and ContractsAdministration

Administrative Services

Word Processing

Project and Logistical Support

Reception Area

Business & Technology Development Program

Technology TransferEconomic Development Finance ProgramBusiness Development and RecruitmentBusiness Services

Corporate Communications

Media RelationsPublicationsWeb SitesProjects and Strategies

Library & Information Services

Information CollectionInformation RetrievalInformation Dissemination

Science & Technology Development Program

University DevelopmentGrants Programs Intellectual Exchange Programs

Education & Training Program

Grants ProgramsK-12 and Undergraduate Education ProgramsWorkforce DevelopmentPublic Education

Coordination and OversightFiduciary ManagementSubsidiary Operations

Information Management

Network Administration and Maintenance

Training

Internet

Database Services

Application Management

Statewide AffairsGovernment and Corporate RelationsPolicy and IssuesInternational, Special and Strategic Projects

Human Resources

Personnel ManagementCompensation and Benefits Management Legal and Regulatory Compliance

Operations & Technology

Facility Management

Facilities Maintenance and Security

N O R T H C A R O L I N A B I O T E C H N O L O G Y C E N T E R

Program Structure & Task AreasAS OF JUNE 30, 2005

20

Leslie M. Alexandre, Dr.P.H.*President and Chief Executive Officer North Carolina Biotechnology Center

John L. Atkins III*Treasurer, Board of Directors President and Chief Executive Officer O’Brien/Atkins

Robert M. Bell, Ph.D.*Life Sciences Venture Partner Intersouth Partners

Molly Corbett BroadPresident The University of North Carolina

John F.A.V. Cecil*President Biltmore Farms, Inc.

John D. ChaffeeExecutive Director Pitt County Development Commission

Sue W. ColeRegional Chief Executive Officer U.S. Trust Company, N.A.

W. Mark CrowellAssociate Vice Chancellor for Economic Development and Director of the Office of Technology Development The University of North Carolina at Chapel Hill

Stephanie E. Curtis, Ph.D.Department of Genetics Professor and Department Head North Carolina State University

Richard H. Dean, M.D.President and Chief Executive Officer Wake Forest University Health Sciences

John F. Del GiornoVice President, State Government Affairs GlaxoSmithKline

James T. Fain IIISecretary, Department of Commerce State of North Carolina

Heinrich Gugger, Ph.D.*President Icoria, Inc.

Ken R. Harewood, Ph.D.Director and Professor Biomedical/Biotechnology Research Institute North Carolina Central University

John Jackson HuntFormer Legislator

John A. Irick*Senior Vice President and Chief Business Officer Biolex, Inc.

Robert B. Jordan IIIPresident Jordan Lumber Company

H. Martin LancasterPresident North Carolina Community College System

Howard N. LeeChairman North Carolina State Board of Education

James G. Martin, Ph.D.Corporate Vice President Carolinas HealthCare System

William F. Marzluff, Ph.D.Department of Biochemistry and Biophysics Professor and Executive Associate Program of Molecular Biology and Biotechnology The University of North Carolina at Chapel Hill

Adnan M. Mjalli, Ph.D.President and Chief Executive Officer TransTech Pharma, Inc.

William M. Moore, Jr.Professor The Kenan-Flagler Business School The University of North Carolina at Chapel Hill

Marvin Moss, Ph.D.Department of Physics and Physical Oceanography Professor The University of North Carolina at Wilmington

Arthur M. PappasManaging Partner A.M. Pappas & Associates

Paul V. Phibbs, Jr., Ph.D.*Secretary, Board of Directors Professor & Vice Chair for Research Department of Internal Medicine East Carolina University The Brody School of Medicine

Milton PrincePresident and Chief Executive Officer Coastal Carolina Cotton Gins

Sallie Shuping RussellManaging Director Quellos Private Capital Markets, L.P.

Christy L. Shaffer, Ph.D.*Chief Executive Officer Inspire Pharmaceuticals, Inc.

James N. Siedow, Ph.D.Vice Provost for Research Duke University

Sam R. SloanConsultant (Privately Owned Companies)

Jean G. Spaulding, M.D., DFAPATrustee The Duke Endowment

Robert S. Timmins, Sc.D.*Chairman, Board of Directors

E. Norris Tolson*Secretary, Department of Revenue State of North Carolina

Tim Valentine*Vice Chairman, Board of Directors Former Member, U.S. House of Representatives

Huntington F. Willard, Ph.D.Director, Institute for Genome Sciences and Policy Vice Chancellor for Genome Sciences Professor, Department of Molecular Genetics and Microbiology Duke University

Sandra YankwichSenior Manager, Third Party Contract Management Global Manufacturing and Supply GlaxoSmithKline

Lori L. Greenstein**Assistant Secretary and Assistant Treasurer Corporate Administration North Carolina Biotechnology Center

Robert W. Spearman**Counsel and Assistant Secretary Parker, Poe, Adams & Bernstein L.L.P.

* member of the Executive Committee ** staff to the Board of Directors

Board of DirectorsAS OF JUNE 30, 2005

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The Board of Directors North Carolina Biotechnology Center and Subsidiaries:

We have audited the accompanying consolidated statements of financial position of the North Carolina Biotechnology Center and Subsidiaries (Biotechnology Center) as of June 30, 2005 and 2004, and the related consolidated statements of activities and changes in net assets and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Biotechnology Center’s management. Our responsibility is to express an opinion on these consolidated financial state-ments based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Biotechnology Center’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence sup-porting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the North Carolina Biotechnology Center and Subsidiaries as of June 30, 2005 and 2004, and the changes in their net assets and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

August 1, 2005

Consolidated Financial Statements I N D E P E N D E N T A U D I T O R S ’ R E P O R T

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Assets 2005 2004

Cash $ 1,805,481 1,549,914

Investments 19,368,653 16,146,044

Receivables:

Accrued interest receivable 1,092,970 1,041,471

Miscellaneous receivables 164,213 115,585

Contributions receivable 43,597 209,229

Loans receivable 1,075,000 1,075,000

Notes receivable 2,879,984 2,690,442

Allowance for uncollectible accrued interest, loans and notes receivable (2,800,035) (2,693,941)

Total receivables, net 2,455,729 2,437,786

Other assets 20,993 20,993

Property, plant, and equipment, net 4,230,746 4,391,908

Total assets $ 27,881,602 24,546,645

Liabilities and Net AssetsAccounts payable and accrued expenses $ 154,708 150,071

Grants and contracts payable 5,490,158 3,808,748

Deferred revenues 75,000 76,742

Total liabilities 5,719,866 4,035,561

Net assets:

Unrestricted net assets:

Designated for specific purposes 21,530,776 19,550,704

Undesignated 530,023 721,577

Temporarily restricted 100,937 238,803

Total net assets 22,161,736 20,511,084

Total liabilities and net assets $ 27,881,602 24,546,645

C O N S O L I D A T E D S T A T E M E N T S O F F I N A N C I A L P O S I T I O N

June 30, 2005 and 2004

See accompanying notes to consolidated financial statements.

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2005 2004

Unrestricted revenues, gains, and other support:

Grants and contracts:

State of North Carolina $ 10,801,770 5,790,727

Federal 55,817 47,083

Interest and dividends 554,526 502,284

Hamner Conference Center 458,206 378,432

Net realized and unrealized gain (loss) on investments 100,303 (276,953)

Net loss on sale of property and equipment — (3,159)

Other, net 78,340 117,855

Net assets released from restrictions 256,567 307,479

Total unrestricted revenues, gains, and other support 12,305,529 6,863,748

Expenses and losses:

Science and technology development:

Institutional development grants 2,348,200 808,686

Multidisciplinary research grants 499,957 530,000

Collaborative funding program 246,768 162,155

Academic research initiation grants — (13,840)

Hamner Conference Center 627,361 533,721

Education and training program grants 357,818 235,131

Library and information services 322,987 309,769

Economic development loan programs 308,361 236,429

Project to strengthen biotechnology across North Carolina 275,806 238,995

Other programs 169,554 185,732

Workforce training project 150,367 207,047

Intellectual exchange activities 75,192 64,641

Biotechnology event grants/sponsorships 55,886 30,154

Genomics and bioinformatics program 33,711 18,756

Program management 3,111,220 2,849,575

General and administrative 1,933,823 1,817,350

Total expenses and losses 10,517,011 8,214,301

Change in unrestricted net assets 1,788,518 (1,350,553)

Temporarily restricted revenues:

Contributions 118,701 181,939

Net assets released from restrictions (256,567) (307,479)

Change in temporarily restricted net assets (137,866) (125,540)

Change in total net assets 1,650,652 (1,476,093)

Net assets, beginning of year 20,511,084 21,987,177

Net assets, end of year $ 22,161,736 20,511,084

C O N S O L I D A T E D S T A T E M E N T S O F A C T I V I T I E S A N D C H A N G E S I N N E T A S S E T S

Years ended June 30, 2005 and 2004

See accompanying notes to consolidated financial statements.

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2005 2004

Cash flows from operating activities:

Change in total net assets $ 1,650,652 (1,476,093)

Adjustments to reconcile change in total net assets to net cash

provided (used) by operating activities:

Depreciation 288,442 288,223

Net loss on sale of property and equipment — 3,159

Net realized and unrealized (gain) loss on investments (100,303) 276,953

Program management expenses associated with the North Carolina Bioscience Investment Fund 175,925 205,644

Increase (decrease) in cash due to changes in:

Notes and loans receivable (189,542) (1,132,821)

Allowance for uncollectible accrued interest, loans and

notes receivables 106,094 (332,722)

Accrued interest receivable (51,499) (321,724)

Contributions receivable 165,632 114,751

Miscellaneous receivables (48,628) (13,349)

Other assets — (19,993)

Accounts payable and accrued expenses 4,637 35,571

Grants and contracts payable 1,681,410 291,835

Deferred revenues (1,742) (1,158)

Net cash provided (used) by operating activities 3,681,078 (2,081,724)

Cash flows from investing activities:

Purchase of property and equipment (127,280) (79,104)

Proceeds from sale of investments 131,006,101 137,349,689

Purchase of investments (134,304,332) (135,216,333)

Net cash (used) provided by investing activities (3,425,511) 2,054,252

Net increase (decrease) in cash 255,567 (27,472)

Cash, beginning of year 1,549,914 1,577,386

Cash, end of year $ 1,805,481 1,549,914

C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W S

Years ended June 30, 2005 and 2004

See accompanying notes to consolidated financial statements.

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(1) Organization and Summary of Significant Accounting Policies

(a) Organization and Purpose

The North Carolina Biotechnology Center (Biotechnology Center) was incorporated in 1984 for the purpose of furthering economic development in North Carolina through education, research and commercial development in biotechnology. The Biotechnology Center aids the biotechnology-related efforts of researchers, businesses, state and federal governments, and other agencies primarily through awards of research grants restricted to specific programs.

The North Carolina Bioscience Ventures, LLC (Ventures) is a wholly owned subsidiary of the Biotechnology Center which is used to account for a special $10 million appropriation to the Biotechnology Center from the State of North Carolina. The purpose of the appropriation and establishment of Ventures is to promote the development of the bioscience industry in North Carolina. The appropriation remains in Ventures until funds are drawn down by the North Carolina Bioscience Investment Fund, LLC (BIF). The BIF is responsible for investing funds of the Biotechnology Center along with funds from other investors into portfolio companies.

The North Carolina Genomics and Bioinformatics Consortium, LLC (Consortium) is a wholly owned subsidiary of the Biotechnology Center. The purpose of the Consortium is to bring to-gether the key elements of research, development, commercialization and support infrastruc-ture in North Carolina that use or develop genomics, proteomics or bioinformatics in order to plan strategic research and development initiatives, and build infrastructure, synergy and community among its associates.

(b) Basis of Accounting and Presentation

The consolidated financial statements have been prepared using the accrual basis of accounting.

Net assets and revenues, expenses, gains and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, net assets of the Biotechnology Center and changes therein are classified and reported as follows:

Unrestricted net assets — Net assets that are not subject to donor-imposed stipulations.

Temporarily restricted net assets — Net assets subject to donor-imposed stipulations that may or will be met either by actions of the Biotechnology Center and/or the passage of time.

Revenues are reported as increases in unrestricted net assets unless use of the related asset is limited by donor-imposed restrictions. Expenses are reported as decreases in unrestricted net assets. Gains and losses are reported as increases or decreases in unrestricted net assets unless their use is restricted by explicit donor stipulation or by law. Expirations of temporary restric-tions on net assets (i.e., the donor-stipulated purpose has been fulfilled and/or the stipulated time period has elapsed) are reported as reclassifications between the applicable classes of net assets.

(c) Principles of Consolidation

The consolidated financial statements include the financial statements of the North Carolina Biotechnology Center and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

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(d) Significant Accounting Policies

The following significant accounting policies have been used in the preparation of the consoli-dated financial statements:

Cash and Investments

The Biotechnology Center invests funds not immediately needed for day-to-day operations in short-term investments, primarily certificates of deposit and commercial paper, consis-tent with guidelines established by the board of directors. These guidelines require that the Biotechnology Center invest only in certain financial instruments considered to be both con-servative and adequately diversified. The Executive Committee and The Equity Investment Committee periodically review the Biotechnology Center’s investment portfolio.

The equity method of accounting is used to account for certain equity investments where the Biotechnology Center’s ownership is considered to be more than minor, but less than 50%. Equity investments include private equity investments in biotechnology/bioscience companies and venture capital funds.

Investments are generally recorded at fair value. In the case of certain less marketable in-vestments, principally private equity investments which are not accounted for on the equity method, investments are carried at the lower of cost or fair value. For these less marketable securities, the determination of fair value requires the use of estimates. Because of the inher-ent uncertainty in the use of estimates, fair values that are based on estimates may differ from the fair values that would have been used had a ready market for the investments existed.

For purposes of the consolidated statements of cash flows, the Biotechnology Center consid-ers cash equivalents and certificates of deposit to be investments.

Under a profit sharing agreement with the State of North Carolina, the Biotechnology Center and the State will share equally the net profits in excess of $150,000 on any individual invest-ment made with State funds by the Biotechnology Center after July 1, 1997. There were no net profits on any of the Biotechnology Center’s investments in 2005 and 2004 that exceeded the $150,000 threshold.

Receivables

Through its Economic Development Finance Program, the Biotechnology Center supports re-search and development projects of young and growing biotechnology/bioscience compa-nies that may not yet qualify for conventional forms of financial assistance. Since 1988, most awards to companies have been in the form of notes, and all amounts, including interest, are to be repaid in full within one to seven years of the date of the notes. Management has con-sidered each company’s ability to repay the notes, loans and accrued interest, including the financial condition of the company and the repayment terms of the note, and has recorded an allowance for uncollectible receivables. The allowance for uncollectible accrued interest, loans and notes receivable totaled $2,800,035 and $2,693,941 at June 30, 2005 and 2004, respec-tively. The Biotechnology Center’s other receivables are considered to be fully collectible.

Property, Plant, and Equipment

Property, plant, and equipment are recorded at cost. Depreciation is provided using the straight-line method over the estimated useful lives of five years for furniture, fixtures and equipment and thirty years for the Biotechnology Center’s permanent headquarters.

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Recognition of Grant Awards and Grants Payable

Grant awards and the corresponding grants payable are recognized at the time the grant award is approved by the Executive Committee of the board of directors.

Net Assets

Certain unrestricted net assets have been designated for specific purposes by the board of directors. At June 30, 2005 and 2004, unrestricted net assets designated for specific purposes consisted of the following:

2005 2004

Fixed assets $ 4,230,746 4,391,908

Building renovations and repairs 2,294,028 2,528,956

Future economic development investment 6,055,934 3,236,227

Stocks and equity investments 5,986,457 7,941,510

Other 2,963,611 1,452,103

$ 21,530,776 19,550,704

Temporarily restricted net assets are available for the following purposes at June 30, 2005 and 2004:

2005 2004

Statewide offices $ 27,641 152,945

Intellectual exchange activities 73,296 85,858

$ 100,937 238,803

Net assets were released from donor restrictions by incurring expenses satisfying the restricted purposes or by the passage of time. In 2005 and 2004, purpose restrictions were accom-plished by incurring $256,567 and $307,479, respectively, in expenses for statewide offices and intellectual exchange activities.

Contributions

Contributions, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become uncondi-tional, that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value.

Recognition of Funding

Funds are granted periodically from private and public agencies for specific purposes or to aid the Biotechnology Center’s general operation and sustain its continued existence. Funds appropriated for specific purposes are deemed to be earned and reported as revenue when the Biotechnology Center has incurred expenditures in compliance with the grant agreement. Such amounts received, but not yet earned, are reported as deferred revenues.

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The Biotechnology Center received 89% and 81% of its unrestricted revenues from the State of North Carolina in 2005 and 2004, respectively.

Functional Allocation of Expenses

The costs of providing the various programs and activities of the Biotechnology Center have been summarized on a functional basis in the statements of activities and changes in net as-sets. Certain general and administrative expenses totaling $910,372 and $902,328 for the years ended June 30, 2005 and 2004, respectively, have been allocated among the programs and activities benefited.

Income Taxes

The Biotechnology Center is exempt from federal income taxes on related income under Internal Revenue Code Section 501(a) as an organization described in Section 501(c)(3). Accordingly, no provision for income taxes has been made. As single member limited liability companies, Ventures and the Consortium are disregarded entities for income tax purposes.

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting prin-ciples generally accepted in the United States of America requires management to make esti-mates and assumptions that affect the reported amounts of assets and liabilities and disclo-sure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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(2) Investments

The aggregate values of investments at June 30, 2005 and 2004 were as follows:

2005

Cost Gross unrealized

gains

Gross unrealized

losses

Fair value

Cash equivalents $ 2,630,791 — — 2,630,791

Certificates of deposit 4,000,000 — — 4,000,000

Stocks 211,392 — (201,965) 9,427

Fixed income 9,200,000 — — 9,200,000

BIF 7,505,461 — (4,925,802) 2,579,659

Equity investments 1,431,727 — (482,951) 948,776

$ 24,979,371 — (5,610,718) 19,368,653

2004

Cost Gross unrealized

gains

Gross unrealized

losses

Fair value

Cash equivalents $ 3,080,088 — — 3,080,088

Certificates of deposit 1,000,000 — — 1,000,000

Stocks 211,392 — (189,258) 22,134

Fixed income 8,350,000 — — 8,350,000

BIF 7,673,135 — (4,925,802) 2,747,333

Equity investments 1,592,857 — (646,368) 946,489

$ 21,907,472 — (5,761,428) 16,146,044

The BIF represents Ventures’ equity-method investment in the North Carolina Bioscience Invest-ment Fund, LLC. In 2005 and 2004, the Ventures’ share of the BIF’s net loss totaled ($175,925) and ($205,644), respectively, which is recorded in the consolidated statements of activities and changes in net assets as program management expense.

In connection with Economic Development Finance awards, the Biotechnology Center receives the right to purchase stock in various biotechnology/bioscience companies if certain condi-tions are met. As of June 30, 2005, the Biotechnology Center received warrants to purchase 632,161 common shares with exercise prices ranging from $0.32 to $600 per share. These warrants expire at various dates through 2015. Management has determined the value of the warrants to be immaterial and, accordingly, they are not reflected in the consolidated financial statements.

As of June 30, 2005, the Biotechnology Center has capital contribution commitments to vari-ous venture capital funds totaling $318,271. These funds will be invested in future years as capital calls are made by the various venture capital fund managers.

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(3) Loans and Notes Receivable

Loans and notes receivable at June 30, 2005 and 2004 consisted of the following:

2005 2004

Loans receivable:

Loan receivable dated October 15, 1998 from Eno

$ 75,000 75,000

River Capital, L.L.C. Interest is payable along with the principal in one lump sum on October 15, 2005. Interest rate is 6.25% per year on the unpaid principal balance.

Loan receivable dated April 10, 2003 from KBI

1,000,000 1,000,000

BioPharma, Inc. Interest is payable quarterly at a rate of 5% of the outstanding loan balance. Principal is due and payable in one lump sum on or before April 10, 2006.

Total loans receivable 1,075,000 1,075,000

Notes receivable:

Notes receivable from various state biotechnology

180,216 193,887

companies under Economic Development Finance awards. Interest rates on these notes vary from 7.0% to 8.25%. Generally, principal and interest are payable one to five years from the execution of the note. Due dates are 2006.

Notes receivable from various state biotechnology

213,917 206,417

companies under Small Business Innovation Research awards. Interest rates on these notes vary from 4.00% to 10.50%. Generally, principal and interest are payable one to five years from the execution of the note. Due dates range from 2006 to 2010.

Notes receivable from various state biotechnology

123,102 117,512

companies under Business Development Awards. Interest rates on these notes vary from 5.50% to 11.00%. Generally, principal and interest are payable one to three years from the execution of the note. Due dates range from 2006 to 2008.

Notes receivable from various state biotechnology

2,283,705 2,093,582

companies under Small Business Research Awards. Interest rates on these notes vary from 4.00% to 6.0%. Generally, principal and interest are payable one to five years from execution of the note. Due dates range from 2006 to 2010.

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Notes receivable from various state universities under

23,583 23,583

Patent Funding Assistance awards. These notes bear a flat interest fee of $2,000. Principal and interest are payable upon transfer, assignment, or license of patent for compensation.

Notes receivable from various state universities under

55,461 55,461

Proof of Principle Awards. Generally, principal and interest are payable within seven years, if the technology or intellectual property is sold, transferred, assigned or licensed. However, there is no interest if paid in the first year.

Total notes receivable 2,879,984 2,690,442

Less allowance for uncollectible loans and notes receivable (2,041,065) (1,943,499)

Loans and notes receivable, net $ 1,913,919 1,821,943

(4) Contributions Receivable

Contributions receivable consisted of the following at June 30, 2005 and 2004:

2005 2004

Unconditional promises expected to be collected in:

Less than one year $ 43,597 209,229

One year to five years — —

$ 43,597 209,229

(5) Property, Plant, and Equipment

A summary of property, plant, and equipment at June 30, 2005 and 2004 follows:

2005 2004

Building $ 7,305,069 7,305,069

Furniture, fixtures, and equipment 1,511,413 1,394,942

8,816,482 8,700,011

Less accumulated depreciation (4,585,736) (4,308,103)

Property, plant, and equipment, net $ 4,230,746 4,391,908

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(6) Grants and Contracts Payable

The Biotechnology Center has committed grants and contracts to various research programs, primarily through major universities and biotechnology companies located in North Carolina. Grants and contracts payable at June 30, 2005 are expected to be paid as follows:

Total

2006 $ 4,232,459

2007 1,257,699

$ 5,490,158

(7) Interest and Dividend Income

Interest and dividend income of $340,622 and $166,837 was earned during the years ended June 30, 2005 and 2004, respectively, primarily by investing in certificates of deposit and commercial paper. Interest income on notes and loans receivable in 2005 and 2004 totaled $213,904 and $335,447, respectively.

(8) Benefit Plans

The Biotechnology Center has a defined contribution money purchase pension plan covering all qualified employees who have completed one year of service. The Biotechnology Center’s contribution is 11.00% of pre-tax compensation for eligible employees. Employees are fully vested in the plan assets upon participation. Approximately $293,000 and $251,000 was con-tributed to the plan during the years ended June 30, 2005 and 2004, respectively. The plan is self-directed, with the majority of participants electing mutual funds. Additionally, after six months of employment, all regular employees are eligible to participate in a 403(b)(7), tax-deferred supplemental retirement plan. Participants may contribute subject to prevailing Internal Revenue Service regulations.

(9) Operating Leases

The Biotechnology Center has acquired the right to use the land on which its building is con-structed through an operating lease agreement which expires on December 31, 2089 with another nonprofit organization, the Triangle Universities Center for Advanced Studies, Inc. (TUCASI). Title to the land remains with TUCASI.

Payments to TUCASI under the agreement are at the nominal rate of $1 per year, and the Bio-technology Center pays all costs of insurance, taxes, and maintenance as defined in the lease agreement.

(10) Related Parties

Certain members of the board of directors of the Biotechnology Center are affiliated with funds and companies invested in by the Biotechnology Center. The dollar amounts of related transactions are material to the consolidated financial statements. Board members abstain from voting on matters related to his or her organization.

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