COLORADO SPRINGS, Colo. - Colorado Springs economic development officials are trying to nurture a budding biotechnology industry around a company started by a local biology professor.

Business officials envision a cluster of biotech companies here that would further diversify the economy, employ thousands and bring prestige and attention to the city.

Colorado Springs already is home to more than three dozen mostly small biotech firms, including Agada Pharmaceuticals Inc., started as Newellink Inc. in 2002 by Karen Newell. She is scientific director of the Institute of Bioenergetics at the University of Colorado at Colorado Springs.

Local business officials hope Agada will be the home run that will put the Springs on the nation's biotechnology map.

"Her (Newell's) research is earth-shattering; it is our winning ticket," said David White, vice president of marketing for the Colorado Springs Economic Development Corp., which is heading the effort to expand the city's biotech industry. "Her work is very much at the center of our strategy to build a biotechnology hub in Colorado Springs."

Biotech companies focus on converting research in biology, chemistry and other biosciences into viable commercial products. Such companies can run the gamut from pharmaceutical firms to equipment companies to research labs.

Newell's research is centered on cancer treatment. She found that dichloroacetate, a chemical compound, robs cancerous tumors of the energy they need to grow. She said Agada has 25 patents awarded or in various stages of approval covering the compound and its use to treat cancer.

"We try to identify and target the energy sources of cancer cells and leave normal cells alone," Newell said. "We are not a pharmaceutical company that is developing a cure for cancer. We are a biotherapeutic company focused on treatments for cancer."

Newell's research and the compounds she has developed "could be the kind of breakthrough technology that is truly revolutionary," said Maurice Gaubatz, president of Springs-based Pyxant Labs Inc., which tests drugs being developed by pharmaceutical companies.

Newell, 56, came to UCCS after teaching at Dartmouth University and the University of Vermont. She followed an unconventional career path, earning a biology degree in 1972 before getting married and spending the next 10 years raising children.

She earned a doctoral degree in microbiology and immunology from the University of Colorado Health Sciences Center in 1987 and did postdoctoral work at McGill University in Montreal and the National Jewish Center for Immunology and Respiratory Medicine in Denver.

Newell's career skyrocketed after she published a groundbreaking paper in the early 1990s about what happens to T-cells in an AIDS patient. She taught in 1995 at UCCS while working at National Jewish and "really loved the students and environment and wanted to stay in Colorado," but got a better offer in Vermont. She returned to UCCS in 1999.

Despite her academic successes, Newell nearly failed at running a business. Earlier this year, Newellink had spent all but "a few thousand dollars" of the $2.1 million it had raised from a California family that developed and two years ago sold the Nature's Gate line of skin- and hair-care products.

"We didn't have a whole lot left in the bank and had a lot of debt," Newell said. "Our management team had no experience in creating a company, and we had gone through three interim managers, so we realized that the company needed to be restructured."

Newell sought out David Drake to lead the restructuring. The Longmont-based entrepreneur had earlier helped patent her research discoveries and set up Newellink while he was heading a nonprofit set up by the University of Colorado to license technology developed by its researchers.

Drake also headed the Fitzsimmons BioBusiness Incubator in Aurora, was chief executive of a Boulder software company, worked for two Denver-area venture capital funds and served as a board member, executive or consultant to several Denver-area startup technology firms. At the time, Canadian researchers were getting publicity for showing that dichloroacetate, long used to treat rare metabolic disorders, helps kill cancer cells. That fueled interest in Agada's patents on the compound. Drake raised $600,000 in March to pay off Newellink's debts and recruit a management team to turn Newell's research into marketable products.

Agada is now trying to raise $1 million from private investors by September and $5 million to $10 million by year's end from investors and venture capital funds to begin clinical trials by mid-2008. It could cost up to $100 million to complete clinical trials, Drake said.

Adam Rubenstein, assistant director of Fitzsimmons BioBusiness Partners, which operates the state's only biotechnology business incubator, said Agada's patents could draw "a lot of interest" from venture capital funds that specialize in biotech startups.

Agada's management team also includes veteran Denver-area biotechnology executive Joanna Money as chief operating officer and David Sebasta, a former executive with NeXstar Pharmaceuticals Inc. and Ribozyme Pharmaceuticals Inc., as a consultant.

Agada is a virtual company - it has no offices and just one employee, Drake. Money, Sebasta and Newell work for the company as consultants. The company plans to contract out its financial, accounting and other administrative operations, Drake said.

Much of the initial investment in Agada came from the Weinstein Family Trust, which had been headed by Nature's Gate founder Leo Weinstein until he died of cancer in 2005. Drake said the trust boosted its investment in the company as part of the March financing.

The company changed its name in April to Agada, which in Sanskrit means "free from disease, healthy."

Officials hope Agada is successful not only for itself but also because of its connection to UCCS - and the potential to build biotech here.

UCCS Chancellor Pam Shockley-Zalabak called Newell's research "an important component in the university's long-term goal to create a research park" housing companies that develop practical uses for results of scientific research conducted by faculty.

That process of turning research into products - technology transfer - is a key element in growing Colorado's emerging biotechnology industry, said Tom Roach, a Denver-based partner who specializes in the health sciences industry with accounting giant Ernst & Young LLP.

"There is certainly a significant number of small biotech companies that have grown out of universities because of the emphasis they have put on technology transfer," Roach said.