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Vision, Cooperation and Capital Stimulate Bio 

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By Rachel Duran

Regions fill in missing pieces to propel entrepreneurship.

Bioscience companies involved in the site selection process will find locations throughout the country are successfully closing gaps and creating new opportunities in their clusters.

In St. Louis, strong bioscience-based assets including universities and corporate R&D were in place; however, the area lacked an ecosystem to support entrepreneurs, and turn ideas into companies. The strengths in medical, plant and agricultural bioscience activities was likely to be based in academia and not focused on entrepreneurial activity.

 

In Spokane, Wash., the area serves as the medical hub for the Inland Northwest region, where area hospitals were involved in R&D, including the Inland Northwest Health Services, a large telehealth effort serving a broad network. The medical hub also attracted additional health sciences companies. Years back, Washington state and federal delegation leaders understood health-care related activities would be a key to Spokane’s economic growth, and set in motion efforts to fund and establish a medical sciences campus. The University District is located close to the Spokane River Gorge and the hospital systems in downtown Spokane.

 

And in Maryland, which is home to the National Institutes of Health, federal agencies, and defense-related labs, among other assets, an important objective for state leaders has been to increase the access by small bioscience companies to capital sources. Officials are also allocating funds to enhance the state’s biosciences infrastructure to further support the industry.

 

Working Together

 

A common thread in these communities and regions is the collaborative spirit, where stakeholders ensure initiatives and programs are carried out to provide bioscience firms with every opportunity for success. While these areas feature the components of thriving clusters, such as research institutions, medical centers, large companies, and established educational and training programs, they were missing pieces required to offer a full spectrum of resources.

 

The BioMaryland Center, part of the Maryland Department of Business and Economic Development, was one of the outcomes of a statewide bioscience industry strategic plan. The state is halfway through a 10-year, $1.3 billion investment initiative for the industry; 50 percent allocated to infrastructure and 50 percent allocated to programmatic activity. The infrastructure includes development of a system of bioparks affiliated with universities, incubators and scientific capabilities in the university system.

 

Maryland’s bioscience industry leaders are creative when it comes to raising venture capital funds.

Maryland has a long-term history in the biosciences industry and a variety of programs in place to support innovation; however, entrepreneurs found it difficult to find the programs. The BioMaryland Center, in place since 2010, connects entrepreneurs, scientists, business leaders and CEOs with resources. This could include funding, collaborations with academia and federal labs, clinical trial sites, and networking for partners or potential customers, says Judy Britz, Ph.D., executive director, BioMaryland Center.

 

The state’s bioscience industry leaders are creative when it comes to raising venture capital funds. Leaders approached insurance companies in regard to the taxes these firms pay on their premiums, and held an auction in 2012 where the companies bid 84 cents on the dollar in an effort that offered an advanced discount on a tax credit, which these companies wouldn’t take advantage of for three years, Britz says. The effort raised $84 million, of which two-thirds was directed toward private venture capital to invest in companies, alongside the state’s investments.

 

Over in St. Louis, “we have the universities, the research institutions and corporate R&D programs that put us on the map of major bioscience communities,” says Donn Rubin, president and CEO, BioSTL, which is charged with building the infrastructure and entrepreneurial culture for the area’s bioscience industry. “And the collaborations and interaction between universities, corporations and entrepreneurs is a strong convergence.

 

“But we needed the mechanisms to take the ideas and turn them into companies,” Rubin continues. One effort was to plug into the large amount of inherited wealth in the region, and keeping investments in the region, and creating a venture capital fund dedicated to the bioscience industry. Starting in 2001, in a short amount of time, Washington University in St. Louis, the Danforth Foundation, and the McDonnell family each contributed $40 million to jumpstart venture capital funding in St. Louis. The funds are in their fourth and fifth iterations.

 

St. Louis’ Cortex District is a growing center of gravity.

A variety of facilities was also needed to support the expansion of the area’s bioscience industry. The Cortex District has become central to this effort. This mile-long corridor in the urban core of St. Louis is anchored by Washington University Medical School, hospitals and offshoots of institutions on the western end, and St. Louis University and its medical center on the eastern end of the corridor.

 

Sandwiched in the middle is a bioscience innovation district. Cortex, a nonprofit effort comprised of several organizations, is charged with the redevelopment rights for nearly 200 acres in this area. The BioGenerator initiative, a subsidiary of BioSTL, has invested $6 million of nonprofit funds in 42 startups, which have raised $150 million. An original component of the initiative was a 5,000-square-foot facility, outfitted with shared equipment that is required by a variety of bioscience startups.

 

Some of the startup firms are comprised of former Pfizer employees, who after the company’s downsizing were interested in starting up companies, if they could access funding, reagents and consumables to do the experiments, Rubin says. A number of these companies are funding their drug discovery enterprise with the contract research work they conduct for pharma and biotech companies located all over the world.

 

Rubin says the Cortex District is a growing center of gravity. “We have completed a combination of office and lab space, adding 12,000 square feet to the 5,000 square feet [BioGenerator]; more than tripling the space, and we expect to triple the number of companies. The next goal is to turn the Cortex into a 24/7 live, work and play district, adding more residential areas, with the lab and innovation centers and places where entrepreneurs plug in and do their thing.”

 

Tapping the Coffers

 

Moving west to Spokane, during the past decade, the region has seen an infusion of $500 million in funding to build the area’s medical sciences campus, the University District, and amenities. “We have used federal, state and local funds to put infrastructure in place; and we have leveraged $55 million in private investment,” says Robin Toth, vice president, business development, Greater Spokane Inc.

 

Washington State University has designated the development as its health sciences campus, and has brought its pharmaceutical program to the campus, Toth says. The campus also includes various programs for Gonzaga University, Whitworth University, Eastern Washington University, and the Community Colleges of Spokane. These institutions attract 15,000 students to the University District.

 

This district features a number of assets including an incubation facility, and several facilities including an academic health sciences center, and a biopharma and bioscience facility. The bio building, which opened in September 2013, is already full.

 

In addition to facilities and engaged community leaders working to assist startups, Spokane’s funding asset, the Health Sciences and Services Authority of Spokane County, uses a hold back of county tax revenues to assist in with the creation of R&D, including recruiting doctors and/or professors.

“The University District has been a game changer for our region,” Toth says. “We want to attract additional retail and health sciences on campus so the students on campus can go there for their clinicals and rotations.” At any one time, there are 500 clinical trials taking place in the region.

 

In addition to facilities and engaged community leaders working to assist startups, Spokane’s funding asset, the Health Sciences and Services Authority of Spokane County, uses a hold back of county tax revenues to assist in with the creation of R&D, including recruiting doctors and/or professors. Recently, a company relocating from Oregon to Spokane made use of the funding. Toth says the company received SBIR grants, and the authority’s funds can be used to assist startups in relocating their company to conduct R&D in the area.

 

“It was a small grant of $500,000 but it was enough to bring them here and affiliate with our medical education system to do their R&D here,” Toth says. “That is how you really create wealth and good jobs in a community — attracting these entrepreneurs.”

 

In Maryland, Britz says officials understood that research universities such as “Johns Hopkins and the University of Maryland attract billions of dollars from NIH and federal funding. But we have not been as effective in transforming that research into commercial product.” To that end, the Maryland Innovation Fund encourages academic faculty to transform how they think about work and research.

 

“The first two years of the fund featured $10.8 million, which allows faculty to receive, on a competitive basis, up to $100,000 to create their first prototype or begin to better define a lead compound for a drug,” Britz says. “This is money that normally is not available from the NIH grant system.”

 

Another funding effort, the Biotechnology Investment Tax Credit, in its eight years has assisted more than 65 companies with more than $110 million, of which $55 million was contributed by the state in the form of tax credits. The tax credit offers an investor based in Maryland a 50 percent credit on the investment. Investors located outside of Maryland receive a 50 percent cash refund. Britz says the governor has proposed expanding the amount of the tax credits to $12 million for the 2015 budget; it is currently at $10 million.

 

By plugging the gaps in their bioscience cluster, the state of Maryland, and the cities of St. Louis and Spokane are creating new opportunities by building relationships, forming entrepreneurial networks, and creating funding mechanisms.

 

For complete details on the organizations featured in this article, visit:

BioSTL

BioMaryland Center

Greater Spokane Inc.

Illustration by ddpavumba at Free Digital Photos.net

Shelby County, Tenn: Ortho Device Epicenter
Sometimes members of a dynamic industry are unaware of the impact they have on an economy. In Bartlett and Shelby County, Tenn., one of the nation’s leading orthopedic medical device clusters, OEMs and suppliers were unaware of the expanse of the cluster. A survey of the industry conducted by regional economic developers a couple of years back designed to gauge challenges, such as workforce and the FDA, found that oftentimes, industry stakeholders weren’t aware of each other. Some of that stems from companies developing their own training programs and identifying their own candidates due to the precise and sophisticated nature of the products. The region lacked an established training program to create a pipeline of skilled workers. An industry task force has created the framework for a standard training curriculum, which will include elements such as certifications and opportunities to move up the career ladder, says John Threadgill, president, Bartlett Area Chamber of Commerce. The regional cluster is anchored by OEMs including the corporate headquarters for Wright Medical; the spinal medical device division for Medtronic; the corporate headquarters for Smith & Nephew; and the world headquarters location for MicroPort, a spinoff of Wright Medical’s orthopedic division, now owned by a Chinese company. “The company will use this operation as its entry into the orthopedic medical device industry,” Threadgill says. A fifth OEM is the ear, nose and throat medical device division for Olympus. Threadgill says the cluster features talented entrepreneurial spirits who have left the security of an OEM and ventured out with their own companies, finding support from the pro-business public officials along the way. “We do what we can to work with companies; we welcome them to come in,” he says. For complete details, visit www.bartlettchamber.org and www.bartlettareavision.com.

 

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About the author: Rachel Duran

Rachel Duran is the editor in chief for Global Corporate Xpansion. Contact her at rduran@latitude3.com.

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