The Competition: Other State Initiatives

The Minnesota Partnership for Biotechnology and Medical Genomics is one of the most promising initiatives in our state. It provides Minnesota with the potential to emerge as a leader in the rapidly growing field of biotechnology and medical genomics by leveraging the scientific leadership of two of our renowned institutions in a powerful research collaboration. However, the competition is fierce and Minnesota must move quickly to secure state funding in 2005. Currently, 40 states specifically target the biosciences for development and all 50 states have economic development initiatives available to assist bioscience companies. The following summarizes some notable initiatives by other states. These illustrate Minnesota's stature and leadership role in this highly competitive industry, and the urgency to continue to build biotechnology in Minnesota.

MASSACHUSETTS' NEW LIFE SCIENCE INITIATIVE

Investment package, industry and public- private higher education collaboration and state stem cell bank make Massachusetts global leader

BOSTON – Tuesday, May 8 – Governor Deval Patrick today announced his plan to make Massachusetts the global leader in life sciences, unveiling for the first time ever a comprehensive, collaborative Massachusetts Life Science Strategy.

The plan, outlined during a speech at the BIO 2007 convention, includes a 10 year, $1 billion investment package that will both enhance the state’s already nationally recognized assets in the fields of medicine and science and fill gaps in federal funding to ensure the state’s ability to support life science progress from the idea stage through the production stage. The Patrick Administration’s strategy brings together industry, academic research hospitals, and public and private colleges and universities to coordinate these efforts, spur new research, strengthen investments, create new jobs and produce new therapies for a better quality of life.

"There is no place in the world with as much talent in life sciences and biotech as here in Massachusetts," said Governor Patrick. "Now is the time for us to invest in that talent and bring together the resources of our unparalleled research universities, teaching hospitals, and industry to work towards a common goal – to grow ideas into products to create cures and jobs."

Key to the Governor’s Life Science Initiative is new legislation that will strengthen the Massachusetts Life Science Center and charge it with the execution of a life science mission focused on science and economic development, strategic investments at critical stages of the development cycle, and collaboration with the private sector to create innovation infrastructure critical to both researchers and companies. The Governor also announced his commitment to making targeted investments in companies that encourage life science economic development in the Commonwealth.

"I commend the Governor for reaching our to all sectors of our life science cluster in order to craft a stem cell/life science package that recognizes the unique institutional assets and intellectual firepower in our region," said Steven Hyman, Professor of Neurobiology at Harvard Medical School and Chairman of the Massachusetts. "The Governor allocates state resources in effective ways to enhance our traditional strengths, buttress areas that need attention, and encourage powerful collaborations between our leading edge institutions."

Today’s announcement at the BIO 2007 Convention highlighted the following:

A $1 billion investment package that includes funds to:

• Bridge the NIH funding gap – A competitive grant program during the current downturn in federal support to sustain key programs in the state. Our collective success during the 1998 – 2003 period when the NIH budget doubled from $14 billion to $28 billion only solidified Massachusetts’ dominance in the area of biomedical research. However, the subsequent four years of flat funding since 2003 has caused a 13 percent loss of funding power by NIH and a 35 percent reduction in support for clinical trials. The Patrick administration will make surgical investments during the downturn to sustain key programs here in Massachusetts in order that our position is sustained to once again capture large percentages of new funding when it materializes.
• Create the Massachusetts Stem Cell Bank – A first A first in the nation centralized repository of new stem cell lines available to all sectors, public and private, of research enterprise. Boston University, Brigham & Women’s, Children’s Hospital, Harvard University, Massachusetts General Hospital, the Massachusetts Institute of Technology, Partners HealthCare and the University of Massachusetts have already agreed to participate in the Bank when it is completed.
• Establish Massachusetts Life Science Fellowship Grants – Grant packages for research institutions in Massachusetts to attract and retain the rising stars of life sciences research in the Commonwealth, and ensure Massachusetts is competitive with other states and nations.
• Establish Massachusetts Life Science Innovation Centers – Center-based research facilities that streamline technology transfer, development time and funding opportunity.

"As the president of the University of Massachusetts, the leading public academic research institution in the Commonwealth, I applaud Governor Patrick for making such a strong commitment to the life sciences, particularly stem cell research and RNAi-related research and development," said University of Massachusetts President Jack M. Wilson. "The announcement today is an important step in developing a world-class life sciences strategy for the Commonwealth that will foster scientific innovation, including unlocking the mysteries of debilitating diseases, and spur economic growth. The University of Massachusetts is proud to be able to play an important role in this strategy and I truly believe this proposal is far-reaching, comprehensive and of sufficient scope and scale to enable Massachusetts to continue and expand its national and global leadership in biotechnology and the life sciences."

"It is clear to me that scientific innovation and cutting-edge research help set Massachusetts apart in the eyes of the life sciences and greater scientific community. Today’s announcement of this significant, new state funding is an important signal that the opportunities to do cutting-edge research in this state are expanding. I am proud that RNAi is already changing the scientific landscape, offering new tools in the effort to better human health; my colleagues at the UMass Medical School and I see great promise in our continued work with RNAi and RNAi Therapeutics. Support of this type from the government, academic institutions and society allows us to further advance science and to conduct important basic, clinical and translational research," Nobel Laureate Craig Mello, Ph.D. of the University of Massachusetts Medical School said.

"The future of life sciences is here in Massachusetts." Governor Patrick said. "We have the talent. We have the entrepreneurial spirit. Now let’s seize the future."

Why Biotech's Promise Is So Great

By ANDY KESSLER

January 3, 2007; Page D9

It was 30 years ago that Genentech ushered in the era of biotechnology, forming a company to create new drugs based on genetic engineering. Since then, hundreds of new companies chasing the dream of blockbuster drugs have lost billions of dollars of investors' capital. It reminds me of Warren Buffett's crack about the notoriously unprofitable airline industry, suggesting that any rightminded capitalist would have shot down the Wright brothers at Kitty Hawk. Cumulative profits for the entire biotech industry are meager. The whole lot of them probably drip red ink if you take out Amgen, a 26-year-old company with $14 billion in annual sales and -- like Genentech and just a handful of others -- real profits.

Can science and business mix? Gary Pisano takes on this important question in "Science Business: The Promise, the Reality and the Future of Biotech." The problem, according to the Harvard Business School professor, is that today's corporate structures are allergic to the uncertainty and risk inherent in science.

"Science Business" provides a fascinating history of pharmaceuticals and biotechnology. It ranges from Bayer synthesizing an active extract of willow-tree bark in 1897, thus creating the acetylsalicylic acid commercially known as aspirin, to the cancer drugs of today. Somewhere in between, the science (or is it an art?) of drug discovery turned into a huge business. So-called Big Pharma, with roots in the first half of the 20th century, typically means companies that process naturally occurring compounds with organic chemistry, while a wave of new biotech companies synthesize and genetically engineer drugs in an attempt to fight disease. There is less of a distinction today. Both the pharmaceutical and biotech industries operate with enormous costs for research and development, outlays that seem rational but end up being crapshoots.

Mr. Pisano notes that "drug R&D is a highly complex process; it is expensive, time consuming, and fraught with risk. In these respects, drug R&D is not too different from, say, the development of a new airliner, a new microprocessor, or even an epic movie." The key word is risk. While an Airbus plane, Intel's Core Duo or "Apocalypto" may have market risk, their development is undertaken with confidence that the products will at least make it to market; drug companies begin work on a new product with no idea whether it will even make it out of the lab, much less progress through clinical trials and onto drugstore shelves. A new drug might have the potential to be a blockbuster, but, then again, only one drug out of 6,000 newly developed compounds actually goes on sale. "Productivity" is not a word used often in the drug business.

Drug development is a gamble in itself simply because of the hit-or-miss nature of the science -- or the "profound and persistent uncertainty," as Mr. Pisano calls it, "rooted in our current limited knowledge of human biological systems." But it becomes a staggeringly expensive gamble -- like playing blackjack at a table with a billion-dollar minimum -- because of the facilities required and the legions of experts in chemistry, biology, genomics and other fields who pour their time and energy into research. The "nature of this process is integral," Mr. Pisano points out. "It cannot be broken neatly into different pieces."

And therein lies the rub. Most other science-based businesses nowadays have made the transition from vertical to horizontal integration. Vertically integrated IBM ruled the computer industry, for instance, until the market showed that it was more efficient for Microsoft and Intel and Dell and Best Buy each to own a horizontal layer of the business.

But in drug development, attempts by companies to stake out a horizontal layer -- by providing just the compounds or the processes or the genomic databases -- have failed to take hold. The conventional wisdom remains, though, that it's much harder, if not impossible, to take risks inside large corporations, where managers pay more attention to career risks than market risks. Given that venture capitalists exist to fund smart entrepreneurs with new potential blockbuster drug ideas, biotech companies continue to sprout up, ready to chase new ideas.

So we have vertically integrated Big Pharma plodding along with its risk-averse corporate structure operating in a terrifyingly risky business, and the more nimble biotech companies hoping to catch lightning in a bottle even as they bleed fortunes. Mr. Pisano, in his conclusion, calls for structural change in both businesses: Big Pharma should take more biotech-like risk, and biotech should vertically integrate like Big Pharma. In addition, the entire drug industry should embrace more university research and use the grants process to push R&D at the basic-science level.

I'm not so sure. The biotech industry exists because Wall Street provides access to capital. The stock market, in its inimitable way, looks at the industry, strips away the high R&D spending and then models what a company's profits might look like on a normalized basis, considering today's losses in the light of future profits. Failure is punished quickly.

Even Big Pharma is not immune. Pfizer's stock dropped 11% in December on news that the company's new cholesterol treatment, torcetrapib -- developed by using a biotech technique known as RNA interference -- was dropped because of deaths and complications during clinical trials. Still, Pfizer's established cholesterol drug, Lipitor, is a $12-billion-a-year drug. When these things work, they work big. Mr. Pisano's proposals for structural change are unlikely to be embraced unless Wall Street demands them.

Investors may find "Science Business" particularly compelling. Mr. Pisano notes that "everyone from sophisticated VCs to Aunt Martha" invests in biotechnology companies: "They hope to catch the next Amgen [now valued at $80 billion]. Never mind that probabilities are very low and, on a risk adjusted basis, it may not be a good bet. The promise is there." So science and business will continue to mix. For the moment, they make a volatile cocktail.

Mr. Kessler is author of "The End of Medicine" (HarperCollins, 2006).

URL for this article: http://online.wsj.com/article/SB116778706309665480.html

WISYS, MARSHFIELD CLINIC JOIN FORCES FOR RESEARCH & DEVELOPMENT AGREEMENT MARKS FIRST TIME WISYS REACHES OUTSIDE UW SYSTEM

Marshfield Clinic and WiSys Technology Foundation, Inc., the patenting and licensing organization of the University of Wisconsin (UW) System, today jointly announce a partnership to strengthen collaborations in research and technology transfer*.

This is the first time WiSys has entered into a collaborative relationship with an institution outside of the UW System.

WiSys, a wholly-owned subsidiary of the Wisconsin Alumni Research Foundation (WARF), the nation’s pre-eminent technology transfer organization, will provide patenting and licensing services to Marshfield Clinic scientists as well as facilitate collaborations between University and Clinic researchers.

"Just as the UW School of Medicine and Public Health has long offered research expertise to UW-Madison and the state, this enterprise brings together Marshfield Clinic's premier clinical research and the world-class UW System for the benefit of the common good," said Kevin Reilly, UW System president.

The agreement is expected to benefit researchers at both institutions by enabling them to work together, jointly develop intellectual property and create advancements in human health. Both institutions will work together to identify areas of potential collaborations and facilitate joint research programs.

"Our vision is to create a truly statewide technology transfer organization through partnership with Marshfield Clinic and emulate the success of WARF in Madison to other regions of the state," said Carl Gulbrandsen, managing director of WARF and president of the WiSys board of directors; and member, National Advisory Council, Marshfield Clinic.

Marshfield Clinic is the largest private group medical practice in Wisconsin and one of the largest in the United States, with 736 physicians representing 86 medical specialties in 41 sites in Wisconsin. MCRF has 30 Ph.D. and M.D. scientists and 180 other staff, who provide support for approximately 200 physicians throughout the Marshfield Clinic system engaged in research in areas such as clinical research, human genetics, agricultural health and safety, bioinformatics and epidemiology. UW System has more than 200 faculty engaged in developing therapeutic molecules for various diseases, medical imaging technologies for diagnosis, equipment to assist the disabled and research tools for medical research.

Formation of this partnership is designed to bring together world-class researchers, share resources, protect intellectual property and benefit the state by transferring cutting-edge technologies to businesses.

"This agreement marks a significant step towards marshalling two institutions’ creative powers for the benefit of our society," said Karl Ulrich, M.D., M.M.M., president of Marshfield Clinic. "This collaboration with WiSys will allow us to do things that may not have become a reality otherwise."

"For Marshfield Clinic, the true benefit is how technology developed through this arrangement will translate into direct patient care. Our goal is to discover and communicate scientific knowledge that substantially improves human health and well being," said Humberto Vidaillet, M.D., director, MCRF.

WiSys identifies innovative technologies developed throughout the University of Wisconsin System and brings them to the marketplace for the benefit of the inventors, their colleges, Wisconsin’s economy and society as a whole.

Technology transfer collaborative efforts at Marshfield Clinic will be under the direction of Robert A. Carlson, M.D., director of Marshfield Clinic Applied Sciences, the Clinic division that will oversee the agreement at Marshfield.

"This collaboration will greatly accelerate Marshfield Clinic’s technology transfer program. Access to the wide array of resources of WiSys will provide the Clinic the ability to effectively evaluate and pursue intellectual property opportunities. A key component of this agreement will be research that brings together the unique strengths of each organization. Together, we can facilitate the timely transfer of medical discovery to patient care. This relationship, which is a first for both institutions, will create a synergy that allows both organizations to work toward the common goal of enhancing scientific discovery, protecting our nation’s health and improving quality of life," said Carlson.

"This partnership is an extraordinary step forward for Marshfield Clinic, providing opportunity to advance research to find cures for deadly diseases and improve quality of life," said Mark Bugher, director, UW Research Park, Madison; chair, National Advisory Council, Marshfield Clinic; and chair, Laird Center for Medical Research fund-raising campaign, Marshfield Clinic.

*Technology transfer is the process of developing practical applications for the results of scientific research. It moves scientific discoveries from the lab to the marketplace to benefit society and its economy.

Ohio

In 2002, Gov. Taft proposed the $1.1 billion "Third Frontier Project" in an effort to make Ohio a leader in new, high paying jobs. This initiative includes a $500 million allocation to build the "Wright Centers of Innovation," world-class research facilities designed to accelerate the pace of science commercialization. The Centers are collaborations among Ohio higher education institutions, nonprofit research organizations and commercial companies in the biosciences and other technologies.

• The Biomedical Research and Technology Transfer Fund provides grants supporting biomedical and biotechnology research leading to commercialization and improvements in the health of Ohioans. Funded projects include $9 million to the Genome Research Infrastructure Partnership led by the University of Cincinnati, and $10.2 million to Case Western Reserve's Genetics of Gastrointestinal Cancer.

Florida

Enterprise Florida, the state's public and private partnership for economic development, recognizes life sciences as one of the five "strategic technology sectors" targeted for development. In 2003, the State used $310 million in one-time federal economic stimulus funds and nearly $200 million in county and local resources to establish a Scripps Institute in West Palm Beach.

• $30 million Technology Development Fund to create university-based centers of excellence at $10 million each.
• Florida's FY 2005 budget proposes $20 million in funding for two additional Centers of Excellence and $25 million to match private donations to state universities. The state's strategic plan calls for a multi-part venture capital initiative that includes a $10 million pool for Small Business Innovation Research (SBIR) grants and $40 million to be invested in Florida-based venture capital firms.

Pennsylvania

Pennsylvania has many strengths supporting the biosciences: world-class academic/research institutions; location - 80 percent of the world's largest pharmaceutical companies are within 50 miles of Philadelphia; and strong ancillary industries that support the growth of biosciences.

• The Ben Franklin Technology Development Authority has committed $10.8 million over five years to a multi-institutional alliance that will focus on biomedical applications.
• The Commonwealth's Tobacco Settlement Board has placed $2 million in three venture funds that all invest in biosciences.
• The Lifesciences Greenhouse Initiative provides seed funding and commercialization of biotechnology and other life sciences.

North Carolina

North Carolina is a world leader in agricultural biotechnology. Three of the world's largest agricultural chemical companies - BASF, Bayer CropScience and Syngenta - have major biotechnology R&D facilities in the state. The North Carolina Genomics and Bioinformatics Consortium, created by the North Carolina Biotechnology Center, (NCBC) unites more than 70 companies, universities and service organizations to enhance the state's effectiveness in genomics, proteomics, and genomics research and business. Each year North Carolina's universities, federal labs and non-profit institutes conduct more than $1 billion of sponsored research in the life sciences, placing North Carolina among the top five states.

• Half of the state's tobacco settlement has been allocated to an endowment that has dispersed many of the funds to applied research projects in the biosciences, including a $60 million grant for a training program for biomanufacturing and pharmaceutical workforce development.
• Through the state budget, NCBC receives about $6 million annually, much of which goes to support two major research grants: one provides up to $250,000 per project in multidisciplinary research grants and the other gives up to $55,000 for 18 months of individual research.

New Jersey

New Jersey is home to the global pharmaceutical industry and has a growing biotech sector, giving it more than 46,000 employees in the two industries. New Jersey ranks eighth among the states in venture capital investments in biotechnology.

• New Jersey has specifically targeted R&D funds to leverage federal and private funding. The NJ Commission on Science and Technology receives $5.5 million annually in federal support to operate an R&D Excellence grant program.
• University-based bioscience research and development centers accounted for a major share of $125 million in capital funding through two bond issues over the last 15 years.