Biotechnology Innovation and Entrepreneurship / Ingram's Magazine -Feb 2012

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Biotechnology Industry Outlook Report

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Biotechnology Innovation and Entrepreneurship / Ingram's Magazine -Feb 2012

  1. 1. (left to right)Joe Heppert, University of KansasKevin Sweeney, Polsinelli Shughart (Co-Sponsor, Chair and Host)Stephen Higgs, Kansas State University(Co-Sponsor)Robert Casillas, MRIGlobalJohn Norton, Henry W. Bloch School of Management, UMKCJohn Garretson, Shook Hardy & BaconJeff Boily, Center for Animal Health InnovationPeter Dorhout, Kansas State University(Co-Sponsor)Dan Getman, Kansas City Area Life Sciences InstitutePatrick Wooley, Polsinelli Shughart, Co-Sponsor and Host)Jeff Reene, University of Kansas Cancer Center, Kansas City Cancer CenterNot Pictured: Henry Randall, Saint Lukes Hospital INGRAMS • February 2012 • Volume 38, No. 2
  2. 2. More Best Than Worst of Times for AreaBiotech SectorIn the 12 years of Ingram’s Industry Outlook assembly series, Polsinelli Shughart’s KevinSweeney did something that no previous chair had thought to do: begin his presentation with arecitation from Charles Dickens.“It was the best of times, it was the worst of times,” said Sweeney, who proceeded to read therest of the entirely apt opening paragraph of The Tale of Two Cities. This excerpt summarizedSweeney’s feelings on the state of the biotech industry in this region.Positive signs are many: MOSIRA, a major income-tax based financing tool on the Missouriside, a record level of federal grants for area institutions, a loosening of venture capital, KansasState’s new facility in Olathe, Kansas University’s state-of-the-art clinical facility in Mission, anangel tax credit bill recently introduced in Missouri’s legislature, helpful new federal legislation,progress with NBAF and National Cancer Institute designation for the KU Cancer Center, the listgoes on.“Those are all good things,” said Sweeney. He then proceeded to cite challenges: the worsteconomic downturn in memory, the risk of losing companies to either coast, difficultiesnegotiating the state line, and the political consequences pursuant to that division.Sweeney invited his colleagues to sort out the best from the worst and point the way to the futurewhile so doing. Joining him at Polsinelli Shughart’s offices overlooking the Country Club Plazawere a dozen high-level stakeholders from the area’s most prominent biotech institutions,including representatives from Kansas State University, which co-sponsored the assembly. INGRAMS • February 2012 • Volume 38, No. 2
  3. 3.  1. Kevin Sweeney invoked the opening of Charles Dickens’ “A Tale of Two Cities” to assess the current state of biotech in theregion. | 2. Joe Heppert said the Kansas City region is on the cusp of top-tier translational research. | 3. John Garretson praised thecollaborative nature of biotech interests in the two-state area. | 4. John Norton cited opportunities to steer more intellectualproperty onto paths for commercialization.OpportunitiesAs an opening question, participants were asked to cite the most promising opportunities for theregion’s biotech industry. There appears to be much to look forward to.Joe Heppert, associate vice chancellor for research and graduate studies at KU’s Lawrencecampus, sees great promise in translational science on his campus. Ideally, the research thatchemists, biologists, and pharmacists are doing can be translated into cures, both human andanimal. “We’re on the cusp of doing this about as well as anybody does in the country,” saidHeppert.“I think that it comes down to three things,” said John Garretson, who leads Shook Hardy &Bacon’s practice group to biotech. He cited “opportunity, money, and identifying and helping theentrepreneurial talent.” Garretson, who recently moved to the area from New York, found themore collegial environment here a welcome change from the “insular sort of mindset” thathampers research back east. INGRAMS • February 2012 • Volume 38, No. 2
  4. 4. Robert Casillas, vice president of strategic life sciences and national security for MRIGlobal,sees “enhancing and strengthening our partnerships and collaboration” as a major opportunity forall regional players. “Those successes will pipeline in the talent,” said Casillas, “which is thehuman research talent that we’ll need to continue to grow.”“There’s a lot of research to do. There are a number of start-up companies. There’s a momentumto this area,” said Patrick Woolley, chair of the science and technology group at Polsinelli. Whatthe area lacks, however, are major investment funds, and this Woolley sees as a likely area ofgrowth.Dan Getman, president of the Kansas City Area Life Sciences Institute, pointed to three broadareas with growth potential: the animal-health corridor; translational research, particularly in themedical area; and the improvement in the venture capital environment, an example of which isAratana Therapeutics.This KCK-based animal health company recently completed a $15 million Series B financingdeal, which brings the total capital raised to $31 million since Aratana was launched earlier in2011. “They brought in some really top talent,” said Getman, “and it’s a very unique company.”Jeff Boily, the CEO of the Center for Animal Health Innovation, agreed that one of the corestrengths of the region was the animal-health corridor. The corridor—a swath that stretches fromManhattan in the west to Columbia in the east—includes companies that account for nearly 32percent of total sales in the $19 billion global animal-health market. “I’m not sure everyone trulyrealizes how unique the corridor is,” said Boily. That much said, he recognized that the area fallsshort in the amount of investment capital available.“What I see in this area,” said John Norton, the associate director of the UMKC Institute forEntrepreneurship and Innovation, “is the opportunity to connect lots of intellectual property, lotsof new knowledge to people who have the resources to develop the new knowledgecommercially.”Jeff Reene, chief operating officer of the KU Cancer Center, envisions three major growthopportunities. The first would be to grow the federal research-funding portfolio. The second, onthe translational side, would be to leverage local strengths to make sure area institutions werefully capitalizing. And the third would be to increase access to capital.  INGRAMS • February 2012 • Volume 38, No. 2
  5. 5.  1. Collaboration, said Stephen Higgs, will be key to driving success of the NBAF facility in Manhattan, Kan. | 2. “Cancer doesn’trecognize the state line,” said Jeff Reene, addressing the need for collaborative efforts. | 3. A key to driving life-sciences successwill be educating a new cohort of skilled biotech workers, said Peter Dorhout. | 4. Changes in federal funding policies compelsmore collaborative efforts between organizations, said Robert Casillas.“My mandate is to educate, train and develop scientists for the NBAF,” said Steve Higgs,research director of the Biosecurity Research Institute at Kansas State. NBAF, the National Bioand Agro-Defense Facility, is the planned research facility that will replace the 1950s-era PlumIsland facility in New York. The 520,000-square-foot facility is scheduled to become fullyoperational by 2020 and employ up to 300 people. K-State has fought very hard to secure it andget it funded. Success, said Higgs, will require collaboration between federal labs, like NBAF,and biotech facilities and industries here in the region.Peter Dorhout, the dean of arts and sciences at K-State, argued that one of the critical missionsfor everyone around the table would be educating the work force for biotechnology’s future.“One of my goals as dean of arts and sciences,” said Dorhout, “is to really engage graduatestudents and undergraduate students in the whole inquisitive process of learning about science.” INGRAMS • February 2012 • Volume 38, No. 2
  6. 6. Bi-State CollaborationsFrom the windows of Polsinelli Shughart, one can see the state of Kansas less than a mile away.As Kevin Sweeney pointed out, the uniquely bifurcated nature of the region makes competitionbetween the states inevitable, and collaboration difficult. He wondered how institutions dealtwith that reality.“It is not just cross-border collaboration that has to be cultivated here,” said KU’s Joe Heppert.“It is collaboration between institutions that are in the same state.” One challenge for him is tocreate stronger collaborations between KU and KU Medical Center, which is part of the samesystem. One area in which KU is looking to foster collaboration, both with K-State and theUniversity of Missouri, is bioinformatics.“Cancer doesn’t recognize the state line,” said Jeff Reene. He cited the momentum generated byRoy Jensen’s return to the Kansas City area in 2004 to help University of Kansas Cancer Centerobtain National Cancer Institute designation.“It was very apparent that we needed to rise above the traditional challenges there,” said Reene.In creating the Midwest Cancer Alliance, a collaboration of 15 institutions on both sides of thestate line, the goal was “to rally together and leverage our collective capabilities in terms of thispursuit of NCI (National Cancer Institute) designation.”Reene cited two other examples of successful bi-state collaboration, one being the clinical andtranslational science award that involved seven or eight institutions. “That’s a huge feather in ourcap as a region,” said Reene. A third example is the IAMI, the Institute for Advancing MedicalInnovation at KU Med Center funded by a Kauffman Foundation grant. “We’ve had somephenomenal early results there in terms of collaborations with Children’s Mercy,” said Reene.“We intentionally set aside the state line. We’re not big enough to figure this out alone. We’vegot to figure out how to collaborate.”As Dan Getman observed, there is an intense competition for funding at the national level, andmost of the grants now require cross-institutional collaborations. In the region, he noted, each ofthe different institutions has unique strengths. “Rather than trying to elevate every area at eachinstitution,” he recommended that area institutions “build on our strengths.” That is alreadyoccurring. “If we don’t do that,” he added, “we won’t be able to compete nationally.”According to Robert Casillas, MRIGlobal has succeeded with partnerships not just across statelines but within the larger region. “It is a business model for MRIGlobal to partner,” saidCasillas. The federal funding environment all but demands “pre-partnering.”  INGRAMS • February 2012 • Volume 38, No. 2
  7. 7.  1. Jeff Boily noted the truly unique levels of outcomes-focused cooperation in this region, even among companies that have beencompetitors in the animal-health sector. | 2. By moving more intellectual property disputes into patent court, as opposed to federalcourt, resolutions can be achieved quicker, and more efficiently, said Patrick Woolley.Explained Casillas, “We have already come to the table, looked at each other and said ‘What areour strengths and what are our weaknesses?’ and pre-positioned ourselves so that we can—No. 1—provide optimal solutions for our national security.”Peter Dorhout, who has recently arrived at Kansas State University by way of Colorado State,finds the environment here conducive to collaboration. “Kansas actually is in a very positiveplace,” he said, “because higher education often speaks with one voice. We spoke with 14 voicesin Colorado.” As a telling example of that problem, he added, “There were times when I felt itwas easier for me to collaborate with colleagues at nuclear weapons facilities in the formerSoviet Union than it was to collaborate with folks down at Colorado University Medical Center.”Jeff Boily noted that participants in the animal-health corridor, some of them competitors, lookedat the idea of collaboration from an outcomes perspective. The industry came together with thegoal of accelerating early-stage research to help “grow the corridor, grow jobs, and give themember companies access to a greater product pipeline. ““I have not seen this any place in the world,” said Boily, “where everyone is still kind of on thesame page, moving forward, and we’re attracting interest literally from around the world.”CommercializationKevin Sweeney asked UMKC’s John Norton, whose Bloch School is well known for its effortsin entrepreneurship, what he was seeing in regard to the commercialization process. “What arewe doing right,” Sweeney asked, “and what could we be doing better?”Norton reported that many would-be entrepreneurs think it is all about securing start-up money.But he believes that ideas must come first. It is important “to start lots and lots of businesses andto start to commercialize lots of ideas.” Bloch’s research has shown them what works, andfaculty expose their students to these models. Given that the average entrepreneur will createsome 500 jobs in his lifetime, and that Bloch trains 100 entrepreneurs a year, “that’s a big deal.” INGRAMS • February 2012 • Volume 38, No. 2
  8. 8. With ideas being critical, and knowing that the intellectual property surrounding those ideascreates value, Kevin Sweeney wondered how Washington’s “new intellectual property regime”would impact the regional bio-tech industry.As Patrick Woolley explained, the new system basically takes cases out of the federal courtsystem and puts them in the patent office where, presumably, they can be managed a lot moreeconomically. “I think you get a better result without spending upwards of seven figures to go trya patent case,” said Woolley. This approach also harmonizes American law with the rest of theworld’s, which Woolley believes, is “actually a good thing for our purposes.”John Garretson generally agreed with Patrick Woolley, but is not quite so bullish on the changes.Garretson thinks we are entering a period of uncertainty. He cited specifically the FDA’s failureto issue guidelines on biosimilars—that is, officially-approved subsequent versions of innovatorproducts. These guidelines were promised by January of last year but have not been delivered.In addition to the uncertainty, Garretson wondered how the government was going to find severalhundred new patent judges to hear these cases. “What it does is put pressure on early assessmentof what is your IP” or intellectual property, said Garretson.   INGRAMS • February 2012 • Volume 38, No. 2
  9. 9.  1. John Norton addressed the way advancing technologies could help address the acute lack of physicians in rural areas. | 2. JoeHeppert talked about how advances in bioinformatics could revolutionize medical care. | 3. Increasing numbers of junior facultymembers are helping drive awareness of the need for commercialized research, said John Garretson.Peter Dorhout believes that the academic sector shares the responsibility of fosteringentrepreneurship. That, he said, is going to take training. “We need to make [commercialization]a part of the reward process and we need to facilitate it.”According to John Garretson, a large number of junior faculty are way out in front of theirinstitutions on the issue of commercialization. “They want to do this regardless of whether thereare well-characterized rewards at stake,” said Garretson. “They’ve grown up with the expectationthat their work is going to have long-term impact and is really going to end up in themarketplace.”BioinformaticsBioinformatics, in its essence, refers to the application of computer science and informationtechnology to the field of biology and medicine. As Joe Heppert explained, bioinformatics meansmany different things to many different constituencies, from medical informatics, as at CernerCorp., to molecule drug discoveries and protein-to-protein interactions. “Our ability to move INGRAMS • February 2012 • Volume 38, No. 2
  10. 10. beyond where we are right now in terms of discovery,” he said, “is going to be driven over thenext 10 years only by our ability to innovate and new computations.”Although there is a significant range and variety of challenges to be overcome, said PeterDorhout, bioinformatics “opens doors for serious collaborations that are interdisciplinary,multidisciplinary.”Robert Casillas of MRIGlobal spoke to the importance of translational research in areas like foodsurveillance, bio surveillance, and health surveillance. “The more that the discipline ofbioinformatics grows,” said Casillas, “the more we can address emerging surveillance concernswhether in this country or globally.”Joe Heppert emphasized the potential of bioinformatics in the development of personalizedmedical care. Jeff Reene strongly agreed. “Based on studying the biomarkers and the data,” hesaid, “we’re now able to target therapies to individuals to be much more effective.”Advances in bioinformatics, John Norton suggested, could offer small-town doctors the ability topractice the kind of medicine heretofore done only in cutting-edge facilities. “The possibilitiesare really staggering,” Norton said, “and we don’t know which ones are going to work. All weknow is that we need to rethink the way data are manipulated, the way data are approached,combined and dealt with.”An advantage for the Kansas City area, Woolley observed, was Google’s selection of the area forthe installation of an ultra-high-speed network that will allow for Internet access more than 100times faster than what most Americans have today. “It’s a big pipe,” said Wooley. “It’s fast. Youlet people run with it. You have small grants, and you see where it takes you.”Henry Randall, director of transplantation and hepatobiliary surgery at Saint Luke’s HealthSystem, has high hopes for applied bioinformatics. “Cancer is also a part of what I do,” saidRandall. “So developing bioinformatics, expanding that arena for transplant, for cancer care, issomething very personal to me.”Work-Force TrainingKevin Sweeney asked his colleagues whether they were “moving the needle” on the quality ofthe regional biotech work force. “I think the best measure of that is going to have to come fromindustry that is telling us we’re doing the right things,” said Peter Dorhout. In launching atraining program with Manhattan Area Technical College, K-State is now working with studentsfrom the associate degrees all the way up to the graduate level. An integral part of training the work force is retention, said Steve Higgs. “There’s nothing thatmotivates somebody to be trained more than an opportunity to be safe, secure and doingsomething exciting.”Joe Heppert is enthused about the incubator spaces that are starting to spring up across themetropolitan area and in Lawrence. Some of them, in fact, are so full that they are running out of INGRAMS • February 2012 • Volume 38, No. 2
  11. 11. space. Heppert worries that if we do not provide for the talented undergrads and PhDs that theregion is producing, “We’ll continue to be a great feeder for the coasts.”Some of the better secondary schools are also contributing to the creation of a viable work force.John Norton gave kudos in particular to the Blue Valley’s Center for Advanced ProfessionalStudies, an extraordinary consortium of five high schools. “They’ve got little tiny kids that arepatenting biotechnology and aero-space stuff,” said Norton. His hope is to keep those students inthe area, ideally at UMKC. “We need to get them integrated into this process,” Norton added.“Our greatest impact is reaching to the middle school and high school systems to bring that talentup,” agreed Robert Casillas. “The more we can be involved as mentors, as tutors, allowing ourvarious staff to be involved and engaged daily is where were going to see that greatest impact.”Law firms are in the recruiting business as well. Polsinelli Shughart already has 11 PhDs. AsPatrick Woolley observed, they need more—more chemists, more doctors of pharmacy, morepeople with technical training whoare prepared to spend three additional years in law school.Henry Randall wants not only to nurture young talent here but to recruit from outside the area aswell. One of the quickest ways to do that is to identify mentors and create programs that areattractive to outsiders.IncentivesOne part of a comprehensive plan to attract and retain talent is a program of government-sponsored incentives. Kevin Sweeney asked his colleagues which of the available developmenttools has proven most effective.Dan Getman lobbied for the Angel Tax Credit Program, which has been very successful inKansas. He also likes the state’s Eminent Scholars Program. Jeff Reene believes that the EminentScholars program has been integral to the success of the Cancer Center. INGRAMS • February 2012 • Volume 38, No. 2
  12. 12. Said Jeff Boily of the Center for Animal Health Innovation, “There’s no doubt that the tax creditissue has been very successfully used across the board.” Jeff Reene spoke highly of the 1/8 centsales tax in Johnson County that funds the Johnson County Education and Research Triangle,providing funding for K-State’s Olathe campus, the Edwards Campus of KU, and the Universityof Kansas Medical Center.SurprisesAs a closing question, those participants relatively new to the area—and there were many—wereasked what surprised them most when they got here.The area’s work ethic impressed Peter Dorhout, also the affection people have for where theylive, especially Kansans.“What I saw here was a clean slate,” said Henry Randall, “the opportunities for building aclinical program, to also add on a research component to it, and knowing that Kansas City didhave this developing biotech industry, andI wanted to be a part of that.”Said Dan Getman, “I was stunned by people in the region who didn’t have an appreciation forthe progress that had been made over the last decade in the life sciences.”Dan Casillas was impressed by the area’s “partnering environment.” John Garretson agreed. Thespirit of collaboration here he found to be “light years beyond” what he had seen in New York.For John Norton, it was the em-brace—by the region in general and the Bloch School inparticular—of the entrepreneurial spirit. “Were going to change the economy of this region,” heenthused. “We’re going to change people’s lives.”   __________________________________________________________ INGRAMS • February 2012 • Volume 38, No. 2

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