Biomedical Research Expands Area Economy - KC Business, May 2012


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The Kansas City Area Life Sciences Institute advances the life sciences and related economic development in the Kansas City region. The existing presence of several big players in biomedicine has been incentive for collaborations and has attracted other organizations to the area. The activity and research of the life sciences community is set to impact the local economy and cement Kansas City’s reputation as a life sciences destination.

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Biomedical Research Expands Area Economy - KC Business, May 2012

  1. 1. Biomedical Research ExpandsArea EconomyScience, entrepreneurship and corporate savvy boost business opportunitiesStory by Julius Karash | Photos by Gary RohmanBioscience and Technology Union Station, a venerated icon and a symbol of our can-do spirit, leaves its mark on the Kansas City landscape and psyche.But most locals and visitors don’t know that the grand old station is home to the Kansas City Area Life Sciences Institute (KCALSI),an organization that advances the life sciences and related economic development in the area. And while the restoration of UnionStation marked a great achievement, the constant growth of life sciences activities in our region is cutting a wide swath as well.Much of the impact will come from new jobs created by companies that commercialize life science discoveries taking place inarea labs.“These higher technology jobs in life sciences are well-paying,which translates into things like houses and taxes,” says DanGetman, KCALSI president and CEO (he plans to retire nextspring). “These are highly educated individuals, so they feelstrongly about education. These are exactly the kinds of thingsyou want to grow. Kansas City is in the midst of significantgrowth in this whole life science area.”Getman cites life science powerhouses in our area such as the StowersInstitute for Medical Research, the KC Animal Health Corridor andthe University of Kansas Cancer Center, which is seeking NationalCancer Institute designation.The KCALSI reported recently that the Kansas City area is hometo more than 70 contract research organizations that generate anestimated $1.33 billion in annual revenue and employ more than9,000 workers.Others contributing to growth in the Kansas City area life sciencescommunity include the University of Missouri-Kansas City, KansasCity University of Medicine and Biosciences, Teva Neuroscience Inc.and MRIGlobal, a not-for-profit research and development organizationthat recently formed a global health and security unit.“Building collaborative relationships with research universitiesand medical centers has helped us focus and develop programsthat are more complementary,” says Tom Sack, who is senior vicepresident and director of technical operations at MRIGlobal. “Asthe local academic community grows, that provides us with amuch better workforce.”“By having these things like Stowers, the [Animal Health] Corridor,the Kansas Bioscience Authority and the Cancer Center effort,” saysGetman, “those cause people to look at Kansas City and say ‘Wow,there’s something really good going on in this area. Maybe I need togo visit. Maybe I want to collaborate. Maybe I want to establish apresence in that region.’”But Can Kansas City Really Do This?That’s not to say it’s been smooth sailing for the life sciences in KansasCity. In the 1990s, some experts told Jim Stowers that he needed toestablish his institute on the East or West Coast rather than KansasCity because the country’s best scientists would not move to fly-overcountry. But Stowers vowed that he would build the institute here andprovide the funding to ensure its success, and he has made good onhis word.Of course, most life science efforts won’t be lucky enough to finda Jim Stowers to bankroll them, and Kansas City’s share of researchgrants and life science venture capital investing pales in comparison toareas such as Boston and San Diego.But funding comparisons can be misleading, Getman says. “Dollarfor dollar, it’s hard to compare research funding that goes to ourmetro area compared with other metro areas because most of themajor universities in our region lie outside our metro area. Weoperate as a broad region.”In addition, Getman says such comparisons typically don’t includeorganizations such as the Stowers Institute, which was endowed withnearly $2 billion, and MRIGlobal.“Many of these studies are based on NIH (National Institutes ofHealth) funding,” Getman says. “That really puts a focus on medicalresearch within the immediate Kansas City area. We have much morediverse funding sources, like the Department of Defense, the U.S.Department of Agriculture and Homeland Security, as well as NIH.”i n s i g h t, i n n o vat i o n & i n sp i rat i o n 35
  2. 2. Furthermore, there is evidence of substantialgrowth in NIH funding for the area.The Kansas Bioscience Authority reported in2010 that Kansas was No. 1 in the nation forits increase in NIH funding, jumping 37 percent(from $75 million to $103 million) betweenfiscal year 2004 and fiscal year 2009.One of the emerging success stories in theKansas City area bioscience sphere is theOlathe-based Novita Therapeutics, whichis developing new medical devices for renal,cardiovascular and gastrointestinal health.Novita got a boost last year when theKansas Bioscience Authority made a$600,000 investment in the company.Novita Therapeutic’s president and CEO isDr. Nicholas Franano. His accomplishmentshave made him emblematic of the success thatis possible in the bioscience-business world.In 2001, Franano and William P. Whitakerco-founded Proteon Therapeutics Inc., whichis developing pharmaceuticals to address themedical needs of patients who have renal andvascular diseases.Eight years after that, they received the 2009Ernst&YoungEntrepreneuroftheYearawardsin the private equity/venture capital-backedcategory in the Central Midwest region.Proteon Therapeutics has since grabbedthe attention of Swiss pharmaceutical giantNovartis AG, which has an opportunity toacquire the firm for $550 million in 2013.Novita Therapeutics develops productsinternally, Franano explains. “When we get tothe point where we would like to show themto venture capital investors, we put them intoa subsidiary company. We created our firstsubsidiary company in 2010, and our secondlast year. We’re developing products at bothsubsidiaries, and we’re actively talking withinvestors about spinning off both of them.”Kansas has become a great state in whichto start a life sciences company, Franano saysfromexperience.“WhenIfirststartedin2001,as an entrepreneur, you could legitimatelycomplain that there weren’t enough resourcesin the region to do the kinds of companiesthat I wanted to do. But I think now theonus is on the entrepreneurs to make good.”The Stowers Institute: By the Numbers475 staff members, more than 150 ongoing research projects, more than$850 spent on research, 600,000-square-foot research facility in Kansas Cityand 5 American Academy of Arts and Sciences fellowsKansas City Life Sciences Industry SegmentsSource: Kansas City Area Life Sciences Institute Inc.’s 2009 Industry Census.BiotechnologyResearch and Testing34%Drugs andPharmaceuticals30%Medical Device Firms18%FoodScience/Feed orPlant-Based Products12%Software3%Organic orAgricultural Chemicals3%36 K C B u s i n e ss | K C B C e n tra l . com
  3. 3. Two Out of Five Ain’t BadWhen the Greater Kansas City Chamberof Commerce unveiled its “Big 5” ideas forthe region last year, two of them involvedlife sciences.One idea is the “The World’s Symposiumon Animal Health,” to be held in KansasCity. The Chamber said at the time that theKC Animal Health Corridor, located betweenColumbia, Missouri, and Manhattan, Kansas,is home to the single largest concentration ofanimal health entities in the world.“The objective is to permanently cementKansas City’s position as the preeminent cityin the country, and perhaps in the world,for animal health science,” says Jim Heeter,Chamber president and CEO. “That includesresearch and development, production, newbusiness growth and job opportunities.”The other life science-related Big idea is“The KC Regional Translational ResearchInitiative.” Translational research, which issometimes characterized as “bench to bedside”activity, involves the conversion of laboratorydiscoveries into new cures and treatments.To establish Kansas City as a nationallyrecognized center for translational research,the Chamber has set a five-year goal to raise$40 million. This would augment a recent$20 million NIH Clinical and TranslationalScience Award granted to area researchers.Beneficiaries of the existing NIH grantinclude the University of Kansas MedicalCenter, University of Kansas, Children’s MercyHospitals and Clinics, Saint Luke’s HealthSystem, Truman Medical Centers, the KansasCity University of Medicine and Biosciencesand the University of Missouri-Kansas City.“Translational research is the kind ofinitiative, like ‘The World’s Animal HealthSymposium,’ that has the potential to createan enormous number of jobs and economicgrowth for our region,” Heeter says. “Thesetend to be very high-paying jobs. We aretalking about bringing a lot of money andcreating a lot of economic stimulus andgrowth for the Kansas City region throughthe development of both of these.” And thatstimulus and growth could contribute to therealization of a third Chamber Big idea.Heeter says that both the world animalhealth symposium idea and the translationalresearch idea dovetail with another Chamberinitiative, “The Making of America’s MostEntrepreneurial City.”“We want to be the most entrepreneurialcity in America,” he says. “That ties intoboth the translational research and animalhealth initiatives. Both of those involve agreat deal of entrepreneurism and creationof new businesses and new facilities. Withrespect to the commercialization of thescience produced by research in particular,entrepreneurism is the key.”And beside the potential for creating andattracting new businesses, research projectsin the Kansas City area raise our region’sbiomedical profile, thereby spawning moreresearch and increasing the likelihood ofimportant discoveries occurring in KansasCity labs.It would be nearly impossible to detailall of the biosciences-related research anddevelopment activities that are happeningin the area in just these few pages, but hereis a sampling:Cancer SurvivorshipTraining Inc.Jennifer Klemp, who is a researcher at theUniversity of Kansas Medical Center, wantedto start a company that would develop onlinecurriculum for health care professionals whomanage care for cancer survivors. She appliedin January 2011 to the National CancerInstitute for a grant to make that happen.The answer? A resounding no.“They told me I was overly ambitious,”Klemp says. “And I said, ‘All right! I’ll takethat on.’”Klemp had obtained financial supportfrom Back in the Swing, a local nonprofitorganization, but more was needed. To movethe dial forward, she and her colleaguesformed a corporation and signed a licensingagreement with KU in January.“The license agreement with KU allows me,as an employee, to use my intellectual propertyto build something that also has commercialvalue,” says Klemp, the company’s CEO.“KU’s an investor in the business. It allows usto take great things that are happening at KUand [use them] in this business.”Klemp also received Kansas Angel TaxCredits geared toward startup technologycompanies. The credits allow investors toget back 50 percent of their investmentswith a limit of $50,000. “This has been avery helpful tool for us getting investors,”she says. “We’re raising $500,000, andwe’re about two-thirds of the way there.”Cancer Survivorship Training is basedin Prairie Village. Klemp’s partners in thecompany are Rob Bykowski, presidentand chief operating officer, and WilliamBrunkhardt, chief technology strategist.Klemp has performed research at the KULawrence campus and at the KU MedicalCenter in Kansas City, Kansas. According toKU, Klemp recently published research on aOne-third of the $19 billion global gross sales of the animalhealth industry emanate from companies that have a presencein the KC Animal Health Corridor. This represents 20,000 jobsat about 220 companies in the region.—Kimberly Young, vice president of bioscience developmentfor the KCADCrelated readingi n s i g ht, i n n o vat i o n & i n s p i r at i o n 37
  4. 4. national needs assessment, in a partnershipwith the National Oncology Nursing Society,to evaluate both the extent and the type ofsurvivorship care being delivered to patients,as well as the educational needs of the healthcare providers.Klemp sees a great need for what she’soffering. “By 2020 there are going to be 18million cancer survivors in the United States,”she says. “They are [seen and treated] inevery type of medical practice, includingendocrinologists and internal medicinedoctors and cardiologists. If all of these folksdon’t understand some basics on cancersurvivors, then they are going to be at adeficit when caring for those patients.”To prevent such deficits from occurring,Cancer Survivor Training will provide toolsfor activities such as patient assessment andcare coordination.How far does Klemp want to take herbusiness? “We can handle as much volumeas we can get,” she says. “We are going tolicense it to organizations and universities.We are also going to sell [training] courses toindividual users. The platform can be usedin any health care space (not just cancer orsurvivorship). You can build anything youwant into that framework.”Klemp says that researchers who want tofollow a path similar to hers should knowthat “there are opportunities for funding outthere. There are creative ways to get funding.It is our responsibility to take grant andphilanthropic dollars and leverage them to thenext step. And it’s very important to look tothe business community for collaboration.”And in all of these, keep an open mind.Also crucial is the willingness to work aspart of a team, Klemp says, and to “thinkoutside the box. Businesses don’t have to bejust a medical device or drug therapy. Thereare lots of ways we can take things to thenext level.”KC Animal Health CorridorKansas City can no longer lay claim toa major stockyards, but agribusiness isbooming here.Area civic and business leaders realizeda few years ago that a corridor stretchingfrom Columbia, Missouri, to Manhattan,Kansas, was becoming the hub of one ofthe world’s top centers for animal healthenterprises. To leverage that expertise,they established the KC Animal HealthCorridor in 2006. The Kansas City AreaDevelopment Council (KCADC), GreaterKansas City Chamber of Commerce andKansas City Area Life Sciences Instituteled the initiative.Major players in the region’s animal healthfield include Bayer HealthCare AnimalHealth, Boehringer Ingelheim Vetmedica,Hill’s Pet Nutrition and CEVA Biomune.“One-third of the $19 billion global grosssales of the animal health industry emanatefrom companies that have a presence in theKansas City Animal Health Corridor,” saysKimberly Young, who is vice president ofbioscience development for the KCADC.“This represents 20,000 jobs at about 220companies in the region.”The goals of the KC Animal Health Corridorare retaining the companies that are alreadyhere, recruiting companies to move here andgrowing the animal health research base inthe region.The Animal Health Corridor has thrivedeven amid challenging economic times, Youngsays. “Since the start of the effort, 22 companieshave moved here,” she says. “They’ve createdalmost 1,300 jobs and $1 billion in newinvestment. That’s very significant.”Young cites last year’s announcement thatArgenta, a global provider of drug developmentservices and contract-product manufacturingfor the animal health industry, had decided tolocate a new lab facility and office in Lawrence.The move created 27 new jobs along with aninvestment of $500,000 in purchasing newlaboratory equipment.“That was a nice win and investment forthem to come here and create those high-payingjobs,” she says.Young says the Animal Health Corridorbenefits from 14 bioscience incubators inthe region that provide crucial assistanceand resources to early-stage companies.Many of the incubators are connectedwith universities.Another strong point along the Corridoris the Center for Animal Health Innovationin Olathe. The Center provides early-stageproof-of-concept funding.“One major focus of the Center is trying toidentify the next big idea in the animal healtharea, as far as research goes, that has thepotential to become a commercial product,”saysJeffreyBoily,CEOoftheCenterforAnimalHealth Innovation. “It’s all about identifyinginnovative, early-stage research that addressesunmet needs in the animal health industry.”Young says that the Corridor will hold itsfourth annual investment forum at the endof August. “That’s venture capital fundingwith a $5 million to $20 million target,” shesays. “It is getting ideas off the ground, ideasthat haven’t had clinical trials yet. It’s helpingBy having these things like Stowers, the [Animal Health]Corridor, the Kansas Bioscience Authority and the CancerCenter effort, those cause people to look at Kansas Cityand say ‘Wow, there’s something really good going on in thisarea. Maybe I need to go visit. Maybe I want to collaborate.Maybe I want to establish a presence in that region.’—Dan Getman, president and CEO, Kansas City AreaLife Sciences Institute38 K C B u si n ess | K C B C e n t r al . com
  5. 5. support that pipeline from the idea stage to acompany setting up and commercializing.”The concentration of companies here andthe attention and support they receive attractother animal health companies, Young notes.“Companies on the outside want tocome here and benefit from that,” she says.“There’s no other place in the world that hasthis concentration and singular focus onanimal health that they’re going to find here.”Aratana TherapeuticsAratana, a Kansas City, Kansas-basedcompany that develops medicines forcompanion animals, was founded in 2010by MPM Capital, Avalon Ventures, theKansas Bioscience Authority, CultivianVentures and RaQualia Pharma.“After we licensed two new compoundsas innovative new medicines for dogs andcats, we settled the company in Kansas to bepart of the Animal Health Corridor becausethere are opportunities here for us to makeconnections with animal health companies,”says Linda Rhodes, CEO.After approximately nine months, theoriginal investors wanted to raise moremoney. “We went out to the ‘super angelcommunity’ in the Kansas City area, as wellas across the country,” Rhodes says. “Wehad a very successful completion of a SeriesB [round of preferred stock] and raisedan additional $15.5 million. We did it in twoclosings to take advantage of tax credits forboth 2011 and 2012.”An “angel investor” is an individualor group that provides capital to startupcompanies but does not become a partner.They’re rarely involved in management, butangel investors typically add value throughtheir contacts and expertise.One of the new angel investors in Aratanais the Women’s Capital Connection, which isbased in Lenexa and was founded in 2008with 32 investors committed to investing inwomen-led ventures in our region.Other investors in the Aratana Series Bround included the Mid-America Angelsand the Kauffman Foundation, along withindividual investors.“The local community understood what wewere trying to do as a company,” Rhodes says.“We are creating innovative new medicinesfor companion animals. As pets have becomemore a part of our families, most people whoheard our story have pets or know people whohave pets. They understood that pets need tohave innovative new medicines, and peopleare willing to spend the money to supportthe medical care of their dogs and cats.”Rhodes says that the three ingredientsthat are necessary in order to fundraise inthe biomedicine and technology world aremarket opportunity, robust technology andthe right management team.“You can have a great technology, but ifyou don’t have the people who know howto bring it forward in a cost-effective way,the company may not be as successful as itotherwise could be,” Rhodes says. “We’revery fortunate in that we have a very strongteam and some great technology.”Rhodes adds that she and her colleaguesare grateful for the support they got from thecommunity. “We want to get our message outthere that we’re a pioneering company doingfor animal health what the human biotechsdid for human health.”Saint Luke’s Mid AmericaHeart InstituteAbout 300,000 Americans suffer fromsevere aortic valve stenosis, an abnormalnarrowing of the aortic valve in the heart.They often develop symptoms that restrictactivities such as climbing stairs or evenwalking a short distance.Many of those patients are deemed toohigh-risk for conventional aortic valvereplacement surgery because of advancedage or other medical conditions.Some researchers at Saint Luke’s MidAmerica Heart Institute in Kansas City havebeen participating in national trials in orderto evaluate whether a collapsible replacementvalve could be inserted into such patients viacatheter through a small incision in the groinor between the ribs.“We’ve been involved in this procedure formore than two years,” says Dr. Keith Allen,director of cardiothoracic clinical research atthe Institute. “The only valve that’s approvedby the FDA is the one that we currently arestudying. It is approved for use in veryspecific patients.”Saint Luke’s was one of 22 medical centersin the country initially selected for the trialby Edwards Lifesciences, a California-basedmedical device company funding the research.“It’s a select group of hospitals that werechosen because of their expertise and nationaland international reputations,” Allen says.How does a hospital make the cut for suchresearch projects?“You have to have the infrastructure todo the research, which obviously the HeartInstitute has,” Allen says. “You need to havea collaborative process, particularly in the fieldof cardiac disease. The mantra now is toutilize a team approach. Things have becomeso complex that it’s important for the surgeons,the medical doctors and the cardiologists all towork together very collaboratively.”When I first started in 2001 as an entrepreneur, you couldlegitimately complain that there were not enough resourcesin the region to do the kinds of companies that I wantedto do. But I think now the onus is on the entrepreneursto make good.—Nicholas Franano, president and CEO, Novita Therapeuticsin s i g h t, inno vation & in s p i r ation 41
  6. 6. Allen says Saint Luke’s participation inthese kinds of trials has had and will have“tremendous impact on raising Kansas City’sprofile in the life science research community.The Heart Institute already has an internationalreputation. I think that it is not alwaysappreciated by the Kansas City community.I’m not sure they’re aware of the depth ofresearch that goes on at the Heart Institute.”Dr. David Cohen, director of cardiovascularresearch at the Heart Institute, says hemoved here from Boston five years agobecause the Mid America Heart Institutehad a reputation for outstanding clinical work.“The collaborative heart team concept hasbeen a very big outgrowth from this program,’he says. “A lot of the advances that are comingin cardiovascular medicine are going to comefrom these collaborative efforts.”Cohen says his area of research isknown as health economics and technologyassessment. His program is one of onlyfour in the entire country.“As everyone is aware, we have majoreconomic challenges with health care inthe United States,” he says. “One of ourcentral missions in my research programis to understand new technologies as theymature and develop. What is the cost ofdelivering those treatments? What is thecost effectiveness? Who are the right patientsto get these treatments?”Cohen says he studied cost effectiveness aspart of the heart valve trials, and Saint Luke’salso performs cost effectiveness studies ona third-party basis. “We have five or sixresearch grants currently from NIH to do thiskind of work,” he says.Children’s Mercy Hospitalsand ClinicsDr. Stephen Kingsmore, director of theCenter for Pediatric Genomic Medicine atChildren’s Mercy Hospitals and Clinics,moved his research team here from theNational Center for Genome Resources inSanta Fe, N.M., in 2011.There are many children’s hospitalsaround the United States, but Children’sMercy appealed to Kingsmore.“They really wanted us,” Kingsmore says.“And they had a vision that was very similarto ours. Children’s Mercy has been focusingon personalized medicine for quite a whilenow. Decoding genomes is a way to do that.We toured the city and came back a coupleof times. At the end of the day, Children’sMercy just said ‘Look, we’re going to coverthe cost of this. Come here.’ We had been goingaround the States for 18 months to differentlocations to find the right place to put this.We decided this was the right place.”Genomic medicine focuses on the role thatDNA mutations play in causing diseases.“There are more than 7,000 different diseasesthat are caused by mutations at specific placesin the genome code,” Kingsmore says. “Theyaffect 3 percent to 4 percent of children, andthey cause about 15 percent of hospitaladmissions to places like Children’s MercyHospital. They are responsible for about 20percent of deaths of newborns.”Kingsmore’s team has developed a test todiagnose more than 600 severe childhooddiseases. “Up until today, the way you weretested for these types of diseases was one at atime,” he says. “Some of the tests were very,very expensive, maybe as much as $3,500 atest. It costs us about $750 to do so.”Children’s Mercy has established the Centerfor Pediatric Genomic Medicine to pursuethe goal of transforming children’s medicinethrough genomic interpretation.“Test development costs $1 million or so,”Kingsmore says. “But building a genomecenter in a children’s hospital—that’s a $10million expense. We’re doing everything inour power to raise funds for it, like applyingfor government grants and reaching out toprivate donors in the Kansas City area. Wehad our first success, a significant donationfrom the Marion Merrell Dow Foundation,in December.”In addition, Kingsmore and his colleagueshave received several million dollars in NIHgrants for genomic medicine research sincearriving at Children’s Mercy. “The test is justthe appetizer,” he says. “There’s a full mealto follow here. This is something that’s goingto take us several years to implement, and it’sgoing to eventually transform medicine foreverybody in the United States. We want tobe a pioneer in this area.”The genomic research taking place atChildren’s Mercy is raising the profile ofKansas City in terms of innovative medicine,Kingsmore adds.“We are having senior executives ofcompanies fly in to see what we’re doing,” hesays. “For companies already here, we hopethis will be a significant development for them.My hope is that they will catch the vision ofgenomic medicine and will want to drive theirgrowth in the Kansas City region by partneringwith us. Once we start doing that, you’llstart to see the venture capital moneycome here.”Translational research is the kind of initiative, like ‘TheWorld’s Animal Health Symposium,’ that has the potentialto create an enormous number of jobs and economic growthfor our region. These tend to be very high-paying jobs.We’re talking about bringing a lot of money, creating a lotof economic stimulus and growth for the Kansas City region,through the development of both of these.—Jim Heeter, president and CEO,Greater Kansas City Chamber of Commercei n s i ght, i n n o vat i o n & i n s p i r at i o n 43