22 Nov Third coast of biotechnology makes strong showing at VC conference
Last week was a big week for Wisconsin.
Though California recently made the extraordinary announcement to fund $3 billion in new stem-cell research in the wake of President Bush’s policy (which severely limits and restricts federal government-associated research in this area), Wisconsin is the state where such research was pioneered.
Wisconsin is also the state where the University of Wisconsin-Madison and the Wisconsin Alumni Research Foundation (WARF) hold the key patents.
Wisconsin Governor Jim Doyle announced his own state’s initiative to stay in the forefront of life-science research with a $750 million outlay. While not as big as California’s commitment just for stem cells, Wisconsin has already spent hundreds of millions (if not billions) in this area over at least a decade or more.
This announcement took place while the Wisconsin Technology Council’s annual Wisconsin Life Science and Venture Conference was in its second and final day. Day one of this event (completing its 20th year) featured more than 30 biotech companies from seven states, including:
- Wisconsin (20 companies)
- Illinois (six companies)
- Michigan (two companies)
- Minnesota (two companies)
- Missouri (one company)
- Pennsylvania (one company)
- Washington state (one company)
The event was held at the Monona Terrace Conference Center, which is a modern and striking building that overlooks Lake Monona and is just blocks from the Wisconsin State Capitol building in the heart of downtown Madison, Wis.
The organization of this event was outstanding. While it was announced that there were 412 people registered at the event, it unfortunately didn’t seem like it. While attendance was pretty good on the first day, it dropped significantly on the second day.
Madison’s mayor and governor both attended as did several of the governor’s staff (including a dynamic Wisconsin Secretary of Commerce Cory Nettles). Also present was the State of Wisconsin Investment Board (SWIB), which manages $69 billion and is the ninth-largest institutional investor of public pension fund assets in the U.S. and the 18th largest in the world.
SWIB is a big investor in biotech and pharmaceuticals around the country. SWIB has put $150 million on the table to fund early and seed-stage life science companies in Wisconsin and the Midwest in the last four years via four different venture capital groups.
This year’s event did not juxtapose itself with the annual meeting of the Wisconsin Biotech Association, which held its annual meeting a month earlier. This may be one of the reasons why attendance was light. Very disappointing was the turnout of VCs. Of course, the main Wisconsin life science VCs were there, including:
- Mason Wells (Milwaukee)
- Venture Investors (Madison)
- Baird Venture Partners (Madison and Chicago)
Also in attendance was new Wisconsin VC group The Kegonsa Fund, which was started by former WARF executive Ken Johnson. This fund just completed its financing and is looking to start investing with the advent of the new year. Another Wisconsin investment group present was Wisconsin angel group Wisconsin Investment Partners, which is headed up by Dick Leazer (the former WARF managing director).
Some other Midwest VCs were also in attendance, including:
- IllinoisVENTURES (Chicago and Champaign, Ill.)
- Advantage Capital Partners (St. Louis)
- Charter Life Sciences (Cincinnati)
From outside the Midwest, there was Morgan Stanley Venture Partners (New York) and Banc Boston Capital (Boston). All in all, you could count the number of VCs in attendance on less than two hands.
On average, the companies at the event were looking for funding of $2 million per company (or in total something in the range of about $80 million, according to my calculations). Clearly, there weren’t enough VC groups there to provide that kind of funding as most of the VCs present on average put in perhaps $500,000 to $750,000 per deal.
The Wisconsin Technology Council shouldn’t feel that bad. The recent iBIOMarketplace annual meeting in Illinois, which also had about 400 or so people, had a similar representation of VCs. By the way, there is a Midwest life science VC network called the Midwest Health Investors Network, which has more than 20 VCs affiliated with it. Where were they?
It seems that BIO, the national biotech trade association, is the only one able to really pull in not only the Midwest VCs but also east-coast and west-coast VC. BIO started up a Midwest life science VC series a year ago beginning in Chicago and then in St. Louis during year two. What funding and deals are coming out of these meetings? It’s difficult to track.
Meanwhile, the Wisconsin Technology Council put on a good show. It’s not difficult when you have the University of Wisconsin and WARF, the Wisconsin governor and the mayor of Madison in your backyard.
According to the chancellor of the University of Wisconsin-Madison, more than 120 companies have been spun out of the university based on technology developed at the university. The university garners some of the highest amounts of NIH grants of any university in the U.S.
Its cancer center is one of the National Cancer Institute’s designated comprehensive cancer centers where many of the new cancer drugs under development are tested in human trials. As such, new cancer therapy trials are abundant at this university. On day two, a whole session was devoted to new cancer approaches coming out of the University of Wisconsin-Madison.
Michael Sussman, the director of the university’s Center for Biotechnology, made one of the more interesting presentations I have seen. He demonstrated with some imbedded video clips some startling technology coming out of the university. He also made an interesting analogy on the historic development of technology in Wisconsin:
- From 1850 to 1900: Wisconsin focused on the development of the trees and forestry for the timber and lumber industries.
- 1900 to 1950: Development of ore for the steel industry was key in the state.
- 1950 to 2000: The development of crops and dairy industry for the agricultural industry.
- 2000 to 2050: The development of intellectual property for scientists and entrepreneurs will be the main focus.
Some of Sussman’s key bites:
- About one-third (or 700) of the university’s tenured faculty (about 2,000) are biologists. This is a very high concentration that gives the university a unique critical mass in this scientific arena.
- There are about 30,000 human proteins (of which 24,000 have already been analyzed in detail and their structures identified).
- About 150 different species have had their genomes sequenced.
- The NIH is currently funding nine genomic centers in the U.S. (of which Wisconsin has one).
The meeting did attract the likes of some Midwest Big Pharma:
- Takeda North America president Mark Booth made a keynote speech.
- Joshua Salisbury, vice president of corporate financing and investment banking at Eli Lilly, was part of a panel on “Building the New Wisconsin Economy.”
By the way, Lilly has just set up its third venture fund of about $50 million, which will be dedicated to medical devices. Likewise, Takeda has a biotech venture fund that is run out of California. Unfortunately, these funds weren’t present at the event.
Finally, the Wisconsin Technology Council was able to bring in two U.S. government health-care speakers to provide a key perspective:
- The director of the Agency for Healthcare Research and Quality (of the U.S Department of Health and Human Services, which is the parent to the FDA).
- The assistant commissioner for planning at the FDA.
All in all, even though attendance was light and venture capital was scarce, the Wisconsin Technology Council should be commended for a good show. Wake up on the east and west coasts as there are some very good things going on here in the Midwest. After all, Wisconsin and much of the Midwest is the third coast.
See you next week!
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Michael S. Rosen is president and CEO of Barbeau Pharma and a founder and board member of the Illinois Biotechnology Industry Organization (IBIO). He can be reached at rosenmichaels@aol.com. This article has been syndicated on the Wisconsin Technology Network courtesy of ePrairie, a user-driven business and technology news community distributed via the Web, the wireless Web and free daily e-mail newsletters. They can be found at www.eprairie.com.
The opinions expressed herein or statements made in the above column are solely those of the author, & do not necessarily reflect the views of The Wisconsin Technology Network, LLC. (WTN). WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed herein.