15 Jul Wisconsin's $750 million biotech investment could use better vision
In 2004, the nation took notice as California and Wisconsin independently announced major investments in stem cell and biotechnology research. In California, voters approved Proposition 71, a massive $3 billion commitment over ten years to fund stem cell research. In Wisconsin, Governor Jim Doyle announced a $750 million state investment in biotechnology in order to help the state maintain a leadership position in the life sciences. Four years later, let’s take a look at what is going on inside Wisconsin and around the country to gauge just how well Wisconsin’s biotech leadership is holding up.
Home cooking—Wisconsin’s biotech investment
The cornerstone of Wisconsin’s $750 million biotech investment is the $150 million Wisconsin Institute of Discovery (WID). WID is a partnership between the state, the Wisconsin Alumni Research Foundation (WARF) and a generous donation from John and Tashia Morgridge, each of which contributed $50 million to build a new public/private hybrid research building on the UW-Madison campus. Some of Doyle’s total came from the public sale of Blue Cross Blue Shield of Wisconsin, which had been in the works quite awhile before Doyle’s announcement. The total also includes $134 million and $132 million for new additions to the UW-Madison School of Medicine and Public health and to the Medical College of Wisconsin, respectively—funds that also had been raised much earlier and that included substantial private contribution.
By my count, of the $750 million, $421 million comes from non-state sources or is money that already was earmarked for medical school buildings when Doyle made his announcement, leaving about $330 million as Wisconsin’s total commitment to life sciences since 2004—a tidy sum to be sure, but not as impressive as it was made to sound. This is about what California will spend on stem cells each year for the next ten years.
More revealing is what this money is buying. A significant portion clearly is going for bricks and mortar in order to expand and modernize the research infrastructure in Madison and Milwaukee.
The revenue from the sale of BCBS mostly goes for local public health and education efforts across the state. It is disingenuous to add this money into the total of a biotech initiative.
Even though ground has just been broken for the WID and the building won’t be finished until 2010, we can get a glimpse of the research the Institute will support from the $3 million recently awarded for discovery seed grants. These seed grants will support the following research:
- finding a diagnostic test for a common causes of infertility in women.
- understanding cognition and the effects of Ritalin in the brain.
- more efficient production of embryonic stem cells.
- finding new drugs that inhibit cancer cells from spreading to other locations.
- improved healing of persistent wounds.
- high-tech screening for drug candidates that can dock to critical disease-specific receptors on cells.
- developing micro-optical lenses that can be fine-tuned by environmental factors.
- finally, there also is a project to find improved ways to teach African American children from low income families to speak proper English.
While each of these projects, individually, are certainly very interesting and address important questions, it is hard to see any overarching theme in this disparate collection of projects. Was there any strategy behind selecting these projects other than that these were the ones that rose to the top of the pile of the potpourri of proposals that were received?
Case in point—as important as the research likely is, how teaching minority children to speak proper English fits into a biotech initiative is utterly befuddling. The micro-lens project may not have much life science relevance as well.
The impression from all of this is that the research component of Wisconsin’s biotech initiative lacks a critical focus that a rather small investment cannot afford. When competing with billion dollar initiatives, a smaller contender needs to clearly define its specific strengths, identify important opportunities related to those strengths and proceed in a focused fashion to capitalize on strength and opportunity rather than spread the largess willy-nilly. But, it appears that Wisconsin soon will have a fabulous, brand-spanking-new research facility staffed by a mish-mash of researchers who will have little in common to talk about with each other.
For comparison, let’s take a look at what Wisconsin’s competition has been up to recently.
While Wisconsin’s $3 million in discovery seed grants was given to 8 disparate research efforts, not all of which relate to biotechnology, the California Institute for Regenerative Medicine (CIRM) has so far approved 206 grants for more than $554 million, all focused on stem cell research and regenerative medicine. These grants include money to support and train 169 new stem cell scientists and clinical fellows, 22 grants to launch the research of new faculty, funds for 73 seed grants to test highly innovative ideas, and awards for 28 comprehensive grants to senior stem cell scientists.
More importantly, on top of their stem cell meta-focus, the California initiative recently finished a round of grant awards strategically concentrated on developing new stem cell lines. The research programs supported by these California awards will go to find better ways to reprogram adult cells into stem cells and to develop clinical-grade stem cell lines that can be used to treat patients. Some of the projects will develop disease-specific stem cell lines in order to model cell development in Parkinson’s disease, amyotrophic lateral sclerosis (ALS) and cardiovascular disease. This represents a beneficial mix of complementary projects so that the whole of California’s research initiative is greater than the sum of the individual projects.
California made 16 of these awards for a total of $23 million, which comes to $1.44 million/award compared to Wisconsin’s average of $375,000/award — 26 percent of the California average.
Like the first round, the next round of CIRM research awards will also be strategically focused, but on forming disease-specific teams of researchers and clinicians to develop stem cell therapies for human illness. From the preliminary applications that have been accepted, these teams propose to develop stem cell therapies for diabetes, eye disease, osteoarthritis, wound healing, stroke, heart disease, muscular dystrophy, AIDS, Parkinson’s disease and certain blood diseases. CIRM indicates that successful proposals will include a plan for an investigational new drug filing with the FDA at the end of the four or five year project.
Wisconsin should especially take notice that these disease-specific team projects involve cross-functional teams of scientists and physicians, often from multiple California public and private institutions. The teams can also include partnerships with private biotech and pharma companies across the US, as long as the company has an office in California. Clearly, California is creatively leveraging its resources to not only support research, but also to ensure that the research is translated into business and moves into the clinic.
Compare California’s inclusive, collaborative team approach to Wisconsin’s singular focus on UW-Madison with the WID. While Wisconsin’s 8 discovery seed awards do involve research teams, the teams only come from UW-Madison. These awards fail to take advantage of the growing private biotech sector in Southern Wisconsin and the scientific talent that can be found at other institutions across the state such as UW-Milwaukee, the Medical College of Wisconsin and the Marshfield Clinic.
In other words, California has purposefully focused its research efforts, while simultaneously encouraging broad public and private partnerships across the state. Wisconsin has done exactly the opposite by funding a broadly unfocused research portfolio restricted to a single institution.
California has positioned itself to get more “bang for the buck” than Wisconsin will for its investment.
It doesn’t stop there—the competition is getting more intense
In a 2004 press release, Governor Doyle said that California’s $3 billion stem cell investment, “…will not diminish Wisconsin’s role; if anything, there will be a synergy between our two states.” However, time shows that California prefers to synergize elsewhere.
For example, the Canadian Institutes of Health Research announced in a recent press release that it will join forces with California to focus on cancer stem cell research. Toward this end, Canada pledged $100 million ($98.9 million USD) to the Cancer Stem Cell Consortium, a partnership of academic, business and government agencies, which will work with CIRM.
On top of that, CIRM is actively seeking partnerships with the US federal government as well as with other nations in order to turn their ten-year commitment into a sustainable venture. Indeed, the CIRM is working on a deal with the Australian state of Victoria and last year, the Canadian province of Ontario ponied up $30 million for cancer stem cell research linked to CIRM.
Now look eastward—Maryland, Massachusetts and New Jersey
Wisconsin does not only have to worry about competition from California—Massachusetts, Maryland and New Jersey have or are planning major financial forays into the biotech field.
In mid-June, Maryland Governor Martin O’Malley announced a plan to provide $1.1 billion over the next ten years in state incentives in the form of tax credits and grant programs for the state’s biotech industry, while the state’s pension board will invest an additional $500 million, bringing the total to $1.6 billion. The goals are to build a biotech center, finance capital projects and to make equity investments in start-up biotech companies—an intriguing and innovative idea.
It used to be that angel and venture investors covered this earliest and critical stage in biotech development that is euphemistically called the “valley of death”—a nod to the difficulty researchers have commercializing their ideas. But recent trends show that investors are increasingly reluctant to invest in nascent companies. They want to see prototypes and experienced teams in place before plunking down their money. Therefore, equity funding from states promises to meet an increasingly critical need for commercializing emerging biotechnology and this tactic could very well generate a nice return for Maryland—if it is approved by the state legislature.
Not to be outdone in the state bidding war for biotechnology, Massachusetts Governor Deval Patrick recently signed legislation to allocate $1 billion over ten years to fund the Bay State’s life sciences industry. This includes $250 million in tax incentives to support the growth of biotech companies, the same amount to fund research and $500 million in infrastructure.
Patrick said it takes “political will and courage to make those long-term commitments” and admitted that his state’s funding commitment is, in part, a defensive measure to ensure that Massachusetts’ universities, companies and research institutes retain top scientists and biotech companies.
Patrick’s candid admission underscores the intensity of the competition for science talent and resources in which Wisconsin wants to successfully contend. Further underscoring the high stakes in these biotech funding wars, Patrick claimed that over the next ten years, Massachusetts’ support of the biotech industry will create 250,000 new jobs. In this light, it is illustrative that Massachusetts’ commitment to the biotech industry heavily factored into the decision of the regenerative medicine company Organogenesis, Inc., to expand its operations in the state rather than elsewhere.
Meanwhile, in New Jersey, legislation was introduced in late June to establish an pioneering public-private vehicle for state funding of stem cell research with venture capital. A press release said that the bill will allow private investors to contribute up to $500 million over five years to fund such research. To encourage participation, investors would be granted tax credits equal to their investment, but only if a funded research project failed to repay the loan. In order to obtain funding, researchers would submit loan applications to the state’s Economic Development Authority. Both non-profit and academic labs would be able to apply for a stem cell research loan.
What’s a state in fly-over country to do?
Clearly Wisconsin has a very credible biotechnology research enterprise thanks to the huge bioscience community at UW-Madison. The state’s biotech footprint is even more impressive when private biotech companies and institutions other than the UW-Madison are included. Despite this research muscle and recent infusion of state money, Wisconsin is missing a narrow and critical opportunity to capitalize on its strengths because it lacks the vision and creativity seen in the efforts of other states.
Wisconsin could learn from California and make a much more resolute effort to strategically focus on developing specific biotech strength, be it stem cells or something else. Wisconsin also could learn from California, Massachusetts and New Jersey about creative leveraging of public and private resources to boost, not only academic biotech research, but biotech business as well. After all, the best research, if not translated into successful businesses, does nothing for the people, the state or the economy.
On average, across the country, every new biotech job generates almost 6 additional jobs in the community. Salaries in the biotech industry average a whopping 68 percent higher than other private sector jobs. This is the return that Wisconsin can expect to realize by wisely investing its resources in biotechnology. However, the latest data show that Wisconsin falls below average in both of these metrics, yet we have an above average per capita infusion of federal research dollars.
Wisconsin clearly has room to realize a better return on its investment.
The opinions expressed herein or statements made in the above column are solely those of the author, and do not necessarily reflect the views of Wisconsin Technology Network, LLC. WTN accepts no legal liability or responsibility for any claims made or opinions expressed herein.