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Arizona City OKs $200K for Life Sciences Commercialization Consortium

By Alex Philippidis

NEW YORK (GenomeWeb News) — Officials in Peoria, Ariz., Tuesday agreed to commit $200,000 over two years to a partnership focused on commercializing life-sciences discoveries, with the city set to work with Translational Genomics Research Institute and possibly other partners.

Peoria's City Council on Tuesday committed $200,000 over two years to the International Bioscience Commercialization Consortium — as well as an in-kind donation of 10,000 square feet of office and lab space for a global headquarters within the Phoenix suburb, at a location yet to be decided. The council voted 6-0, with one member absent, following a brief discussion.

"This is an opportunity to leverage some federal grant monies that are available, to bring that opportunity here to Peoria, and to create a foundation from which we can start to grow our bioscience presence," Scott Whyte, Peoria's economic development services director, told the council.

In a report distributed to City Council members before the meeting, the IBCC described itself as a joint partnership involving TGen, the Van Andel Reseach Institute, and the Thunderbird School of Global Management in Glendale, Ariz. The consortium said it was "currently applying for" a $1 million i6 Challenge grant from the US Economic Development Administration.

A TGen spokesman told GenomeWeb Daily News no grant application had been submitted, and that the partners that will comprise the consortium and other details remain to be finalized. Galen Perry, TGen's vice president for marketing and communications, said Peoria's approval of city funding for IBCC will allow TGen to start working with partners to flesh out who will be part of the consortium, what it wants to do, and what funding it will need to carry out its activities.

"We sort of roughed out some things, but nothing is set in stone," Perry said. "We don't know what the final grant is going to look like." He described the consortium as being in a "very conceptual" stage.

In the eight-page report, the consortium said it will work with startups to help them commercialize bioscience discoveries that require additional technologies from other institutions to generate value that exceeds the risk of commercializing them — and thus escape the proverbial "valley of death."

The i6 Challenge grant program is designed to accelerate technology commercialization and new venture formation, and would require an even match by one or more partners. EDA guidelines allow among eligible applicants for the grant a "public or private non-profit organization or association acting in cooperation with officials of a political subdivision of a State."

"Applicants are also expected to leverage regional strengths, capabilities, and competitive advantages. Furthermore, they are expected to identify a real or persistent problem or an
unaddressed opportunity with a sense of urgency, cultivate strong public-private partnerships, provide a credible plan to access resources, demonstrate how the effort will be sustained, and bring together a well-qualified team and partners," the agency stated.

According to the report, IBCC said its resources for startups will include:

• The expertise of TGen and VARI, which over the past year have hammered out an alliance combining VARI's basic research knowledge with TGen's translational genomics and analysis capabilities to further studies of diseases such as cancer, neurological disorders, diabetes, and infectious diseases.

• Current and former industry executives, who will be tapped by the institutes and Thunderbird to assess the commercial potential of new technologies; and in some cases serve as advisors and managers.

• Access to the business development roadmaps of life sciences companies, with the goal of quickly identifying partners for a new technology, and positioning it as a "solution" that meets their needs.

• Graduate and post-doctoral students from TGen and Thunderbird interested in working with the consortium who "are willing to provide their labor at a fraction of its market value."

• Multiple sources of capital, including angel, venture capital, and private equity investor networks established by TGen and Thunderbird; as well as sponsorships and memberships from academic institutions, corporations, law firms, and others.

The consortium said it will use a nonexclusive, nonprofit model intended to advance new technologies regardless of origin, as well as avoid concerns about making the most lucrative deals.

The council agreed to obtain the $200,000 for the consortium from the city's half-cent sales tax. According to the city's budget for the 2011 fiscal year that began July 1, Peoria estimated it will generate just over $14 million from the tax, which accounts for 4 percent of the city's total projected revenues.

"It is anticipated that when the grant expires, the IBCC global headquarters would remain in Peoria and that it would not require any further cash contributions and it would generate sufficient revenue to be fully self sustaining within the first three to four years post grant," the consortium wrote in its report, adding, "This is a conservative timeline and could be accelerated depending on the international response to the program."

Arizona's local governments are not allowed to subsidize private entities under the state Constitution's "gift clause." But state courts have allowed the practice when governments making such payments have done so for a public purpose, and have received in return a direct benefit that "is not so inequitable and unreasonable that it amounts to an abuse of discretion, thus providing a subsidy to the private entity," according to a 1984 case, Wistuber v. Paradise Valley Unified School District, that set the precedent for how Arizona courts assess whether payments are illegal subsidies.

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