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Ohio Institutions Await Tuesday Vote on $700M Third Frontier Renewal

By Alex Philippidis

NEW YORK (GenomeWeb News) — Ohio voters on Tuesday will decide whether to approve a four-year, $700 million bond authorization that would extend to 2016 the "Third Frontier" program — a key funding source over the past decade for many of the Buckeye State's research institutions and partners in recruiting researchers, building facilities, and pursuing research.

A consensus of life sciences leaders has joined with business leaders and government officials of both political parties in promoting Third Frontier as crucial to the state's future growth of research in molecular biology and other biotech specialties. That consensus hopes to persuade voters to continue the program despite the recession that has hurt the state's economy and led to calls for reduced state spending, threatening the re-election prospects of incumbents led by Gov. Ted Strickland.

Strickland has maintained state support for Third Frontier, a 10-year, $1.4 billion program — shrunk from $1.6 billion due to reduced state tobacco funding — that has awarded more than $1 billion since it was launched in 2002 by his Republican predecessor Bob Taft. He and other officials hoped the program would replace higher-wage jobs and taxes lost as the state's manufacturing sector has shrunk over the past generation.

As early as 2008, Strickland's Lieutenant Governor Lee Fisher told GenomeWeb that the state would seek to extend Third Frontier past its scheduled end in 2012 — though at the time, the state was looking at a second phase of $1.6 billion.

While Strickland and the pro-Third Frontier umbrella group United for Jobs Ohio have emphasized the program's role in helping commercialize technologies and create jobs, it has also helped advance basic research — and will do so to a greater extent if voters approve State Issue 1, one of its most vocal backers told GenomeWeb Daily News.

Anthony Dennis, president and CEO of the state's life sciences industry group BioOhio, noted that basic research will account for a greater share of spending in Third Frontier's second phase compared with the first, since most of the funding in the proposed extension is intended to pay for operating or non-facility expenses ranging from R&D, to clinical trials, to recruiting personnel.

"The early conception of the program was driven to create bricks-and-mortar based entities; about a third of the dollars in the form of operating dollars. And what we've realized is that in many cases, we have plenty of physical entities. What we need is the operating cash to innovate, to hire staff to do the kinds of things that need to be done by people," Dennis said.

Dennis said the program has allowed life sciences institutions and their partners to obtain federal research dollars equal to 10 times what the state has spent. "As a result, the total base of research and development over the life of the Third Frontier program has grown literally by 100 percent, so the research enterprise of the state is substantially larger than a decade ago."

In the molecular biology realm, among the largest recipients of Third Frontier funds has been Cleveland Clinic, which received $60 million in 2006 toward its Global Cardiovascular Innovation Center. GCIC is set to open in May a 50,000-square-foot incubator designed to nurture startups aiming to commercialize technologies developed at the institution.

On a smaller scale, Cleveland Clinic won $2 million in 2008 toward a collaboration with Case Western Reserve University and the University of Toledo to develop small molecules designed to enhance repair of the brain in multiple sclerosis with the goal of both delaying progression of disability and reversing it.

At the other end of the state, the University of Cincinnati used $9 million in Third Frontier funds to ramp up the Genome Research Institute — renamed the Metabolic Diseases Institute last year — after it was created through the donation of a 23-acre campus property by Aventis Pharmaceuticals, now Sanofi-Aventis. Ohio then spent another $50 million to renovate the campus buildings and build a new power plant.

Part of the institute's initial Third Frontier funding went toward initiating cancer and proteomic research, with longer-range funding coming from the university or the startup companies that evolve from it, Sandra Degen, UC's vice president of research, told GWDN.

Another portion of the initial $9 million for the institute paid for recruiting MDI's Scientific Director, George Thomas, from the Friedrich Miescher Institute for Biomedical Research in Basel, Switzerland, in 2005, and bringing along with him many members of his research group, which numbered 15 at the time and has since grown to 20 people.

Third Frontier "also served to bring together a number of groups that were within the university out to the MDI. We were planted at different places in the university, but we weren't all together to work together," Thomas told GWDN.

Today, MDI has grown to 300 researchers — many of whom were already at UC when the institute was formed — who won a total of about $15 million in grants last year, including $1 million by Thomas' research group.

MDI is home to one of the nation's three mouse phenotyping facilities funded by NIH's National Institute of Diabetes and Digestive and Kidney Diseases, as well as a one of 25 Mouse Models of Human Cancers Consortium centers. The institute also is in the midst of organizing a scientific board that will enhance its ability to interact with commercial and academic partners, as well as an entrepreneurial board that would guide the institute in commercializing its discoveries and renting space for research.

"All of those things sprung out of having that initial Third Frontier money," Thomas said.

MDI's Computational Medicine Center has also benefited from Third Frontier funding, having won $25.1 million from the program. The center is credited with creating 223 research jobs.

Across Ohio, the coalition and other Third Frontier supporters cite figures from Ohio's Department of Development crediting the program as of Dec. 31, 2009, with helping create 54,983 jobs. That performance came as Ohio lost 635,000 jobs overall between January 2000 and January 2010.

Third Frontier is also credited with creating, attracting or funding 637 companies, as well as with generating nearly $4.8 billion in private investment.

"People see this not simply as either a substitute for or an addendum to federal funding. It really is a fundamental, structural program for the state of Ohio to help us change the character of our economy over time," Dennis said. "It's very clear that Ohio needs to make the transition from a pure asset and manufacturing economy, to a more knowledge and innovation-based economy. And the Third Frontier is one of the primary tools, if not the primary tool, to help the state make that transition."

Not so, say some state lawmakers and others, who argue that Third Frontier is essentially corporate welfare for life-science and other employers who benefit at the expense of non-tech job creators and their industries.

"We're taking money away from people and, after the government takes a slice for administrative overhead, we give the rest away for speculative ventures. We may get it back or we may not … There are venture capital firms that do this. The government doesn't need to," Ohio Rep. Matt Huffman (R-Lima), one of 13 state representatives who voted against placing Issue 1 on the ballot, told the newspaper Cincinnati City Beat earlier this month. He did not respond to e-mailed questions from GWDN.

The opposition, and broader voter unease with state spending that has intensified during the recession, explains why officials and life-science leaders have balked at making Third Frontier permanent, Dennis told GWDN. "That discussion has been had, but nobody has the appetite to bite that off at this moment. It's not the right political environment for that to get strong support," he said.

Third Frontier supporters hope to counteract those arguments through a marketing campaign that has included rallies around the state, posters, endorsements from life sciences academic and industry leaders, and TV commercials urging support of Issue 1. Ohio State University President E. Gordon Gee plugged Third Frontier during a televised April 24 spring football game.

The campaign is projected to cost "between $2 million and $3 million," Dennis said.

However, Jason Johnson, a professor of political science and communications at Hiram College some 40 miles east of Cleveland, told GWDN the campaign for Issue 1 had yet to register with many state voters given several higher-profile state political races, topped by contests for governor and senator.

"People are oblivious. They're absolutely oblivious," said Johnson, who believes the program is likely to be renewed. "The people who are upset or would have any complaints about Third Frontier, there's no real organized opposition. It's not an opposition that is really visible to your average person."

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