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State Governors Bet on Biotech Offers Potential Benefits for Array Companies

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A handful of cash-strapped states are making major long-term bets on biotechnology, and those in the microarray industry could come up winners.

It has already happened in Michigan, where at the end of May, Gov. Jennifer Granholm announced amid a fiscal crisis the award of $30 million in funding for the state’s Life Sciences Corridor, a state-supported initiative started in 1999 with the goal of investing $1 billion in life-sciences research and development over the next 20 years.

The funding will benefit microarray or genomics-based researchers in the state with four grants, totaling $5 million. Wayne State University researchers received two grants: $2.3 million for “Streamlining Genomics for Personalized Medicine,” and $1 million for a genomics facility; Michigan State received $1.1 million for “GeneScreen: A low cost high density DNA biochip for detecting up to 30,000 microorganisms,” and DNA Software received $360,000 toward commercializing software for microarray and advanced PCR assay design.

What is going on in Michigan is not an isolated phenomenon. States are lining up funds, tax breaks, and worker training programs to try to reproduce the biotech success of Massachusetts and California.

A good example of the intramural jostling taking place would be the wooing of Athersys, a Cleveland-based company that has been courted by Ohio, North Carolina, Pennsylvania, and Minnesota, each attempting to assemble a plate of tax benefits, institutional investors, and other enticements to get the 100-employee genomics company to move lock-stock-and-barrel.

State governments are firing up the rhetoric as they attempt to carve niches in a sector they see glowing with economic potential.

Here are some of the initiatives states are undertaking, and their existing position in microarrays:

California

Gov. Gray Davis in his state of the state speech in Sacramento, pledged to focus on increasing the number of qualified lab technicians by streamlining licensing processes; simplifying technology transfer for the University of California; and increasing access to venture capital and federal grant money for early-stage and small bioscience companies. In order to “keep California on the cutting-edge of this life-saving field,” Davis boosted his life sciences initiative, a series of meetings across the state to identify strategies to retain and attract life sciences companies, investment and research in the counties of Los Angeles, Orange, Riverside, Santa Barbara, San Bernardino, and Ventura.

The initiative might be designed to boost growth. It might be defensive, too, as California is seen as a place where others might recruit workers, technology, or companies, Davis said.

California led the nation with $3 billion in NIH funding last year, and its position as the leader in the microarray world is without peer.

Indiana

Gov. Ed O’Bannion introduced Energize Indiana, a $1.25 billion economic development plan to promote life sciences as well as other high-tech industries. The plan, passed by the state legislature in April, will provide $75 million over two years to the 21st Century Research and Technology Fund; authorize $340 million in construction bonds and research projects; provide $9 million over two years for technology parks; extend a 10 percent R&D tax credit; and encourage the Indiana Public Employees Retirement Fund and the Teachers Retirement Fund to invest $100 million in Indiana high-tech businesses.

The state already has the Indiana Proteomics Consortium — consisting of Purdue University, Indiana University, and Eli Lilly —and funded with $6 million from Lilly and $3 million each from the two academic partners. The Indiana School of Medicine has a microarray core facility.

Iowa

Gov. Tom Vilsack is promoting the Iowa Values Fund, a $500 million pool created through the sale of bonds and used to expand biotechnology, renewable energy production, and key industries like information solutions, advanced manufacturing, and life sciences. The fund was a cause célèbre in the state, and subject to a legislative battle that extended into a special session.

The University of Iowa has a microarray core facility, and Iowa State University, which hosts the maize genome database, is creating an Affymetrix facility. Des Moines is also home to ag giant Pioneer Hi-Bred International.

Ohio

Ohioans in November will get to vote on a 10-year, $500 million bond issue for the state’s $1.6 billion Third Frontier Project, which seeks to connect researchers in Ohio’s academic and technology bus-inesses. The project includes the Technology Action and Biomedical Research funds, which have disbursed some $45 million; the $100 million Wright Brothers program to build research centers; and the Innovation Ohio Fund. The governor last week tapped Mark Collar, the president of global pharmaceuticals for Proctor & Gamble, as chairman of the Third Frontier advisory board. The Third Frontier project has already disbursed $17 million to the Biomedical Structural, Functional, and Molecular Imaging Enterprise consortium led by Ohio State University to create a biosciences and nanotechnology research facility, the first of six such facilities planned across the state.

The state has microarray core facilities at Ohio State University, Children’s Hospital Medical Center of Cincinnati, and the Children’s Research Institute of Columbus.

Texas

Gov. Rick Perry called for the creation of a Texas Enterprise Fund financed with a one-time appropriation of $390 million from the state’s economic stabilization — or rainy day — fund. The legislature approved a $295 million appropriation. The fund, which will provide $10 million for a bovine genome sequencing project, includes some $55 million for technology and biotechnology businesses and to support university research, and calls for the establishment of a Nobel Laureate Center, endowed chairs, and participation in other projects such as technology parks.

The state has microarray core facilities at the University of Texas Health Science Center at San Antonio, the Baylor College of Medicine in Houston, the University of Texas MD Anderson Cancer Center, and the University of Texas Southwestern Medical Center at Dallas.

Utah

In 2002, Gov. Mike Leavitt proposed a Thousand Day Plan for economic renewal and to “develop Utah as a center for technology investment, employment, and entrepreneurship.” The industries of biotechnology and human genetics are among 11 the state is targeting. One of the initiatives to come out of the plan is GenData Research, a non-profit enterprise formed by the state, the University of Utah, and the Huntsman Cancer Foundation to market a 20-year-old database of genealogical and clinical data collected from 11 million people,in cooperation with the Church of Christ of Latter-Day Saints. The Huntsman Foundation has invested $12 million in the database, and the Utah legislature appropriated $3.7 million to the project.

The University of Utah and the Huntsman Cancer Institute have microarray core facilities. The state is also home to several microarray startups such as Bio-Micro Systems (See Lab Report, page 6).

North Carolina

Biotech-strong North Carolina, mired in more than 6 percent unemployment and with a decimated manufacturing sector, can expect companies to add as many as 3,000 jobs per year through 2005, according to a recent survey conducted by the state-funded NC Biotechnology Center. To meet that need, the North Carolina Economic Development Board, an advisory entity whose members are appointed by the governor and the leaders of the legislature, in May gave its stamp of approval to a $45 million plan to create a biotechnology manufacturing, training, and education program likely to be headquartered in the Research Triangle area. Now, the state has to find the funds for it.

The Research Triangle area has numerous microarray facilities — at Duke University, UNC, and NC State — with at least three companies providing commercial microarray analysis services.

New York

NYSTAR, the New York State Office of Science, Technology, and Academic Research, counts $1 billion in state investments, a major portion of it focused on biotechnology and including $250 million to create centers of excellence in Albany, Buffalo, Long Island, Rochester, and Syracuse.

Gov. George Pataki said the cash-strapped state would this year concentrate on creating new biotechnology centers of excellence in Westchester with New York Presbyterian Hospital, Cornell, and Columbia universities, New York Medical College, as well as IBM and GE; and in New York with Sloan-Kettering Cancer Center, Columbia, New York University and others.

Others

Colorado is considering investing $7 million in economic development grants, and hopes to concentrate on rural areas ... Delaware, where many of the country’s businesses choose to take their court battles, is seeking to create new “technology court” procedures ... Minnesota is looking to the Mayo Clinic and the University of Minnesota ... Montana is seeking to create venture capital investment incentives ... Nevada is putting $47 million into a new Science, Engineering and Technology Center at the University of Nevada-Las Vegas … New Mexico is seeking $3 million in tax incentives for investment and job creation, and an implementation strategy for the $10 million in the New Mexico Small Business Investment Corp., and an additional $200 million in funds ... North Dakota is considering venture capital funds ... Rhode Island wants to double its $7 million investment in its Slater Centers business incubators. .Vermont is spending $106.8 million on job creation and economic security, $60 million for low-interest loans to entrepreneurs, and a proposed $25 in mezzanine-level financing for established companies ... West Virginia is seeking to create $200 million for economic development grants.

— MOK

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