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Embattled NY Governor Lays Out Strategy for Boosting State's Life-Science Sector

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This is an updated edition of a report originally published June 10.

New York Gov. David Paterson on Monday promised to boost the state's life-science sector as part of a broader strategy to wean the state's economy away from Wall Street and manufacturing.

The shift would be fueled in large measure by the federal economic stimulus program, as well as a new cluster-building effort drawing largely on existing resources.

Addressing the New York Academy of Sciences in lower Manhattan, Paterson said the Empire State would maintain the $600 million stem cell research funding program launched in 2007 by his predecessor Eliot Spitzer, who resigned in disgrace last year.

Paterson also said Albany would launch a $100 million Innovation Economy Matching Grants program that will match by 110 percent the funding that life-sci and other technology institutions receive toward developing new facilities through the American Recovery and Reinvestment Act, the $787 billion stimulus measure enacted in February by President Obama.

The state will set aside another $100 million toward partially defraying the cost of alternative energy projects through ARRA by using funds from its renewable portfolio standard program, which requires utilities to purchase a minimum percentage of power from renewable sources.

"We will have shovel-ready projects prepared in advance through stimulus resources, and we will do it very soon," Paterson said in his speech.

"We believe that there are treatments that will exist for cancer and diabetes just moments away from discovery, if we invest in that research," Paterson told the audience. "We want to develop machines the size of cells that will treat the human body, and stem cells that will allow the human body to heal itself. And to invest and develop areas of agricultural products and processes that will help us to feed the entire world."

Paterson vowed that New York "can and we will lead" in agricultural biotech intended to raise crop yields, as well as develop alternative fuels. That activity, he said, could jumpstart upstate communities reeling from years of manufacturing job losses.

In written remarks distributed to the audience at the academy's headquarters, Paterson said his life-sci effort would also include uniting the state's far-flung academic health centers, medical schools, research institutions, and venture-capital companies into a new "life-sciences innovation cluster."

Paterson's speech identified the Long Island region as a potential life-sci cluster, given the presence there of Cold Spring Harbor Laboratories, Brookhaven National Laboratories, and the University at Stony Brook, part of the State University of New York system. The three institutions, he said, constitute "a triple threat of technology development that is unmatched anywhere in our country."

The governor's remarks won praise from the state's top science official. "I can guarantee you that between what he is advocating for our upstate clusters in life sciences research — between Syracuse, Rochester, [and] Buffalo — and what we have in our New York City cluster, the plan is to tap all the strengths of our state," Edward Reinfurt, executive director of the New York State Foundation for Science, Technology and Innovation, also known as NYSTAR, told BioRegion News following the speech.

New York's life-sci assets have traditionally been scattered across the state rather than concentrated in New York City or elsewhere. New York City, for example, is home to numerous research institutions, as well as Columbia University Medical Center's Audubon Biomedical Science and Technology Park; Brooklyn's Bioscience Center at Brooklyn Army Terminal, or BioBAT, a joint project between the NYC Economic Development Corp. and SUNY Downstate Medical Center; and East River Science Park lab-office project under construction by Alexandria Real Estate Equities.

And in April, Cornell University announced that its Weill Cornell Medical College, also located in New York City, plans to build a medical research building by 2013, using a $170 million donation from board chairman Sanford Weill, former CEO and chairman of Citigroup.

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About a dozen mature biotech companies are headquartered in New York City's northern suburb of Westchester County, near New York Medical College in Valhalla. Further north, the 72-acre Agriculture & Food Technology Park in Geneva, near the 127-year-old New York State Agricultural Experiment Station, has been developed this decade by Cornell, which has committed $600 million toward new cross-disciplinary life-sci research facilities.

At least two other upstate communities, Cobleskill and Delhi, are home to SUNY campuses with degree programs in ag-biotech.

In Buffalo, the state has spent more than $200 million developing its Center of Excellence in Bioinformatics and Life Sciences, with SUNY's University at Buffalo serving as lead academic organization, joined by partners Roswell Park Cancer Institute and Hauptman-Woodward Medical Research Institute.

"There are active discussions on bringing more of our bioengineering strengths to bear with our clinical research strengths. That by its very nature brings upstate and downstate together," Reinfurt said. He added that decisions regarding where to base one or more clusters will be based on "where we see the best opportunities. What we have is a strong push from the governor in support and recognition of the life science cluster."

The state will announce additional details of the cluster effort at a later date, Reinfurt said.

"We're very excited by the prospects of where this will take us. We see some major life sciences possibilities in the stimulus funding. There is no doubt that what we'll be proposing in the life sciences field will be a manifestation of the state's long-term commitment," Reinfurt said.

"In the next four to six months, it will be a major, if not the major component of funding" for life-sci research and facility projects being advanced by the state, he added.

The state's cluster building effort will draw more on existing resources than on new funding, which has been scarce in the near-year since the credit and financial markets all but froze.

"We think that the prognosis is very strong for our medical and scientific research right here in New York," especially now that Obama has lifted restrictions by George W. Bush on the creation of new lines of human embryonic stem cells beyond those existing as of Aug. 9, 2001, Paterson added.

Paterson defended the state stem-cell program, which has awarded $118 million in grants to institutions and scientists toward research and facilities intended to advance regenerative medicine statewide. He defended the program as one that has catapulted the Empire State to second place in regenerative medicine research behind California, whose voters in 2004 approved spending $3 billion toward stem-cell research and facilities, a program now overseen by the California Institute for Regenerative Medicine.

Other than that program, however, New York has eschewed the large-scale state spending on biopharma development embraced by the nation's two largest life-sci states — California and Massachusetts, which last year enacted the $1 billion, 10-year Life Sciences Act — as well as Maryland, where Gov. Martin O'Malley has committed the state to spending $1.3 billion over 10 years on a variety of life-sci programs.

While budget shortfalls have forced all three of those states to scale back those initiatives by millions of dollars, they have all but gutted New York's much more modest efforts to promote itself to life-sciences employers.

'I Kid You Not'

Indeed, New York was one of a handful of states not to sponsor even a booth for recruiting life-sci businesses and their jobs at last month at the Biotechnology Industry Organization's BIO 2009 International Convention, held in Atlanta. Also, the state cut the $160,000 subsidy it gave a year earlier toward a public-private life-sci recruitment effort, NY Loves Bio [BRN, Dec. 22, 2008].

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Both cost-cutting moves were attributed to the global financial meltdown, which New York officials have blamed for the $17 billion shortfall plugged by the $131.8 billion budget for the fiscal year that started April 1. The budget has not stopped Paterson from experiencing historically low poll numbers fueled by disappointment from business leaders with the spending plan's $5.3 billion in new taxes and fees, and by anger from labor unions at a since-staved-off plan to lay off 8,900 workers.

Just hours after his June 8 address, Paterson, a Democrat, saw his party lose control of the state Senate to a coalition of Republicans and two Democratic state Senators who cited anger over the budget and other issues in allying themselves with the GOP — Pedro Espada, who represents a Bronx district but has a Mamaroneck, NY, residence, and Hiram Monserrate of Queens, who faces felony assault charges in a domestic violence case. Paterson is near certain next year to face a primary challenge within his party from Attorney General Andrew Cuomo, son of former Governor Mario Cuomo.

In response, the governor has shaken up his staff, vetoed a routine one-year extension of the 20-years-and-out pension plan for police officers and firefighters, and repositioned himself as willing to eschew short-term popularity in favor of laying groundwork for long-term economic growth.

Under Paterson, who took office in March 2008, New York has lost 189,000 jobs since last August — especially in financial services, which once generated 20 percent of total state tax revenues, as well as the retail, business services, and manufacturing sectors.

"In terms of establishing an innovative economy, there is going to have to be a relationship between innovations in New York and job creation in New York. We can never lose sight of our end goal, which is to create jobs and put New Yorkers back to work," Paterson said.

To that end, last month Paterson named a 14-member Task Force on Diversifying the State Economy Through Industry-Higher Education Partnerships, chaired by Cornell University President David Skorton, aimed at stepping up commercialization of university technologies by incubating startup companies.

A first meeting of the task force has yet to take place. When that happens, it will be the first of several convened to craft what Reinfurt called "an aggressive plan" for boosting life-sci startup incubation statewide. Among the panel's issues for consideration: Whether to proceed by expanding existing incubators, or by creating new ones.

Paterson this week is set to promote his innovation "vision" — laid out in a report titled Bold Steps to A New Economy: A Jobs Plan for the People of New York — by delivering a series of speeches statewide.

"There is a new economy flourishing. It is knowledge based, it is technologically based, it is based upon innovation," Paterson added. "And we will be able at this point to start to position ourselves so that we can make full use of all the resources that have put New York in the leadership of economic development for the last 100 years."

Ellis Rubenstein, the academy's president and CEO, expressed support for Paterson's effort to reshape the state's economy by creating more life-sci and other technology jobs: "This adds to the momentum of trying to get new companies to start here, [and] take advantage of the infrastructure that's already here. The educational institutions, the medical institutions, they're all here."

Answering a BRN question at a Q-and-A with reporters after Paterson's address, Rubenstein said he was optimistic about the governor's innovation agenda succeeding where past state efforts haven't because "there's a lot more government support now for these initiatives.

"I think you have expanded institutions that are here now. You've got more people who are focused on this. You've got the federal government funneling money into these types of programs. It's a combination of different components of what it takes to get startups going, to continue growth their businesses. It helps to have that type of funding," Rubenstein added.

Paterson's innovation policy effort is the second significant economic development initiative rolled out by the governor in the past few days. On June 6, he announced the promotion of the top state economic-development official for upstate New York, Dennis Mullen, to the state's top day-to-day job-attraction positions, as president and CEO of the Empire State Development Corp. and commissioner of the state's Department of Economic Development. Mullen will succeed Marisa Lago, who is resigning after just eight months in the positions.

"I have been approached about a number of positions outside of [New York State] government. Given the public nature of Empire State Development and the need for a leader who can devote full time to ESD’s critical mission, I think it is advisable that I resign as I pursue these positions," Lago said in the announcement Saturday afternoon.

Mullen is the fourth person to oversee ESD in the past three years, reflecting the tumult resulting from the Republican gubernatorial administration of George Pataki giving way to the Democratic administration of Spitzer, then to Paterson.

"I kid you not," Paterson insisted. ”New York will recover from this period, and New York will become a leader in this country in terms of economic development very shortly."

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