“This is not just about research. This is about helping other companies grow.”
Georgia Lawmakers Will Ask Gov. to Spend $600M on New Life-Science Renovation Plan
Georgia should spend $600 million over the next five years to create a “one-stop shop” for life-science companies interested in relocating to or expanding within the state, and to step up the state’s effort to commercialize life science technologies, a panel of state representatives will recommend to Gov. Sonny Perdue this week.
The House Georgia Bioeconomic Development Study Committee later this week or soon after will submit a report offering recommendations for drawing more life sciences companies and developing a top-tier cluster. Those recommendations will be the basis of legislative proposals to be submitted to the governor soon after, with the goal of advancing the state’s life science industry.
“We figured probably about $600 million over a five-year period of time should be applied toward venture capital investment, facilities and equipment and education, partly in helping young students realize the importance of math and science, but also helping the middle-management group we’re losing to other states,” Rep. Charlice Byrd (R-Woodstock), who chairs the bioeconomic development committee, told BioRegion News.
“The money would be there to help those that are here to expand,” Byrd said. “It would also be used to go out to recruit those companies that have moved beyond incubator stage, and get them to come and give serious consideration to moving into the state of Georgia.”
A key purpose of the $600 million, Byrd said, would be to create a single agency for life sciences companies interested in Georgia — a “Georgia Innovation Center,” to be run by a director with staff.
“It would be a one-stop shop, so we would end all the fragmentation and know exactly where they could find a facility,” Byrd added.
The proposed innovation center would function along the lines of the nation’s oldest and most successful one-stop shop. The state-funded North Carolina Biotechnology Center is a private nonprofit corporation that promotes biotech research, business, and education statewide. The center, which employs 69, operates on a $17.6 million annual budget, $13.1 million of which comes from the state.
North Carolina isn’t the only state that worries Georgia.
Peachtree State officials have also been jolted as Florida and its local communities have poured nearly $1 billion into subsidies to attract academic research institutes as anchor employers of a biotech cluster created from scratch under Gov. Charlie Crist and his predecessor, Jeb Bush, both Republicans.
Earlier this month, developer Core Communities tripled to 1.5 million square feet the amount of life science space it is planning for the “Tradition” master-planned community within Port St. Lucie, Fla. Core expanded its 120-acre Florida Center for Innovation after the campus attracted three users that have agreed to occupy a combined 675,000 square feet — the Torrey Pines Institute for Molecular Research, a development entity formed by pioneer biomedical entrepreneur-philanthropist Alfred Mann, and Oregon Health and Science University’s Vaccine and Gene Therapy Institute [BioRegion News, Jan. 14].
Unlike Florida, Byrd said, Georgia’s state support for the life sciences should be centered more around commercialization of technologies developed in the state’s laboratories since its research segment is already strong.
“This is not just about research,” Byrd said. “This is about helping other companies grow.”
A Top-Five Ranking by 2020
The study committee’s report and proposed legislation come almost two months since Ken Steward, the commissioner of Georgia’s Department of Economic Development, publicly set an ambitious goal for the state’s life sciences sector: “Georgia’s bioeconomy will rank in the top five states by 2020.”
Byrd said she envisions the five-year, $600 million package as one means to that end, not necessarily the only means — and a one-shot funding source at that.
Steward announced the goal during his presentation at the Dec. 4, 2007, industry “summit” hearing held by Byrd’s committee.
The presentation also outlined six strategies for catapulting Georgia to top-five status:
The Life Sciences Facilities Fund, overseen by the state Department of Community Affairs, offers low-cost loans toward the purchase of equipment and other “fixed assets” to companies expanding in or relocating to Georgia. Companies must agree in return to use $3 of private capital for every dollar borrowed from the fund.
Loans under the life sciences facilities fund are decided on a point system whose criteria include feasibility, program strategy, and the number and quality of jobs created. Bonus points are awarded to companies in active partnership with a State research institution or success in a Georgia incubator. More information on loan criteria can be read here.
A similar program, the Strategic Industries Loan Fund, can be tapped in rural areas of the state overseen by the state’s OneGeorgia Authority.
The loan fund allows companies to buy equipment and other “fixed assets” if they use $3 of private capital for every dollar borrowed from the fund. The program is intended to benefit what the state considers “strategic science- and technology-based industries that create employment opportunities, make private investment, and enhance Georgia’s innovation economy.”
Notwithstanding the loan fund, Georgia’s menu of government incentives and their availability to life science employers were among challenges to the industry cited in a report released Oct. 3, 2007, by the University of Georgia’s Selig Center for Economic Growth, part of the Terry College of Business, and the state’s biotech industry group GeorgiaBio [BioRegion News, Oct. 8].
The report, “Shaping Infinity: The Georgia Life Science Industry Analysis 2007,” cited as challenges access to capital and to government incentives, and a dearth of qualified technicians and managers. The findings reflect a survey of executives from 70 life sciences companies statewide, as well as information from 69 other companies gleaned from public sources, and data from another 20 companies pulled from a similar 2006 study.
The governor has already sought to address the state’s desire for more entrepreneurial capital. Earlier this month, Gov. Perdue joined the public-private Georgia Research Alliance — a coalition of businesses, universities and state government — in proposing a $40 million Venture Capital Fund. Perdue has asked state lawmakers to approve $10 million toward the VC fund, while private investors would raise the other $30 million.
“It really will focus on anything coming out of the universities, with emphasis on the life science, particularly vaccines,” Fred Cooper, a GRA trustee and principal with the VC firm Cooper Capital, told BRN sister publication, Biotech Transfer Week, earlier this month. “What we’re looking at is something that will have a meaningful way of growing economic development in this state in the long run. Some of these things that come out of the universities in Georgia won’t have to go elsewhere.
“Georgia has an awful lot of assets in place between the [Centers for Disease Control and Prevention], a lot of the universities,” Cooper added.
Perdue contends the benefits of the fund will flow beyond the entrepreneurs who will directly benefit from it: “I expect Georgia to lead the way as a global center for health, and helping our young technology and research companies grow and stay in Georgia is a key part of that effort,” the governor said Jan. 15 in announcing the venture fund at the Eggs & Issues Breakfast hosted by the Georgia Chamber of Commerce.
As valuable as the venture fund may prove in benefiting early-stage companies, Byrd said, it would not negate the need for the greater state role in promoting life sciences she and her committee will propose.
“It’s a good first step,” Byrd said. “We are forgetting about the middle-stage companies that are already in the state of Georgia. What about the incubator type companies that are surrounding our state, that have already crossed the very first stage and are now moving into the second stage, where maybe they have 10 employees and [funding them would] not [be] nearly as risky?
“Shouldn’t we be encouraging those people, talking with them to come into the state of Georgia with this kind of money [the proposed $600 million]?” Byrd said.
The state is entering the venture investment fray at a time when a growing number of Georgia entrepreneurs seem to be obtaining such financing privately, judging by venture capital figures released last week. According to Dow Jones VentureSource, formerly VentureOne, the metro Atlanta region in all of 2007 generated $40.02 million in VC funding for three biotech or pharma businesses, nearly five times the $8.6 million for two businesses racked up in all of 2006.
The study also found that the amount of capital invested in medical devices last year swelled 76 percent to $71.9 million from $40.9 million in all of 2006, even as the number of deals ebbed to five in 2007 from six a year earlier.
The Atlanta region may grow as a life science cluster if officials follow through on a redevelopment concept announced last fall for an Army base set to close in 2011. Last September, Perdue joined Atlanta Mayor Shirley Franklin and other officials in announcing plans to develop a science research park within 115 acres of the 487-acre Fort McPherson — which the Defense Base Closure and Realignment Commission selected for shutdown in 2005.
In 2006, the last time Ernst & Young published a list of “top Americas biotechnology centers” among US states and Canadian provinces — reflecting the number of public and private biotech companies based there during the previous year — Georgia finished 10th among 16 centers, which was better than its 11th-place showing in 2005. In both years, California led the list, followed by Massachusetts.
Last year, E&Y stopped compiling the lists, which had been closely watched by state economic development agencies and industry groups.
Georgia on My Mind
This year, Georgia is among several states considering multi-million-dollar programs to assist their biotech, pharmaceutical and other life science industries. The Peach State holds at least one advantage over other states, however: Its economy is stronger on average than the nation’s.
Georgia’s 4.6-percent unemployment rate as of December is smaller than the nation’s 5-percent rate. The state’s 1.4 percent employment growth rate for the year ended Dec. 31 surpasses the nation’s 1 percent. And Colonel’s Island Terminal at the port of Brunswick, Ga., saw a 10-percent jump in traffic last year after its harbor was dredged and deepened, and on increased export activity by companies capitalizing on the weak US dollar, the Georgia Ports Authority said.
That rosy assumption is reflected in the $21.4 billion budget proposed by Perdue for fiscal 2009, which begins July 1. That may seem to be justified by a 4.2-percent rise in overall tax collections and a 1.8-percent increase in sales taxes collections for the last six months of 2007 — the first half of the state’s current fiscal year.
Yet the governor’s spending plan projected a 5.4-percent jump in overall tax collections, but in reality sales taxes sank 8.8 percent in December, a month they usually spike up due to holiday-season shopping. Last month’s shopping slump fueled fears the nation was beginning a slow slide into recession.
“It’s very difficult to think about the bio-industry going into a recession,” Byrd said.
Byrd’s committee was established last April by the Georgia House of Representatives. The resolution creating the panel spelled out the committee’s duties, which included “consider(ing) the need for a state authority for bioeconomic development in Georgia.”
“Other matters to be considered by the committee shall include the study of public awareness of bioeconomic development, funding of an authority, support for biomedical research, legal implications such as intellectual property rights of the state and the researchers whose research is supported or funded with state funds, objective criteria for measuring increased economic activity, and funding considerations including private sources for funding,” the resolution stated.
The committee consisted of Byrd and three other state representatives — Karla Drenner (D-86th District), Carl Rogers (R-26th District), and Larry O’Neal (R-146th District) — as well as three life sciences professionals — University of Georgia professor Clifton Baile; Fabrice Egros, president of UCB Inc., the Smyrna, Ga.-based US unit of Belgian biopharmaceutical company UCB SA; and Russell Medford, president and CEO of AtheroGenics, an Alpharetta, Ga., pharmaceutical company.
Between August and December 2007, the committee held four full-day hearings — one each covering agriculture, bioenergy, drug development and manufacturing, and medical devices. On Dec. 4, the panel held a daylong “summit” focused on forging a comprehensive life sciences strategy for Georgia, with speakers citing the need to build on existing economic development, workforce development and financing programs.
“People testified that they didn’t know these types of programs existed, and that’s not good. And people stated that when they called Georgia, they were constantly transferred to someplace else because they didn’t know where to make the proper phone call to get the ball rolling for them,” Byrd recalled.
“The common threads of all were, one, they needed funding. Two, they needed facility space. And of course, the workforce the majority of people that spoke didn’t even know that we had existing programs,” Byrd recalled. “As far as they were concerned, they didn’t think Georgia was on the radar screen for the bio industry.”
Those programs, she said, included the life science facilities fund and the State of Georgia Bioscience Seed Fund. Established in 2000 by the state General Assembly, the seed fund teams up with early-stage investors in life science companies based in Georgia. The state seed fund invests $1 for every $3 from investors.
Byrd said the panel was intent on uniting Georgia’s academic, business and government leaders, and their businesses or institutions, around a single vision for advancing the state’s life sciences sector, much as North Carolina and some other states have done.
“We were trying to defragment all of that and working with all of these departments, so that we could become an aggressive state — because all the states surrounding us are dumping lots of money into the bio industry,” Byrd added. “If Georgia moves aggressively toward implementing what we are laying out, then we’re not going to just jump to the top five. We’re going to move even higher, and off the chart.”