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Hoping to 'Encourage' Life-Sci Industry, Nevada to Alter Pitch to Sector Employers

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Nevada will tweak its strategy to attract life-science jobs in the coming months by touting its expansion-minded medical schools and highlighting its plan to host the 2012 Biotechnology Industry Organization international convention.

Additionally Nevada said it will not abandon its traditional approach to wooing life-science companies and their jobs: emphasizing the state's lower taxes and business costs compared with neighboring California, according to John Laub, a co-founder of the Nevada Biotechnology and Bioscience Consortium, and whom the state has appointed to an economic-development committee focused on the industry.

Laub, who is also executive director of the Regenerative Medicine Organization in Las Vegas, told BioRegion News last week that he has taken the reins of the Life Sciences Committee of the Nevada Development Authority. He succeeds David Ward, deputy director of the Nevada Cancer Institute, who has served in the position the past two years.

The committee currently comprises three other members but will grow to between eight and 10 and include individuals with business experience as well as those with research backgrounds traditionally appointed to the panel.

Its priorities will include building relationships with state and federal government officials and encouraging the state's Congressional delegation to promote Nevada as a facility site for life-sci businesses it may be working with.

"We're looking to promote the business, support it, encourage it, find niches that make sense for businesses in the life-sciences area, to leverage off what Las Vegas and southern Nevada have," Laub said.

Laub said pitching Nevada as a top-flight site for life-sci training offers better prospects for growing the industry's presence in the state than simply competing with neighboring states for employers. Among these are California, which has top-tier bioclusters in the San Francisco and San Diego regions, and Arizona, which has beefed up its life-sci sector with new research venues like the Translational Genomics Research Institute, and growing medical device and drug discovery companies.

Laub said Nevada hopes to repeat the success it enjoyed 2002 when it persuaded Palo Alto, Calif.-based medical and industrial X-ray device maker Varian Medical Systems to move much of its operation across the California border to Las Vegas. Among the company's Las Vegas facilities is an education center that trains medical technicians on its X-ray and cancer treatment machines.

It's a success the 2-year-old Nevada Biotechnology and Bioscience Consortium, also called NevBio, hopes to repeat with a second life-sci employer whose expansion plans have been made public: Life Technologies. The company, based in Carlsbad, Calif., was created late last year when Applied Biosystems merged with Invitrogen, and is weighing whether to establish a training facility in Nevada or elsewhere. Applied Biosystems has declined comment on the search.

"We're just starting to talk to [ABI] about maybe putting some of the training for their new genomic equipment in Las Vegas," Laub told BRN this week. "Las Vegas is the showcase of the world, so to speak. People can fly in and out real easily, and it's a fun place to come to. If you have a new technology or something that you want people to see, Las Vegas makes sense."

A stronger training sector, he added, could also encourage patients to view Las Vegas and southern Nevada as meccas for medical tourism.

According to a report released last year by the Battelle Memorial Foundation as part of its Technology, Talent and Capital: State Bioscience Initiatives 2008 study initiative, Nevada's life-sci sector consisted in 2006 of some 377 establishments, including Varian, which in May 2008 completed an 85,000-square-foot manufacturing center in Las Vegas.

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The center serves as headquarters for the firm's Security and Inspection Products group, which makes high-energy X-ray machines used for non-destructive testing and in cargo screening installations at ports and border crossings around the world.

Varian notwithstanding, most of Nevada's 225 life-sci establishments are research, testing, and other medical laboratories, compared with 115 medical device manufacturers, 25 pharmaceutical concerns, and 12 businesses focused on agricultural feedstock and chemicals, according to the Battelle study.

By contrast, Battelle counted 632 biotech, pharma, and medical device companies in Arizona;and 6,096 in California.

Nevada also trails behind rival states in total venture capital invested in state-based early-stage life-sciences companies. Dow Jones VentureSource and a predecessor have not recorded a single biotech or medical device financing deal in the state since 2005, when the state was reported to have received $7.25 million in medical device funding.

By contrast, Metro Phoenix alone racked up $88.7 million invested in five medical device companies during the first three quarters of 2008, the most recent period for which figures are available, double the $44.75 million collected by three med device makers during the first nine months of '07.

In Q3 '08, the Arizona region generated $7.5 million in biopharmaceutical investment, just over 6 percent above the $7.05 million it recorded during the same three months of 2007.

One biopharmaceutical company was recorded as receiving $2.1 million in VC during the first three quarters of 2008, compared with no deals in the comparable 2007 period. The rest of Arizona has not recorded any VC life-sci investments in 2008, though it attracted $27.6 million in biotech funding for all of 2007, according to Dow Jones VentureSource.

California, by contrast, drew $571.69 million in biopharma VC funding and $256.9 million in medical device funding in Q3 '08, compared with $443.58 million and $395.45 million, respectively, year over year.

Laub rejected the view that Nevada's relative dearth of life-sci companies, or of VC investment in Nevada bio businesses, should be deemed evidence that the state's low-tax positioning had failed to help it attract biotech, pharmaceutical, and medical device jobs.

"It still is a good strategy, but you have to combine it with other aspects of Las Vegas. It does make sense for a life-science company or a biomedical company to come here if they're close to going public, and the initial founders are going to make a lot of money — they'd be in an advantageous tax environment," Laub said. "There's education. There are other scientists. There's a synergy also in Las Vegas than can assist those types of companies. I don't think we did a real good job packaging the tax advantage with the other side of it."

And California's looming budget upheaval — officials there are scrambling to plug a $41.7 billion budget shortfall for this fiscal year and next — "is going to make us more attractive, and I think the more we increase our visibility, the better we'll do," Laub said. "We'll start to see that in about two years, as we see what will actually happen. As that starts to affect companies, I think we'll get a lot more interest."

Also in the next couple of years, the Las Vegas Convention Center will carry out an $890 million expansion and renovation that will add 86,000 square feet of new meeting space within the total 500,000 of new space to be built. The three-phase Master Plan Enhancement Program will entail upgrading existing infrastructure, adding a new meeting room complex to the existing South Hall, and building a new lobby and grand concourse, all set to be completed in 2012 — in time for the BIO 2010 international convention scheduled to take place in Las Vegas.

Unlike most other states, Nevada does not collect state corporate or personal income taxes, two of 16 selling points the redevelopment authority has included in the "Las Vegas Relocation Kit" it has distributed to hundreds of life-sci CEOs over the past two years.

So too are several research institutions, including the Nevada Cancer Institute, the Nevada Neurosciences Institute, the Lou Ruvo Brain Institute, and the Harry Reid University of Nevada Las Vegas Research and Technology Park, named for the new US Senate majority leader responsible for securing federal funding for the project.

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Nevada is also home to a pair of medical institutions: the publicly funded University of Nevada Health Sciences System and private Touro University Nevada in Henderson. Their recent growth plans helped persuade Laub that the state could play to that strength in its life-sci strategy through a focus on training employees.

"There's a growing group of students and professors, and they have a lot more availability to work with companies than other schools right now," Laub said.

The UNLV School of Medicine, for example, has added five students to its class in each of the past two years, rising from 52 to 62 students. "The ultimate goal, before we had this economic downturn, was to expand the class to 100," Miriam Bar-on, associate dean for graduate medical education for the University of Nevada School of Medicine, told BRN.

The financial upheaval, she said, "halted the expansion. For us to continue with the expansion, we need to expand our facilities comparably."

UNHS' Board of Regents approved five new medical-education projects totaling about $127.4 million in 2007 [BRN, April 7, 2008]. But state budget shortfalls since then have limited the system's ability to construct its ambitious series of projects.

Construction is in progress on the Health Sciences System's Shadow Lane Biomedical Clinical Skills and Simulation Center, a $15.75 million project that consists of renovating 31,000 square feet within the Shadow Lane campus' "Building B." The center will house clinical skills and simulation educational programs in Las Vegas for the University of Nevada School of Medicine, the University of Nevada Las Vegas School of Nursing, and the Nevada State College School of Nursing.

Bar-on said the simulation center will have 12 patient rooms with a control center and software to track training scenarios, an 80-person high-tech "smart" classroom, several debriefing rooms, a 1,200-square-foot surgical-simulation area, at least four rooms for "high-fidelity" simulation including an ER trauma bay, and two task-training rooms.

The Shadow Lane project broke ground last fall, and is slated for completion in fall 2009.

"This project will support the development of a 'mock-hospital' of sorts, to serve as an interdisciplinary, inter-institutional clinical skills and simulation center to promote collaboration, integration, and efficiency through providing shared learning spaces and experiences," according to a health-sciences system description of the project.

Nevada has agreed to foot 70 percent of the construction costs, with the health system responsible for the remaining 30 percent.

Marcia Turner, vice chancellor of operations and chief operating officer of the Health Sciences System, told BRN last week the state has kept two other medical-education projects alive by deferring construction funding. It is proceeding with design work on:

  1. HSS Medical Education Building, a nearly $52 million, 58,000-square-foot facility planned for the University of Nevada's Reno campus. The building will support programs conducted by the school of medicine and UNR's Orvis School of Nursing. Facilities include a new anatomy laboratory and lecture hall, a patient-simulation center, and patient teaching labs. The state has funded $3 million to design the project, set to be completed in the fourth quarter. Plans call for starting construction in the first quarter of 2010, with completion by the fall semester of 2011.
  2. Advanced Clinical Training and Research Center, a $59.7 million, 72,000-square-foot building to rise on UNLV's Shadow Lane campus. The building will allow UNLV's nursing program to move from the school's Maryland campus, and the university's school of medicine to expand its offerings in Las Vegas. Facilities include wet lab research and support space, clinical research space, and space for students and faculty members. The state has funded $4.47 million to design the project, set to be completed in the first quarter of this year. Plans call for starting construction in the second or third quarter of 2009, with completion envisioned by the spring semester of 2011.

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The design funding "enabled us last year to keep the ball rolling" and continue development work on the projects despite the delay in construction funding, Turner said.

The state has deferred $36 million in construction costs for the HSS medical education building, and nearly $29.5 million in construction costs for the advanced clinical training and research center.

Even if the construction spending is restored in Nevada's next fiscal year, which begins July 1 — as the health system hopes — it would still need to raise additional funding to build both projects: $12.9 million for the medical education building, and $25.8 million for the clinical training and research center.

At Touro University Nevada, the first class of 76 medical students — which the school says is the largest medical school graduating class in Nevada history — graduated last May. All received Doctor of Osteopathy degrees from Touro's College of Osteopathic Medicine, which was launched along with Touro's Nevada campus in 2004. Since then, the university's enrollment has zoomed to almost 1,330 students in medical and other programs.

More than 80 additional students graduated last month, including those with bachelor's degrees in nursing and master's degree candidates in physician assistant studies, nursing, and education.

Also last year, Touro opened a $6 million, 35,000-square-foot addition that included a new Center for Autism and Developmental Disabilities, a patient clinic with clinical research center, and facilities for researchers and students.

"Part of our interest is in working with hospitals to create more — and more specialized — residency slots to provide opportunities for our graduates to remain in state during their post-doctoral training," Hilarie Grey, a Touro spokeswoman, told BRN via e-mail.

"Nevada ranks near the bottom of states in the number of health-care categories including the number of physicians per capita," Grey. "The reason the Touro system chose to start a campus in Nevada was because of the opportunity to address those critical needs and disparities."

The osteopathic medicine college also launched a physical therapy degree program last November, which is offered on-line, and is enrolling would-be physician assistants for a new three-year, full-time program set for July 2009.

Touro's expansion plans include adding 165,000 square feet in 2010 to its Building One, where it now occupies 142,000 square feet. The university can accommodate additional expansions within a second building whose 200,000 square feet is now leased to several tenants.

Grey said the ongoing economic and financial turmoil has not significantly changed those expansion plans, though she said it caused them to be pushed back "a touch."

Nevada state officials are scrambling to plug a $1.5 billion shortfall over the next two years — a gap that widened last November by $300 million — which they blame on the economic and financial upheaval.

The shortfall has led to local news reports that Gov. Jim Gibbons will propose a 6-percent pay cut for state employees in his State of the State address on Jan. 15, which could lead to $432 million in annual savings.

Pending the speech, Gibbons has refused to discuss the pay cut, which has been criticized not only by employees but state schools superintendent Walt Ruffles, who has publicly argued the move would breach state contracts with teachers' unions.

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