The US Department of Commerce’s Economic Development Administration recently announced it has awarded $3 million to partially fund a planned $6.25 million regional life-sciences incubator on the University of Kansas Medical Center campus in Kansas City, Kan.
The incubator will likely be operational by 2010 and will provide sorely needed space for life-sciences startup companies — including spinouts of regional universities and non-profit research institutes — to help them eventually contribute to a burgeoning life-sciences economy in the region, officials involved with the project said this week.
The EDA grant will be used to help renovate the Breidenthal Building on the KU Medical Center campus for re-use as a life-sciences incubator, complete with wet-lab and office space.
According to a summary on the EDA website, the new incubator will “provide the infrastructure necessary to promote the growth and recruitment of biotechnology companies to the region and essential to expanding innovation and regional entrepreneurship.”
The EDA also estimates that the project will help create some 300 jobs and generate $44 million in private investment, according to the summary.
It is also anticipated that the grant will be matched by money from the state of Kansas through the Kansas Bioscience Authority, according to William Duncan, president and CEO of the Kansas City Area Life Sciences Institute, the non-profit bioscience-focused economic development agency responsible for coordinating the incubator project.
A spokesperson for KBA told BTW that a decision has yet to be made on the exact amount of funding it would provide, but that the organization’s board is considering a $2 million investment, which will likely win a vote of approval next week.
Duncan also told BTW that the KU Medical Center is planning to finance the remainder of the project. All told, renovating the building is expected to cost approximately $6.25 million.
“Our role in the incubator was to submit a planning grant application to the EDA; to assess the need for incubator space; and to select the best site in the metro region,” Duncan said. “That was completed in fall of last year, and … the site selected was the Breidenthal Building. Then it was up to the KU Medical Center to submit the grant application.”
Duncan said that the location of the incubator was chosen primarily due to its proximity to the life-sciences resources already in place at the KU Medical Center campus, such as a small-animal facility. He added that KU’s willingness to provide additional funding for the project and the availability of a suitable building on its campus also factored into the decision.
“One must keep in mind that our metro area is divided right down the middle by a state line,” Duncan said. “That’s why a regional organization such as ours was in a position to pursue the study on site selection.”
KU already has had a smallish incubator affiliated with its campus for 10 years, Steven Geiger, senior deputy director and CFO of the KU Medical Center Research Institute, told BTW. Offering up about 4,000 square feet of rentable space, the incubator has seen its share of tenants come and go, but oftentimes has been inadequate for the types of businesses that wanted to locate there.
”If we could get a space with a little more flexibility, more labs on one floor, et cetera – that would be beneficial to the community.”
Geiger said that “working against” it is the fact that the current building has one lab of 1,000 square feet; three labs of just under 600 square feet; and one lab of about 300 square feet, as well as nine offices available. “So you can get a nice little business started over there, but there is not much room to expand or grow without knocking out other tenants.
“We’ve had people come and look at our space and go, ‘Well, I need this to do some manufacturing,’” Geiger said. “And this building is just not set up for that. So if we could get a space with a little more flexibility, more labs on one floor, et cetera – that would be beneficial to the community.”
The Breidenthal Building, on the other hand, is about 40,000 square feet, “of which about 24,000 square feet are leasable,” Geiger said. “It’s a very solid building built in the 1950’s, and we are going to remodel that.”
Despite its placement on the KU Medical Center campus, the new incubator is expected to serve as a resource for any startups in the region, including the Western reaches of the state and the Eastern part of Missouri, officials said.
“It’s amazing how much activity there is in a 100-mile radius of Kansas City right now,” Geiger said. “We’re looking at this regionally — not just for our university,” Geiger said. “While this positions us to serve our campus and our faculty, the whole region has had an increase in life-sciences activity — not just in human health, but plant and animal science, as well.”
Specifically, Geiger cited recent increases in research funding at KU, Kansas State University, and the University of Missouri-Columbia, the latter two of which also have agriculture and veterinary schools.
According to yearly data compiled and reported by the Association of University Technology Managers, the University of Kansas saw its research expenditures spike to $132 million in fiscal year 2006 from $120.7 million in 2005; while the KU Medical Center’s research spending rose slightly to $71.5 million in 2006 from $70.5 million in the prior year.
Likewise, Kansas State University spent about $98.3 million on research in 2006, up from $90.3 million in 2005. “The whole idea behind the life sciences initiative here is, of course, economic development,” KCLSI’s Duncan said.
“Given the increasing research base, from that comes intellectual property, and we need to commercialize it,” he added. “We’ve had a basic plan for some time to establish a wet-lab incubator that would be some sort of a community metro-focused incubator.”
Geiger also said that “several dozen” companies in the greater Kansas City area fall into the broad category of “life sciences.”
Also, in 2006, the Stowers Institute for Medical Research in Kansas City, Mo., spearheaded the development of the BioMed Valley Partnership, a tech-transfer consortium that also includes KU and the University of Missouri-Kansas City. As part of the BVP, Stowers formed a for-profit corporation called BioMed Valley Discoveries to market and commercialize life sciences research stemming from those and other institutions.
Lastly, KCLSI, which was established about 10 years ago, works as the catalyst to “get all the oars in the water at the same time,” Geiger said.
To be sure, many of the startups that would expect to seek shelter in the new facility will likely spin out from life-sciences research and intellectual property developed at KU and its medical center, as well as regional universities and non-profits, although that hasn’t always been the case.
According to AUTM, in both 2005 and 2006, neither KU nor Kansas State reported the formation of a startup company from university research. Geiger said that there have been spinout successes in the past, such as XenoTech, spun out of KU Medical Center in 1994, and housed in the campus’ lone incubator until 2002, when it relocated down the road to Lenexa, Kan.
One of the bigger companies to occupy the only incubator affiliated with KU, Proteon Therapeutics, was not a university startup, Geiger said. “The current tenants are not companies involving faculty members, and the people who are working on leases now are also not associated with faculty members,” he said. “So we are truly here for the region.”
However, Duncan said that the recent dearth of university spinouts is likely due to the fact that establishing such companies has been difficult due to the lack of suitable incubator space in the region. He said that it has “absolutely been the case” that life sciences startups have been forced to relocate to other regions in the past, though he did not provide specific examples.
“Our studies have shown there is definitely a need,” Duncan said. “There has been little focus on getting companies into the existing space. To be candid, that original space was not ideal. It was primarily laboratories and not a lot of office space. This new facility will be much more amenable to accommodating a startup company, and will certainly look much more like what they want to be when they grow up.”