Growing Georgia s Bioscience Industries:

Growing Georgia’s Bioscience Industries:

Report on Conference Focus Group Discussions

Introduction

On March 27, 2002, more than 200 representatives from higher educa-tion, business, and government met at the conference “Growing Georgia’s Bioscience Industries.” The goal of the event was to identify ways of harnessing the collective resources of colleges, universities, industry, and government to achieve growth in the biosciences sector of Georgia’s economy.

Co-hosting the conference were the Atlanta Regional Consortium for Higher Education (ARCHE),

Georgia Research Alliance, Metro Atlanta Chamber of Commerce, University System of Georgia’s Intellectual Capital Partnership Program, and Centers for Disease Control and Prevention.

A key portion of the conference centered on nine focus group sessions in which cross-sections of participants from the three sectors discussed topics such as funding, talent development, infra-structure needs, and technology transfer/commercialization.

A summary of the insights and recommendations offered by focus group participants is provided in this report. Topic categories are listed in priority order based on the frequency of discussion across all groups. While not necessarily reflecting consensus views, the following captures the major ideas expressed by participants.

A complete set of notes from all the focus group sessions is avail-able at www.atlantahighered.org. Note: The views and opinions expressed in this publication reflect comments made by focus group participants at the March 27 biosciences conference and are not necessarily the positions or policies of ARCHE or any confer-ence co-host or sponsor.

Communication

Communication between higher education, industry, and govern-ment is necessary in order both to facilitate collaboration that can help grow the bioscience indus-tries and to raise political and public awareness of bioscience research and its applications.

• More opportunities are needed for higher education, bioscience businesses, government, and interested stakeholders to network and share ideas to better understand each other’s organizational cultures, strengths, and needs. The goal of improved communication is greater collaboration, since collaborative efforts are more likely to succeed than those undertaken by each of the sectors acting independently.

• Communication is not the same as marketing (although good marketing does depend on good communication).

We should strive to develop diverse ideas around a shared vision for the

biosciences, to cross pollinate conversa-tion and fresh views.

• Specifically, avenues for communication are needed: among academic researchers involved in commercialization; between universities and industry; and broadly among all parties. Annual or biannual conferences are helpful in this regard, provided they are: open to a wide audi-ence, offered on “neutral” ground, and non-threatening to participants. • Communication is key to getting

all constituencies on the “same page” in using a common, understandable language to more effectively deliver a clear message about the importance of the biosciences. One obstacle to communication is that the nature of the biosciences is so technical

and arcane that industry leaders, researchers, and academics often must speak a language that is difficult

for elected officials, investors, and members of the public to understand. • The Governor needs to receive more

information about the long-term impact of bioscience industries to encourage his further support. Business and higher education should work together to give the Governor the same message on priori-ties, opportunipriori-ties, and measures of success.

• It is important to educate state and local elected officials and government agencies on the process involved in growing the bioscience industries, and to distinguish biotech from other types of technology manufacturing (in terms of the time it takes to develop a product, costs for research and testing, process for commercialization, etc.). This under-standing would help in formulating public policy directions and funding approaches. Biotech is now considered a minor economic player in Georgia, and it is time to begin a campaign to bring awareness to the state and its people. • With respect to the Georgia legislature,

it will take a strategic effort to communi-cate that there are benefits throughout the state from public investment in bioscience industry growth – even though that growth may occur primarily in Atlanta-Athens-Augusta.

• With respect to private financing, investors need to be educated on the particular risks/rewards and challenges/ opportunities of bioscience industries, and

One approach would be to talk with current investors, to seek advice and enlist their assistance. This effort would be helped if industry communicators speak the languages of academia, finance, and entrepreneurship.

Funding

Financial support of bioscience industries from state government and the venture capital community must increase to help seed the growth of new and developing companies.

• While the Governor’s proposed biotech seed fund is a welcomed first step, a larger and more visible financial commit-ment is needed from state governcommit-ment. • State financial support can be offered in

a variety of ways, including: funding assistance for invention disclosures, licenses, patents; allowing the use of limited portions of state pension funds as venture capital; creating a program that promotes state/corporate matching grants; and permitting a portion of Georgia tobacco settlement funds to be used for commercialization of biotech-nologies (as in Michigan).

• State assistance also can take the form of allowing research and development tax credits to be used later than 10 years out, or by permitting their sale to other companies (as in New Jersey). Statutes also could be changed to allow estab-lished companies to purchase the unused

net operating losses (NOLs) of emerging companies.

• The most pressing need for new compa-nies is not incentives, however, but cash flow.

• The use of local tax dollars to support industry growth also should be explored. • In the area of private financial support,

venture capital firms based in Georgia have limited amounts to invest, and only a few of these firms specialize in the biosciences. Venture capital firms based outside the state often do not want to monitor funded companies from a distance. One way to address this situa-tion would be to recruit out-of-state venture capital firms to open branch offices in Georgia. A question was raised, however, as to whether there is sufficient deal-flow in Georgia to support such branch offices.

• Other ideas mentioned included: the need for forums at which university research can be presented to potential investment “angels”; the fact that foun-dations often are overlooked or under-utilized resources; the role Georgia-based, Fortune 500 corporations could play by investing in bioscience industry growth as an economic development initiative; and the need for universities to attract more industry funding for faculty research.

The Biotech

Start-up Hurdles

• The chances are 6 in

1,000,000 that an idea

for a high tech business

eventually becomes a

successful company

that goes public

• Bankruptcies occur for

60% of the high tech

companies that succeed

in getting venture capital

• Fewer than 10 percent

of funded start-up

companies go public

• On the average, a venture

capitalist finances only 6

out of every 1,000 business

plans received each year

Excerpt from conference presentation by Dr. Russell M. Medford, President and CEO, AtheroGenics, Inc.

Talent

Growing, attracting, and retaining a talented work force is a challenge for bioscience industries in Georgia due to factors such as limited opportuni-ties in the state for career movement and professional development, and negative perceptions of Georgia’s public education system.

• One of the biggest talent issues facing bioscience companies in Georgia is the recruitment of experienced management in a variety of positions, because the industry in the state is not large enough to offer alternative career opportunities if the original job does not work out as anticipated.

• In addition, professional development opportunities need to be created or enhanced to attract and maintain a bioscience work force in Georgia.

• The state is losing a valuable talent pool because post-doctoral researchers at the universities are leaving in response to difficulties in funding for their positions or projects, and difficulties in identifying local career opportunities.

A tracking system for post-docs would assist bioscience companies in knowing what research these students are working on and in recruiting them into the industry (large pharmaceutical compa-nies elsewhere are more successful at monitoring post-doctoral work and recruiting these researchers). The Atlanta Biotech Network, a group of more than 250 graduate students,

is working on projects for biotech companies and is trying to find addi-tional connections to the business community to retain these students. • Opportunities for higher education

initiatives to address bioscience company

MD/MBA programs; adding

regulatory practices components to the science curriculum; and pursuing grant support to create masters programs in science and business.

• Higher education also should promote the training of graduate students side-by-side with industry researchers through curriculum components or mentorship programs (similar to MIT’s program that allows graduate students to interact with start-up companies, or the United Kingdom’s programs that require both industry and university advisors for certain research fellowships). Universities could seek corporate philanthropy or capitalize on business interest in naming opportunities to secure funding for joint bioscience industry fellowships. • The poor reputation of Georgia’s K12

system is an obstacle to recruiting bioscience companies because decision makers at these companies will not relo-cate to the state if they perceive there is not a proper work force pipeline, or if they perceive there to be a substandard education system for their employees’ children.

• Considering the diversity of the nation’s and Georgia’s future work force, bioscience industries have a vested inter-est in promoting – and actively partici-pating in – strong math and science education for female and minority students at all levels, from K12 through higher ed.

Infrastructure

Physical infrastructure is a key ingre-dient in the growth of bioscience companies, from incubator space to cutting-edge office/wet lab/manufac-turing facilities. The space necessary to support incubating and emerging bioscience companies is lacking in Georgia, and needs to be expanded for the industry to thrive.

• There is not enough incubator space in the state specifically for biotech compa-nies. Further, emerging companies coming out of incubators need core facili-ties to which moderate amounts of space can be added as the companies grow. These facilities don’t exist now, and young companies aren’t able to buy or lease this type of space due to cost and risk. Developing government and industry partnerships to fund or guarantee such intermediary space – while companies are transferring technology and working toward profitability – would help emerg-ing biotech businesses.

• A priority goal should be to retain Georgia start-up companies in state after they begin to succeed, rather

than losing them to other states which offer better opportunities and support for growth.

• A centralized region should be identified by the state as the target area for biotech industry growth, which could be focused around a research park concept. Georgia does not offer any developer incentives

for such projects, but other states do. This target area most likely would be the Atlanta-Athens corridor.

• If a modular bioreactor – that can produce at capacity for R&D levels and then scale to produce at larger levels for manufacturing – was built in Georgia, companies would come to the state to manufacture drugs and start-up compa-nies would have the facility they need to grow in Georgia, rather than leaving. • Industry could help itself in certain

ways, as well. Companies that over-buy space could sublet unused portions of that space to start-up companies. Core facilities often are underutilized, but few people know about these resources. A common database or Web site could be created to make this information avail-able, similar to what ARCHE did in compiling the higher education bioscience resource directory released at the conference.

Excerpt from conference presentation by Dr. C. Andrew Watkins, Director of the Technology Transfer Office, Centers for Disease Control and Prevention.

What Can We Do

Under a Cooperative

Research and

Development

Agreement?

• CDC scientists can work

directly with industry

• Industry can provide

technology, supplies,

funding, commercialization

expertise

• CDC can provide

equip-ment, supplies, personnel,

state-of-the-art labs

(everything except $)

• Subject Inventions can

be licensed exclusively

to industry partner

Technology Transfer

Technology transfer offices at colleges and universities need additional resources, including larger numbers of experienced staff, to make the transfer of tech-nology from campus laboratory to market more efficient.

• Higher education tech transfer offices are the key interface where academics can get information and companies can obtain assistance, but the process often is confusing. Tech transfer offices are expected to fill many roles: service provider to faculty, outreach agent to business, money-maker for the institu-tion, protector of institutional interests. If key researchers view the tech transfer office as not helpful, they will hold back their research. If companies don’t have someone to talk with who understands the bioscience business environment, frustration can result.

• It takes relationships to get scientific technology from campus laboratory to market. People like to do business with people they know. If tech transfer officers don’t know the players, nothing will happen. Experienced, capable tech transfer staff are critical to brokering deals between government, higher education, and business, and managing deal flow.

• However, tech transfer offices nation-wide are funded and under-staffed. Under-staffing is compounded by the increase in workload generated by the surge in patent applications. In Georgia, it is difficult to retain seasoned tech transfer staff because they are heav-ily recruited by other regions.

Furthermore, tech transfer staff frequently don’t have full authority to negotiate on behalf of their university, or lack the experience or skills necessary to make business deals.

• If Georgia could learn how to streamline the tech transfer process, it would distin-guish itself against competing states. Tech transfer offices need to look to other universities for best practices and find a balance between protecting their institutions’ interests and providing incentives to commercialize. For exam-ple, at MIT, the process is to get a deal done fast and not haggle every penny; this is because MIT recognizes that getting the technology out the door, up and running, reaps more benefits in the long run. The University System of Georgia should consider a uniform process for tech transfer.

• The cost of generating patents is tremen-dous. If in-state law firms were to combine their patent efforts, Georgia would have a stronger overall patent practice. This could encourage universi-ties to use the local firms more

frequently, and help start-up bioscience companies, since Georgia lawyers better understand the local technology and business environments.

Marketing

There is a need for coordinated and effective marketing efforts to commu-nicate the assets already in Georgia to support bioscience industries, as well as those that are developed in the future.

• Fragmented marketing efforts in Georgia in the past several years, while effective

have not demonstrated the power of the state’s collective resources. Georgia needs to determine its core strengths and use these to build customized incentives to target specific companies that could benefit from these strengths.

• In recent years, pharmaceutical compa-nies have relocated to California or North Carolina over Georgia because those states recruit aggressively by entertaining prospects and offering very creative packages. Winning one big “anchor” company would help create the sense of industry “critical mass” in Georgia.

• Georgia’s existing success stories in biotech manufacturing capacity, such as the world’s largest protein manufacturing plant for drugs (in Augusta), are not well known. Building on these success stories would be an advantage for the state. • An Intellectual Enterprise Zone (IEZ)

could create benefits and publicity to help jump-start the bioscience industry in Georgia. The proposed IEZ would offer a variety of opportunities: innova-tive intellectual property policies at universities, access to financing, availabil-ity of space at a reasonable price, part-nerships between government and venture capital firms to enhance fund-ing, and mentoring programs where business people and academics could advise start-up companies across a range of business topics.

R

ESEARCH

B

ASE

:

Support increased funding for GRA, research institutions, Eminent Scholars, and possible state matching funds for small compa-nies that win research grants.

C

OMMERCIALIZATION

:

Facilitate industry/academic discussions. Support expanded state

resources for commercialization.

F

UNDING

:

Increase seed capital to $50 million via seed fund, CAPCO, or pension flexibility. Aggressively market to VC firms outside region.

M

ARKETING

:

Tell Atlanta’s story locally/nationally/internationally using marketing materials, indus-try events, and aggressive PR.

R

EAL

E

STATE

:

Propose 2003 legislation to increase commercial wet lab space beyond incubators.

T

ALENT

:

Support investment in university life sciences programs and executives in residence at incubators. Continue efforts to retain local talent.

B

USINESS

C

LIMATE

:

Pass tax incentives (NOL/credit sale back, NOL 15-yr. carry forward, equipment sales/use tax exemp-tion, etc.) to provide immediate assistance to young companies.

N

ETWORKING

:

Support local efforts with money and time. Sponsor informal events to encourage community participation.

Excerpt from conference presentation by Hans Gant, Senior Vice President of Economic Development, Metro Atlanta Chamber of Commerce.

Metro Atlanta Chamber of Commerce

Biotech Task Force Recommendations

The Task Force studied issues surrounding the growth of the Atlanta bioscience industry. The above recommendations were suggested to achieve a long-term goal of over 400 new bioscience companies with 18,000 new jobs in the Atlanta area by 2010.

Special thanks are due the law firm of Powell, Goldstein, Frazer & Murphy LLP; Georgia Power Company; and the Georgia Department of Industry, Trade & Tourism for their assistance in providing facilitators for the focus group sessions. Special thanks as well are due the University of Georgia for providing the laptops used in the focus groups to record participant comments. Photography in this report by Phillip McCollum.

About ARCHE

Founded in 1938, the Atlanta Regional Consortium for Higher Education (ARCHE) is a non-profit association of 21 public and private institutions of higher learning. Membership also includes corporate and non-profit Community Partners and regional

Affiliated Libraries. The Consortium’s mission is to advance Atlanta-area higher education through academic collab-oration, community

partner-ships, and public awareness.

Member Institutions

Agnes Scott College, Atlanta College of Art, Brenau University, Clark Atlanta University, Clayton College & State University, Columbia Theological Seminary, Emory University, Georgia Institute of Technology, Georgia State University, Institute of Paper Science and Technology, Interdenominational Theological Center, Kennesaw State University, Mercer University (Atlanta Campus), Morehouse College, Morehouse School of Medicine, Morris Brown College, Oglethorpe University, Southern

Polytechnic State University, Spelman College, State University of

West Georgia, University of Georgia

Community Partners

Atlanta History Center, BellSouth, Georgia Humanities Council, Georgia-Pacific, Georgia Power Company, IBM, Martin Luther King, Jr. National

Historic Site, Metro Atlanta Chamber of Commerce, SciTrek, Woodruff Arts Center, YWCA of Greater Atlanta

Affiliated Libraries

Atlanta-Fulton Public Library System, Atlanta History Center Library/Archives, Georgia Department of Archives and History, Georgia Public Library Service, Jimmy Carter Presidential Library