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| A Bio·IT World special section
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STRATEGIC INSIGHTS 

By Barbara Depompa

June 15, 2003

Special Issue 
· State of the States for Biotech
· Northeast Region
· Mid-Atlantic/Southeast Region
· Midwest/South Region
· Northwest Region
· Southwest Region
Colorado 
Biotech Summit in Denver 

In Colorado, Denver is the epicenter of biotechnology activity and resources. According to Christine Snowberger, deputy director of inward foreign investment at the Colorado International Trade Office, there are currently 132 biotech companies, 112 pharmaceutical companies, and more than 300 medical device companies. Amgen has its largest location outside California in Denver.

The number of bioscience companies in Colorado grew by 35 percent between 1998 and 2002, but few are very large. The vast majority are small startups.

A total of 16 research centers support Colorado life science companies, including the University of Colorado Hospital and associated University of Colorado Health Sciences Center, located in a former Army Medical Hospital between Aurora and Denver. This center offers one square mile of research, hospital, and teaching facilities, such as a cancer research center and a specialized telemedicine research organization supporting Native Americans in the region. Snowberger describes this facility as "an incubator," with 17 associated startup companies conducting research there.

Colorado
· 132 biotechs
· Over 300 medical device companies
· Training grants
· 35% bioscience industry growth between 1998 and 2002
Other research centers include the Colorado School of Mines, the Eleanor Roosevelt Institute, the National Jewish Hospital (renowned for its asthma research), the Children's Hospital in Denver, the University of Colorado in Boulder (noteworthy for its DNA research and Nobel prize-winning scientists), and the Barbara Davis Center for Childhood Diabetes.

As for formal technology transfer programs, a university-funded organization, the Colorado Alliance for Bioengineering, coordinates biotech activities among faculty in all universities throughout the state. The group also sponsors an international symposium to connect researchers in Colorado with others from all over the world. The Colorado Bioprocessing Center in Fort Collins also develops and scales-up therapeutic compounds and biologics for biotech companies.

The Fitzsimmons Bioscience Park has several startup companies leasing space. There are legal, accounting, and administrative services available for small companies that locate in the park, along with regular "bio-breakfasts" for networking opportunities.

Among its financial incentives, Colorado offers biotechs an R&D tax refund for state sales and use taxes — basically a refund for the sale, storage, and use of tangible property used in biotech research. Employee training grants are also available for new biotech companies that move to the region, including about $400 per employee in grants administered through Colorado's community college system.

In an interesting twist, the state of Colorado lets each local community negotiate tax breaks with individual firms. Snowberger says these communities have more bargaining power than the state. Certain regions are called Enterprise Zones, which offer numerous tax credits for locating in economically lagging areas of the state. Colorado also claims to have a much lower cost of living than East- or West-Coast biotech clusters.

To foster the local talent pool, the Colorado Institute of Technology raises private funding for universities and primary and secondary schools to be used for high-technology research. A biotech advocate in this organization works with universities and schools to promote biotech education.

Lobbying groups providing local political clout include the Colorado Biotech Association, as well as regional branch offices of the national Medical Device Association and Pharmaceutical Association, both in Denver. The Colorado Association of Commerce and Industry and the Denver Chamber of Commerce both have biotech panels that also lobby for biotech.       www.state.co.us/oed 



Utah
A Mecca for Genealogical Research

Utah's biotech sector owes much to the efforts of Jim Sorenson, a local biotech pioneer. About half of the roughly 300 biotech and related firms in Utah can trace their roots to the Sorenson Foundation, either through funding or direct spin-off assistance from partners Jim Sorenson and Dale Ballard.

The largest sector of Utah's biotech-related business is medical device manufacturing, while drug discovery and development firms tend to be smaller in both number and size. There are only about 15 companies with more than 200 employees, and most have fewer than 100 employees, according to Chris Roybal, president and CEO of the Economic Development Corporation of Utah (EDCU), a public/private partnership that recruits new industry to Utah and assists in corporate expansion.

One of the larger companies, for example, is Myriad Genetics, a Salt Lake City-based biopharma credited with discovering the breast cancer gene. Myriad Genetics also created rapid sequencing technology that, in turn, has fostered at least five biotech startups in Utah.

Among the research centers supporting biotech are the University of Utah Research Park and the affiliated University of Utah Medical Center, as well as the five-year-old Huntsman Cancer Institute, funded by John Huntsman, CEO of Huntsman Chemical Co. The institute employs 500 people and has used more than $100 million in funding for genetic research related to cancer.

The University of Utah has a technology transfer program with Utah State University that has created far-reaching tech transfer and licensing agreements related to plant and animal genetics. In addition, a nonprofit corporation, Gendata, was formed by the state to license genetic database research generated by the University of Utah and the Mormon Church's vast genealogical resources.

Utah also has state-funded Centers of Excellence tied to universities and focused, at least in part, on biotech research. These centers funnel state funds to universities to help industries commercialize their research.

Utah offers a 6 percent R&D tax credit that allows biotech firms to deduct qualifying research-related expenses, including payroll, buildings, and even corporate income taxes in Utah. There's also the Industrial Assistance Fund for new job creation in the biotech sector. Companies may apply to the fund and collect from $1,000 to $3,000 for each new job created. As usual with most states, the money is doled out case by case. A separate, $500-per-job tax credit is available too.

When biotech companies build new facilities in Utah there are local tax inducements offering as much as 85 percent off new property taxes for up to 15 years. The tax credit does not apply to companies moving into existing buildings, however.

The industry lobby with the biggest political clout is the Utah Life Sciences Industry Association, but there's also an active chapter of the Licensing Executive Society, an international organization focused on licensing-related challenges in biotech. This organization's efforts have reportedly been central to aiding biotech and pharmaceutical companies with licensing intellectual property.       www.edcUTAH.org



Washington State
Therapeutics and Diagnostics Niche 

While there are 190 biotech and medical device companies in Washington state, employing more than 19,000 people, about 40 percent of these companies are five years old or younger. The vast majority of these firms produce either therapeutic or diagnostic products. But the common denominator is youth and size: A typical biotech firm in Washington state is "still primarily in the R&D stage, less than 10 years old, and has fewer than 50 employees," says Fred Morris, the state's executive policy advisor for science and technology.

Washington State
· 190 biotech and medical device companies
· 19,000 life science jobs
· 40% of life science companies are less than five years old
The research centers supporting these young firms include the Fred Hutchison Cancer Research Center, which employs 2,500 people and garners some of the largest share of National Cancer Institute grants, and the University of Washington, with its top-ranked medical school and bioengineering degree program. Other smaller but significant research centers include the Institute for Systems Biology, which focuses on the reinvention of biology as an information science, and the Pacific Northwest Research Institute, which champions broad-based scientific research into the pathogenesis of diseases, especially diabetes.

According to Wendy Holden, deputy director for trade and economic development, Washington offers an annual business and occupation tax credit of up to $2 million for companies conducting R&D in computing, biotech electrical devices, and environmental technology. The credit is determined by how much each company pays in state taxes. Retail sales and use taxes on capital expenses related to R&D and manufacturing facilities are exempted, so, for example, the sales tax on materials used for building a new manufacturing facility would be waived.

A job-creation tax credit is available for every qualified position in the state, up to $4,000 for each qualified position with more than $40,000 in salary. The credit is $2,000 for positions with salaries under $40,000. The state is also funding a new biotech planning organization, via a public/private partnership, which would include $250,000 in state funding.

Established support programs include a $1-million annual award from the Washington Technology Center to Washington State University professors who team with companies for help on development or marketing of tech-related products. So far, the program has provided $4 million to 50 company partnerships in biotech and biomedical devices. Likewise, the Spokane Intercollegiate Research and Technology Institute (SIRTI) is a public-private partnership between Washington State University and several other organizations in eastern Washington state that has doled out about $1.1 million to nine different biotech-related R&D projects.

The state's biggest lobbying group is the Washington Biotechnology and Biomedical Association, which also serves as a clearinghouse for detailed information on business development, employment, and other key industry issues.       www.cted.wa.gov








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