BioScience Biz

Wisconsin’s $750 million biotech investment could use better vision

In 2004, the nation took notice as California and Wisconsin independently announced major investments in stem cell and biotechnology research. In California, voters approved Proposition 71, a massive $3B commitment over ten years to fund stem cell research. In Wisconsin, Governor Jim Doyle announced a $750 million state investment in biotechnology in order to help the state maintain a leadership position in the life sciences. Four years later, let’s take a look at what is going on inside Wisconsin and around the country to gauge just how well Wisconsin’s biotech leadership is holding up.

Home cooking—Wisconsin’s biotech investment

The cornerstone of Wiscon’s $750M biotech investment is the $150M Wisconsin Institute of Discovery (WID). WID is a partnership between the state, the Wisconsin Alumni Research Foundation (WARF) and a generous donation from John and Tashia Morgridge, each of which contributed $50 million to build a new public/private hybrid research building on the UW-Madison campus. Some of Doyle’s total came from the public sale of Blue Cross Blue Shield of Wisconsin, which had been in the works quite awhile before Doyle’s announcement. The total also includes $134M and $132M for new additions to the UW-Madison School of Medicine and Public health and to the Medical College of Wisconsin, respectively—funds that also had been raised much earlier and that included substantial private contribution.

By my count, of the $750M, $421M comes from non-state sources or is money that already was earmarked for medical school buildings when Doyle made his announcement, leaving about $330 as Wisconsin’s total commitment to life sciences since 2004—a tidy sum to be sure, but not as impressive as it was made to sound. This is about what California will spend on stem cells each year for the next ten years.

More revealing is what this money is buying. A significant portion clearly is going for bricks and mortar in order to expand and modernize the research infrastructure in Madison and Milwaukee. A substantial amount of the money from BCBS sale of BCBS goes for local public health and education efforts across the state. It is disingenuous to add this money into the total of a biotech initiative.

Even though ground has just been broken for the WID and the building won’t be finished until 2010, we can get a glimpse of the research the Institute will support from the $3M recently awarded for Discovery Seed Grants. These Seed Grants will support the following research:

• finding a diagnostic test for a common causes of infertility in women.
• understanding cognition and the effects of Ritalin in the brain.
• more efficient production of embryonic stem cells.
• finding new drugs that inhibit cancer cells from spreading to other locations.
• improved healing of persistent wounds.
• high-tech screening for drug candidates that can dock to critical disease-specific receptors on cells.
• developing micro-optical lenses that can be fine-tuned by environmental factors.
• finally, there also is a project to find improved ways to teach African American children from low income families to speak proper English.

While each of these projects, individually, are certainly very interesting and address important questions, it is hard to see any overarching theme in this disparate collection of projects. Was there any strategy behind selecting these projects other than that these were the ones that rose to the top of the pile of the potpourri of proposals that were received?

Case in point--as important as the research likely is, how teaching minority children to speak proper English fits into a biotech initiative is utterly befuddling. The micro-lens project may not have much life science relevance as well.

The impression from all of this is that the research component of Wisconsin’s biotech initiative lacks a critical focus that a rather small investment cannot afford. When competing with billion dollar initiatives, a smaller contender needs to clearly define its specific strengths, identify important opportunities related to those strengths and proceed in a focused fashion to capitalize on strength and opportunity rather than spread the largesse willy nilly. But, it appears that Wisconsin soon will have a fabulous, brand spanking new research facility staffed by a mish mash of researchers who will have little in common to talk about with each other.

For comparison, let’s take a look at what Wisconsin’s competition has been up to recently.

Looking Westward--California

While Wisconsin’s $3M in Discovery Seed Grants was given to 8 disparate research efforts, not all of which relate to biotechnology, the California Institute for Regenerative Medicine (CIRM) has so far approved 206 grants for more than $554M, all focused on stem cell research and regenerative medicine. These grants include money to support and train 169 new stem cell scientists and clinical fellows, 22 grants to launch the research of new faculty, funds for 73 seed grants to test highly innovative ideas, and awards for 28 comprehensive grants to senior stem cell scientists.

More importantly, on top of their stem cell meta-focus, the California initiative recently finished a round of grant awards strategically concentrated on developing new stem cell lines. The research programs supported by these California awards will go to find better ways to reprogram adult cells into stem cells and to develop clinical-grade stem cell lines that can be used to treat patients. Some of the projects will develop disease-specific stem cell lines in order to model cell development in Parkinson’s disease, amyotrophic lateral sclerosis (ALS) and cardiovascular disease. This represents a beneficial mix of complementary projects so that the whole of California’s research initiative is greater than the sum of the individual projects.

California made 16 of these awards for a total of $23M, which comes to $1.44M/award compared to Wisconsin’s average of $375,000/award--26% of the California average.

Like the first round, the next round of CIRM research awards will also be strategically focused, but on forming disease-specific teams of researchers and clinicians to develop stem cell therapies for human illness. From the preliminary applications that have been accepted, these teams propose to develop stem cell therapies for diabetes, eye disease, osteoarthritis, wound healing, stroke, heart disease, muscular dystrophy, AIDS, Parkinson’s disease and certain blood diseases. CIRM indicates that successful proposals will include a plan for an investigational new drug filing with the FDA at the end of the four or five year project.

Wisconsin should especially take notice that these disease-specific team projects involve cross-functional teams of scientists and physicians, often from multiple California public and private institutions. The teams can also include partnerships with private biotech and pharma companies across the US, as long as the company has an office in California. Clearly, California is creatively leveraging its resources to not only support research, but also to ensure that the research is translated into business and moves into the clinic.

Compare California’s inclusive, collaborative team approach to Wisconsin’s singular focus on UW-Madison with the WID. While Wisconsin’s 8 Discovery Seed Awards do involve research teams, the teams only come from UW-Madison. These awards fail to take advantage of the growing private biotech sector in Southern Wisconsin and the scientific talent that can be found at other institutions across the state such as UW-Milwaukee, the Medical College of Wisconsin and the Marshfield Clinic.

In other words, California has purposefully focused its research efforts, while simultaneously encouraging broad public and private partnerships across the state. Wisconsin has done exactly the opposite by funding a broadly unfocused research portfolio restricted to a single institution.

California has positioned itself to get more “bang for the buck” than Wisconsin will for its investment.

It doesn’t stop there—the competition is getting more intense

In a 2004 press release, Governor Doyle said that California’s $3B stem cell investment, “…will not diminish Wisconsin’s role; if anything, there will be a synergy between our two states." However, time shows that California prefers to synergize elsewhere.

For example, the Canadian Institutes of Health Research announced in a recent press release that it will join forces with California to focus on cancer stem cell research. Toward this end, Canada pledged $100M ($98.9M USD) to the Cancer Stem Cell Consortium, a partnership of academic, business and government agencies, which will work with CIRM.

On top of that, CIRM is actively seeking partnerships with the US federal government as well as with other nations in order to turn their ten-year commitment into a sustainable venture. Indeed the CIRM is working on a deal with the Australian state of Victoria and last year, the Canadian   province of Ontario ponyed up $30M for cancer stem cell research linked to CIRM. 

 Now look Eastward—Maryland, Massachusetts and New Jersey

Wisconsin does not only have to worry about competition from California--Massachusetts,  Maryland and New Jersey have or are planning major financial forays into the biotech field. In mid-June, Maryland Governor, Martin O’Malley announced a plan to provide $1.1B over the next ten years in state incentives in the form of tax credits and grant programs for the state’s biotech industry, while the state’s pension board will invest an additional $500M, bringing the total to $1.6B. The goals are to build a biotech center, finance capital projects and to make equity investments in start-up biotech companies—and intriguing and innovative idea.

It used to be that angel and venture investors covered this earliest and critical stage in biotech development that is euphemistically called the “valley of death”--a nod to the difficulty researchers have commercializing their ideas. But recent trends show that investors are increasingly reluctant to invest in nascent companies—they want to see prototypes and experienced teams in place before plunking down their money. Therefore, equity funding from states promises to meet an increasingly critical need for commercializing emerging biotechnology and this tactic could very well generate a nice return for Maryland —if it is approved by the state legislature.

Not to be outdone in the state bidding war for biotechnology, Massachusetts Governor Deval Patrick recently signed legislation to allocate $1B over ten years to fund the State’s life sciences industry. This includes $250M in tax incentives to support the growth of biotech companies, the same amount to fund research and $500M in infrastructure.

Patrick said it takes "political will and courage to make those long-term commitments" and admitted that his state's funding commitment is, in part, a defensive measure to ensure that Massachusetts’ universities, companies and research institutes retain top scientists and biotech companies.

Patrick’s candid admission underscores the intensity of the competition for science talent and resources in which Wisconsin wants to successfully contend. Further underscoring the high stakes in these biotech funding wars, Patrick claimed that over the next ten years, Massachusetts' support of the biotech industry will create 250,000 new jobs. In this light, it is illustrative that Massachusetts’ commitment to the biotech industry heavily factored into the decision of the regenerative medicine company, Organogenesis, Inc, to expand it operations in the state rather than elsewhere.

Meanwhile, in New Jersey, legislation was introduced in late June to establish an pioneering public-private vehicle for state funding of stem cell research with venture capital. A press release said that the bill will allow private investors to contribute up to $500M over five years to fund such research. To encourage participation, investors would be granted tax credits equal to their investment, but only if a funded research project failed to repay the loan. In order to obtain funding, researchers would submit loan applications to the state’s Economic Development Authority. Both non-profit and academic labs would be able to apply for a stem cell research loan.

What’s a state in fly-over country to do?

Clearly, Wisconsin has a very credible biotechnology research enterprise thanks to the huge bioscience community at UW-Madison. The state’s biotech footprint is even more impressive when private biotech companies and institutions other than the UW-Madison are included. Despite this research muscle and recent infusion of state money, Wisconsin is missing a narrow and critical opportunity to capitalize on its strengths because it lacks the vision and creativity seen in the efforts of other states.

Wisconsin could learn from California and make a much more resolute effort to strategically focus on developing specific biotech strength, be it stem cells or something else. Wisconsin also could learn from California, Massachusetts and New Jersey about creative leveraging of public and private resources to boost, not only academic biotech research, but biotech business as well. After all, the best research, if not translated into successful businesses, does nothing for the people, the state or the economy.

On average, across the country, every new biotech job generates almost 6 additional jobs in the community. Salaries in the biotech industry average a whopping 68% higher than other private sector jobs. This is the return that Wisconsin can expect to realize by wisely investing its resources in biotechnology. However, the latest data show that Wisconsin falls below average in both of these metrics, yet we have an above average per capita infusion of federal research dollars.

Wisconsin clearly has room to realize a better return on its investment.
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© 2008 Steven S. Clark, PhD. Disclaimer: The authors used their best efforts in collecting and preparing the information published herein. However, Steven S. Clark, nor other authors, do not assume, and hereby disclaim, any and all liability for any loss or damage caused by errors or omissions, whether such errors or omissions resulted from negligence, accident, or other causes.

Articles contained herein, are meant to be distributed freely to interested parties. However, any excerpts from any article must credit BioScience Biz.

Minnesotta gets green light for $300M biomedical research facility

Officials in Minnesota are touting the potential of the planned $300 million Minnesota Biomedical Research Program, a project that already has earned legislative approval for $220 million in state funds. The University of Minnesota says the program will provide space for 100 primary researchers and 500 support staff. And the university believes it can attract $100 million a year in new research funds once the program is up and running. The state has blueprinted 400,000 square feet of research space in four buildings to be completed in 2013. The university will start by expanding the Center for Magnetic Resonance Research and follow up with facilities that will focus on cancer, cardiovascular and infectious diseases.  Read the online StarTribune article here.

In Wisconsin, ground was recently broken at the UW-Madison for the Wisconsin Institute for Discovery, a $150M public/private research facility that will be completed in 2010.

The brave new world of stem cells and human cloning

One of the great promises of embryonic stem cell research is being able to use human cloning to derive stem cells that carry genetic defects associated with myriad maladies. These cells can be used to study the development of tissues that are affected by genetic abnormalities and used as tools for testing new therapies for intractable genetic diseases.

The way that this works is that a researcher derives an embryonic stem cell line from someone with, say Parkinson’s disease. These stem cells can be coaxed into developing into the dopamine-producing neurons that are defective in patients with the disease. Then, a number of different things can be done. For instance, the development of these diseased neurons can be compared to the development of normal neurons in well controlled environments and, hopefully, yield new information on the origins and progression of the disease. Alternatively, the Parkinsonian neurons can be used to test new approaches for treating the disease.

Thus, cloning and derivation of disease-specific stem cells promises to be a powerful and novel tool for studying certain types of cardiovascular disease, certain cancers such as neuroblastoma, Alzheimer’s and Parkinson’s disease, amyotrophic lateral sclerosis (ALS or Lou Gehrig’s disease), metabolic problems such as diabetes, and so on.   

Ethical concerns of cloning human embryos notwithstanding (I am working on a column on this topic that will be posted at a later date), a confounding technical problem is where will researchers find the eggs necessary for the nuclear transfer cloning procedure (the procedure used to clone Dolly, the sheep)? Obtaining human eggs is done routinely at in vitro fertilization clinics, but it does involve hormonal manipulation of young women and a somewhat invasive procedure to harvest the eggs. Who would volunteer for this just so a scientist can do lab research? How many eggs will we need to all the research scientists want to do and are there enough women donors to supply the research needs?

Researchers in England are taking a new approach to deal with the problem of egg supply. They propose to undertake nuclear transfer cloning using eggs from pigs and chromosomes from a human with the desired disease in order to create animal-human hybrid stem cells. A UK regulatory agency recently licensed a laboratory to create human-pig embryos in order to study heart disease.

In fact this is the third animal-human hybrid embryo license to be issued by the British Human Fertilisation and Embryology Authority. In an article just published in the British newspaper, The Telegraph, an HFEA spokesman said it had just approved an application from the Clinical Sciences Research Institute, University of Warwick, for the creation of hybrid embryos. This effort at the University of Warwick is led by Professor Justin St John. "This new license allows us to attempt to make human pig clones to produce embryonic stem cells," he said.

"We will take skin cells from patients who have a mutation for certain kinds of heart disease (cardiomyopathy, which makes the heart lose its pumping strength) and put them into pig eggs after their chromosomes have been removed. We will then make embryos so that we can attempt to derive embryonic stem cells which will allow us to study some of the molecular mechanisms associated with these heart diseases.

"Ultimately they will help us to understand where some of the problems associated with these diseases arise and they could also provide models for the pharmaceutical industry to test new drugs. We will effectively be creating and studying these diseases in a dish.

"But it's important to say that we're at the very early stages of this research and it will take a considerable amount of time. There is still a great deal to learn about these techniques and much of our early work will involve understanding how we can make the hybrid cloning process as efficient as possible."

The study is aimed at understanding the way the cell’s power-producing structures, called mitochondria, are passed from egg to embryo. Mitochondria contain their own small genetic program that produces many of the proteins these organelles need to power cells. Therefore, in the hybrid stem cell, the mitochondria will mostly come from the pig egg, and the researchers will do experiments in order to ensure that the trace of human mitochondria takes over, not least because it is designed to work with human nuclear DNA.

"The key thing we are doing is trying to create stem cells without any animal mitochondria in them. So even though these hybrid embryos normally have…animal mitochondria, we are hoping to create hybrid embryo cells that would have human chromosomes as well human mitochondrial DNA." The reason is that, as the team puts it, "mixing of these two diverse populations of mitochondria can be detrimental to cellular function."

Other research teams in Newcastle and London are also creating human-animal hybrid stem cells. The former have already created hybrids with cow eggs to study genetic regulation in early development, the latter made hybrids with a range of species to generate stem cells from people with neurodegenerative disorders.  Meanwhile, Chinese researchers in Shanghai have reported success in creating human-rabbit hybrid stem cells.

Such research is not allowed in the US, at least in federally-funded labs. But, this does not seem to stop this field from going forward world-wide. Are we in a brave new world, or are we making a Faustian bargain?

Read more on human-hybrid stem cells:

Hybrids: separating hope from the hype

Questions answered on animal-human embryos

Embryo research: a source of hope or horror?

Treating stroke, Parkinson's and other brain diseases with stem cells

Brain repair using genetically engineered embryonic stem cells could offer novel treatments for stroke, Alzheimer's, Parkinson's and other neurological conditions, after encouraging preliminary tests.

Scientists at the Burnham Institute for Medical Research in La Jolla, California, have, for the first time, genetically programmed embryonic stem cells, which have the potential to turn into any type, to become nerve cells when transplanted into the brain, according to a study in The Journal of Neuroscience.

The research showed that mice afflicted by stroke showed "tangible therapeutic improvement" following transplantation and none developed tumors, which had been a major setback in prior transplants.

The team was led by Prof Stuart Lipton, who treats patients with these disorders. "We found that we could create new nerve cells from stem cells, transplant them effectively and make a positive difference in the behavior of the mice," said Prof Lipton.

"These findings could potentially lead to new treatments for stroke and neurodegenerative diseases such as Parkinson's disease."

Prior to this research, creating nerve cells from embryonic cells in a reliable way had been problematic and sometimes cells would seed tumors. Prof Lipton tackled these problems by inducing the stem cells to make a protein called myocyte enhancer factor 2C (MEF2C), which turns on specific genes that drive stem cells to develop into nerve cells.

"We need to have a reliable source of nerve cells that can be easily grown, differentiate in the way that we want them to and remain viable after transplantation," said Prof Lipton.

"MEF2C helps this process first by turning on the genes that, when expressed, make stem cells into nerve cells. It then turns on other genes that keep those new nerve cells from dying. As a result, we were able to produce neuronal progenitor cells that differentiate into a virtually pure population of neurons and survive inside the brain."

The next step was to show whether the transplanted "progenitor" cells became nerve cells that integrated into the existing network of nerve cells in the brain. Performing intricate electrical studies, the team showed that the new nerve cells, derived from the stem cells, could send and receive proper electrical signals to the rest of the brain. The team found that mice which received the transplants showed significant behavioral improvements, although their performance did not reach that of normal control mice.
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Excerpted from an online article by Roger Highfield in the Telegraph on 6/24/08.

New stem cell database is launched to steer scientists through the stem cell maze

Have you ever wondered where a cardiac muscle stem cell comes from and how it is related to a skeletal muscle stem cell?  Or, can a neural stem cell also differentiate into a glial cell?

If you were to drive from San Francisco to New York without any street signs or a road map, you would spend a lot of time going down wrong paths and may never get to the Big Apple. Similarly, as a stem cell is going from its initial, basic level to a complex ear cell, for example, it needs to be steered through a specific path. This map gives scientists not only the knowledge of where they're going, but key "markers" that need to be crossed along the way. Ultimately this will save stem cell companies time and money. 

Read the news article from the San Jose Mercury News, here.  The new stem cell database can be accessed here, www.embryome.com.

Experts talk about how to make the most of biotech clusters

Many cities and countries view the foundation of a biotech sector as desirable for a high-tech, intellectually driven economy. But a discussion by seasoned, international biotech management and investors suggests that attaining an environment with the right mix of money, management and innovation remains a difficult and long-term challenge.

Location is interwoven with the ability of biotech startups to prosper. Regions with nascent biotech sectors often find attracting the necessary financial and human resources to their area an uphill struggle, which can mean the difference between success or failure for a fledgling life science business. In the following article, a group of experienced biotech executives and investors from around the world discuss the pros and cons of building a business inside or outside a cluster. The article is an abridged transcript of a Bioentrepreneur roundtable discussion held at the Marriott Boston Copley Place.  The article was edited to address the major themes of that discussion and was originally published online in Bioentrepreneur.

The panelists included the following:

Fritz Bühler is Director of the European Center of Pharmaceutical Medicine, University Hospital, Basel, Switzerland, and a partner in Bear Stearns Health Innoventure;

C. Mark Tang is Managing Director and Chairman of World Technology Ventures, LLC, New York, New York;

Pratik Shah is a partner at Thomas, McNerney & Partners, San Francisco, California ;

Mark Leuchtenberger is President and CEO of Targanta Therapeutics, Cambridge, Massachusetts;

Ko-Chung Lin is Chairman and CEO PharmaEssentia, Taipei, Taiwan;

Pedro de Noronha Pissarra is CEO of Biotecnol SA, Oeiras, Portugal;

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How important is location in the success or failure of a biotech enterprise?

Pratik Shah: If I had any advice for an entrepreneur who's looking to start up a biotech not located in a cluster, it would be: "Move to the nearest biotech cluster." There has to be a really compelling reason not to do so. And it has to have something to do with a core competitive advantage that staying in the current location is giving them.

And for governments that are trying to create a nascent biotech sector in their region, the question I have for them is: What are you shooting for? Is the goal to draw sustainable research funding from the US National Institutes of Health [NIH] or the like? Or is it to build companies that are going to create products? If the answer is the former, then there are models that have recently emerged in the United States. For example, Florida has set up the Scripps Research Institute with a significant allocation of government funding to get it up and running, and I presume the goal there is to create sustainable research that will attract NIH dollars. But that's a little bit of a zero-sum game. If the objective is to create products, then there is a fundamental gap, because allocation of dollars is not enough. Without involvement of experienced, professional investors who know exactly what kind of things will get funded down the road, it's hard to create an organization that's really ready for that next level of funding without having an active collaboration or dialog or, in the ultimate sense, a very close partnership with the professional investors who are going to take those companies to the next level.

Pedro de Noronha Pissarra: With clusters, at Biotecnol we personally have a geographical problem. Nobody would invest in Portugal, where we are based. So for that reason, we set up a unit in Maryland, and we started doing our deal-making through the Maryland company, Biotecnol Inc., and the whole thing developed very nicely.

But we're still not quite in the cluster, and attracting top-tier management is a problem. It's not qualified people, because there are many qualified people around that went to Ivy League universities, or went to Oxford and Cambridge in the UK. But it's really hard to find the top-notch manager that will see us to the next stage. So I would say one thing: Don't start the company in a place that is not a cluster!

Portugal is a great place. I love it. I lived, worked, and studied abroad for many years and then went back because of the fantastic lifestyle. But, at the end of the day, you've got to be on a plane every month, going to biotech clusters, delivering your talks, convincing people that while we've got great wines and great food in Portugal, we also do great things in biotech. It was initially a very hard sell, but since we have grown and have created a recognized and successful buisness, perception about us has definitely changed. But we need more examples of success.

Mark Leuchtenberger: When I was recruited to Targanta [in the summer of 2006], they said they had a great drug with two positive phase 3 trials, and said the company is located in Indianapolis. I said, "Well, my geography is here, I've spent twenty years here, and I'm not moving." And they said, No, we're not expecting the CEO to move to Indianapolis. Essentially they were doing this search while acknowledging that Indianapolis might not be like Pedro's description of Portugal. It was going to be a place where you could do R&D, but you might set up a commercial or investment headquarters somewhere else—either San Francisco, or La Jolla, or Baltimore, or Boston, but not Indianapolis. You don't think biotech is regional, but, because of the companies and investors, it's intensely regional. People don't want to have to fly if they don't have to.

Fritz Bühler: I'd like to come back to this two-site company setting. We have never actually been able to work out a company in development with two sites. At some point, you have to move everything to one place. So I think that you may have a problem with Marylan and with Portugal and you'll have to make up your mind.

PNP: We've been asking this question to ourselves for awhile now. What are we going to do now? Are we going to spin-off the products completely to the Maryland subsidiary and Biotecnol Portugal is a shareholder, are we going to raise funds and hire local teams so it actually ends up being a spin-off of the company? I see your point; it's very valid. And it's already creating a lot of questions, so people are saying, "We are investing where? Where are the shareholders, where is the management?"

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Beyond easy access to venture capital and infrastructure, why are clusters so important?

ML: Take the Boston area. I think in the past five or six years or so, Novartis [Basel], Pfizer [New York], Merck [Whitehouse Station, New Jersey], Wyeth [Madison, New Jersey] and Bristol-Myers [Princeton, New Jersey], most recently, have all voted with their feet to come here. I think of it sort of as a casino: the house always wins. By that I mean the house is the resident group of knowledgeable, able managers and scientists. Projects come and go, and sometimes you are out of work for months, but usually you just keep participating and don't have to uproot your family. A lot of people switch jobs in Cambridge and don't even change their commute except for the last 200 feet. There are 50 companies over there!

I think that this is what people are betting their careers on now: serial entrepreneurship, over and over again. I've been doing that for the past five years—some of it works out pretty well and some of it works out pretty badly, but here's the bottom line: you're probably staying in the same location, you're accruing a group of people you trust who you can work with, and hopefully you're accruing the trust of the venture capitalists so that when another good idea comes up, they think of you and hopefully you can participate.

PS: I need you to talk to the CEOs of my companies that have only one product. They're always trying to in-license something for job security, and I say, "Hey you're in a cluster. You're going to be fine."

C. Mark Tang: One thing I would like to mention is the strength and existence of academic institutions that are always related to bioentrepreneurship, because the intellectual property and intellectuals are coming from this area. So I think that's a large part of the reason why big pharma and biotech are here in Boston—because of Harvard, the Massachusetts Institute of Technology, etc.

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In what ways are countries with nascent sectors attempting to foster biotech?

CMT: I'll just explain China as an example of Asia. Typically what China has is the government funding. For example, Ministry of Science and Technology, among other agencies, has grants it can fund research and development of startups with, and the city usually has some fund, and then certain banks do too. The government-owned high tech parks at times provide biotech the incubator space perhaps for free or at a discount for a couple of years and perhaps some seed/grant money for free as well. But there are not many, if any, Western style venture capital [VC] firms or groups for biotech. I once invited a well-known VC firm from the US to China to speak at a conference I organized. The VCs were very excited about the prospect of the industry after seeing a high tech park and want to open an office perhaps in five years. But still, biotech is very new.

PS: I'm curious, are there more examples of countries like Singapore who've said that they're taking a very long-term view and allocating a billion-plus dollars in capital toward biotech? And fundamentally from an infrastructure standpoint, is there really a logical reason that biotech should be there as opposed to some other Asian region? That is a positive example of a government making a long-term financial commitment to try to create a cluster.

CMT: I've been to Singapore a few times and I know a couple of managers of the biomedical fund as well. I think the strategy of Singapore is good. They want to form a biotech cluster. Mainly the money they invested in the beginning had a few strings attached, such as giving them first rights of refusal in Asia. So essentially what they were doing was investing money in technology and products overseas and buying Asian rights, and, in turn they're going to sell those products to the Malaysians, to the Indians and to China.

What's happening in Asia, I believe, is that Singapore is a role model because they have managed to set this up in very powerful way, put the right funds behind it and attract, even buy, top people even a Nobel Prize Laureate, from around the world to work and live there. But in China, as well as other Asian nations, I'm worried whether there are funds available now to do this similar (approach) to Singapore? Of the main Chinese biotech centers, Beijing, Shanghai are very good. The next group is TianJing and Shenzhen. One should not forget that the Western Hemisphere, led by the United State, has an enormous advantage and is ahead by 20 years compared with Asia. I don't think one has to reinvent the wheel. Just take the best from what we have learned in developing biotech regions in the United States and Europe, and then insert that in an orchestrated way in Asia, taking advantages of lost-cost, high quality human resources and emerging large local market there.

Ko-Chung Lin: When I deal with Asian companies, I tell them, "You know, if you want to get money from the US you've got to register yourself in the US." I work with people who are actually registered here, but in reality it's virtual—no one is really based here, everyone is in China. But it appears to be a global company, and this makes US investors feel comfortable. Especially in New York, where there are large funds and they have a percentage that they have to invest internationally, so they're very active in looking overseas. Of course, the key part is you've got to have a good story. You know biotech: you don't have to be making money.

PS: I guess the real question is how many venture dollars are flowing into those regions, and if the answer is not a lot, then I think the writing is on the wall. Because although many countries are vying for life science-oriented venture funds, is biotech really for every region? Is there really a fundamental reason why biotech should be in a particular geography where it already isn't? I would take a really cold, hard look at what the facts are.

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What types of business models and exits can biotechs around the world offer investors?

CMT: Like the US, there are four or five business models in China: reagent, equipment and services; generic drugs; technology platform; R & D products and hybrid of technology and products. Right now, service companies, such as contract research organizations, and generic companies are hot in China. Several of them have raised money through IPOs in US stock exchanges.

FB: Valuations have changed enormously over the past ten years. Obviously once you have an asset you want to let it grow as much as possible, so probably the best point at which to sell or partner is after a proof of concept, and it seems possible to develop any compound up to proof of concept. So I think the time is over for any garden-variety investor; it's now smart money. I believe that the funds have changed greatly in the sense that they are now run by people from the pharmaceutical industry who bring not only the dollars, but smart dollars to the table.

The initial public offering [IPO] situation is another major problem, but one well solved in the United States with the NASDAQ exchange, and poorly solved in Europe or in other parts of the world. There are plenty of stock exchanges, but none really have the right flow or a big enough float, and the situation is so scattered in Europe that it's really difficult to go through a successful IPO. It does still happen, despite this scattering, and one wishes that there would be more concentrated IPOs, but nationalism is a huge problem. Why should you, as a Viennese, invest in Zurich? Or a UK person invest in someplace besides London?

PS: I recently looked at the number of companies that were venture backed that had liquidity events driven by IPOs versus mergers and acquisitions [M&A] in the past three years, with a cut-off of $300 million exit value or greater in biotech, pharmaceuticals and medical devices. The numbers suggested that the two paths led to roughly equal numbers of exit opportunities. So, yes there has been a lot of buzz about M&A because of the recent flurry of activity, but I still think that the other path exists; it's certainly nowhere near the valuations that it used to be and therefore has really created a situation in which the amount of the capital and the pre-money valuations that private investors have to make work is much more constrained. I think the two paths still exist.

FB: I'm not sure that the IPO window is totally closed. There's still some happening, particularly in Europe, although the M&A pathway is the one that is now favored. There again, one should caution the biotech/pharma small companies not to merge or be acquired too early, but really grow their value. Unfortunately, that doesn't always happen because of the enormous pressure being exerted by the pharma world, which is short of good ideas and compounds. There's also an innovation gap and a development gap—so pharma really gets its arms around everything it can find.

PNP: The hybrid model should help with valuations, but it's a very hard sell. To say, Okay, we have excellent development capabilities, we may have worked with Schering-Plough [Kenilworth, New Jersey], with Sanofi-Aventis [Paris] or whomever, but still it doesn't sell because the model is capped. The service company will always be the less attractive thing for the investor. I know Pratik has a service company in his portfolio, but he's one of the very few venture capitalists that I know that has that. So you've got to separate the businesses completely. And this puzzles me because it's a perfect meeting of the two worlds; you can mitigate the risk, you even have nice revenues, you've got granted patents on valuable products and technologies, among great know-how, but when you put the two models together, people don't generally like to invest in such structure. Why? I am not certain, but I am convinced that since we favored a product development oriented strategy we certainly have created a great deal of interest in the investment community.

KCL: I can explain this to you. The problem has two parts. The service guy says, I don't want to do drug development because I'm always losing money; the drug development guy says, I want a high-risk return, and I don't like service. So, when you put them together, very few people want to do it. Another problem is working with partners. Because you are working with big pharma, they give you projects to do services on, and they're scared that you're passing these things on to your idea unit or going around them. So pharma says, Listen, if you want to do drug development, you're not going to get our contract. If you shut down your drug development, then we'll give it to you. Because this product is so important to us, you know we've spent hundreds of millions of dollars, we're not going to give it to you if you have an idea unit.

ML: I've got a Biogen [Cambridge, Massachusetts] analogy from the early nineties. We were going along, scraping by, but we signed this deal, got a little bit of money in, and then all of a sudden the hepatitis B and alpha interferon royalties started to kick in and our royalty revenue went from $60 million to $70 million in 1991 to $135 million in 1992. Suddenly we had money to fund all our own development. Did the investment stock market like it? No, they hated it! It was like it was a service business. It was pure royalty; it was pure profit, but they looked and they said, What are you doing with it? You have boring royalties that are only going to increase a certain amount, and until then you're nothing more than a royalty trust and a boutique and a bunch of airheads walking around talking about things.

PS: But that's actually not as irrational a financial decision as it sounds. Look at Biogen versus Amgen [Thousand Oaks, California]; they were started at roughly the same time, and, if you look at those companies' market caps from when they were started or when they went public to today, you see that there's a long period when Biogen's market cap is basically flat, whereas Amgen was favored by Wall Street. Why is that? Well you could call it brilliance or you could call it just luck. But if you have a specialty product where you can develop a sales force, you're going to make a lot higher margin on a lot lower sales line than a royalty model. That's why the market caps diverged. I think that the fundamental issue of market appreciation comes down to, how much are you really going to be able to derive from the pipeline?

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Listening to ritalin--literally: UW study uncovers how ritalin works to boost cognition

MADISON - Stimulant medications such as Ritalin have been prescribed for decades to treat attention deficit hyperactivity disorder (ADHD), and their popularity as "cognition enhancers" has recently surged among the healthy, as well.

What's now starting to catch up is knowledge of what these drugs actually do in the brain. In a paper publishing online this week in Biological Psychiatry, University of Wisconsin-Madison psychology researchers David Devilbiss and Craig Berridge report that Ritalin fine-tunes the functioning of neurons in the prefrontal cortex (PFC) - a brain region involved in attention, decision-making and impulse control - while having few effects outside it.

Because of the potential for addiction and abuse, controversy has swirled for years around the use of stimulants to treat ADHD, especially in children. By helping pinpoint Ritalin's action in the brain, the study should give drug developers a better road map to follow as they search for safer alternatives.

At the same time, the results support the idea that today's ADHD drugs may be safer than people think, says Berridge. Mounting behavioral and neurochemical evidence suggests that clinically relevant doses of Ritalin primarily target the PFC, without affecting brain centers linked to over-arousal and addiction. In other words, Ritalin at low doses doesn't appear to act like a stimulant at all.

"It's the higher doses of these drugs that are normally associated with their effects as stimulants, those that increase locomotor activity, impair cognition and target neurotransmitters all over the brain," says Berridge. "These lower doses are diametrically opposed to that. Instead, they help the PFC better do what it's supposed to do."

A behavioral disorder marked by hyperactivity, impulsivity and the inability to concentrate, ADHD has been treated for more than a half-century with Ritalin, Adderall and other stimulant drugs. New reports also indicate these meds have lately been embraced by healthy Americans of all ages as a means to boost mental performance.

Yet, despite their prevalence, we know remarkably little about how these drugs work, especially at lower doses that have been proven clinically to calm behavior and focus attention in ADHD patients, says Berridge. In 2006, his team reported that therapeutic doses of Ritalin boosted neurotransmitter levels primarily in the PFC, suggesting a selective targeting of this region of the brain. Since then, he and Devilbiss have focused on how Ritalin acts on PFC neurons to enhance cognition.

To answer this, the pair studied PFC neurons in rats under a variety of Ritalin doses, including one that improved the animals' performance in a working memory task of the type that ADHD patients have trouble completing. Using a sophisticated new system for monitoring many neurons at once through a set of microelectrodes, the scientists observed both the random, spontaneous firings of PFC neurons and their response to stimulation of an important pathway into the PFC, the hippocampus.

Much like tiny microphones, the electrodes record a pop every time a neuron fires, Devilbiss explains. Analyzing the complex patterns of "voices" that emerge is challenging but also powerful, because it allows study of neurons on many levels.

"Similar to listening to a choir, you can understand the music by listening to individual voices," says Devilbiss, "or you can listen to the interplay between the voices of the ensemble and how the different voices combine."

When they listened to individual PFC neurons, the scientists found that while cognition-enhancing doses of Ritalin had little effect on spontaneous activity, the neurons' sensitivity to signals coming from the hippocampus increased dramatically. Under higher, stimulatory doses, on the other hand, PFC neurons stopped responding to incoming information.

"This suggests that the therapeutic effects of Ritalin likely stem from this fine-tuning of PFC sensitivity," says Berridge. "You're improving the ability of these neurons to respond to behaviorally relevant signals, and that translates into better cognition, attention and working memory." Higher doses associated with drug abuse and cognitive impairment, in contrast, impair functioning of the PFC.

More intriguing still were the results that came from tuning into the entire chorus of neurons at once. When groups of neurons were already "singing" together strongly, Ritalin reinforced this coordinated activity. At the same time, the drug weakened activity that wasn't well coordinated to begin with. All of this suggests that Ritalin strengthens dominant and important signals within the PFC, while lessening weaker signals that may act as distractors, says Berridge.

"These results show a new level of action for cognition-enhancing doses of Ritalin that couldn't have been predicted from single neuron analyses," he says. "So, if you're searching for drugs that might replace Ritalin, this is one effect you could potentially look for."

He and Devilbiss also hope the research will help unravel an even deeper mystery: exactly how neurons encode complex behavior and cognition.

"Most studies look at how something that impairs cognition affects PFC neurons. But to really understand how neurons encode cognitive function, you want to see what neurons do when cognition is improved," says Berridge. "So this work sets the stage for examining the interplay among PFC neurons, higher cognition, and the action of therapeutic drugs."

The work was funded by the National Institute on Drug Abuse, the National Institute of Mental Health and the UW-Madison Discovery Seed Grant Program.

Biotech drug sales post 12.5% increase in 2007

Pharmaceuticals may be struggling, but biotech drugs are on fire. According to an IMS Health study, global sales of biotech drugs increased 12.5 percent in 2007 to more than $75 billion; that's twice as fast as the pharmaceutical market, which increased 6.4 percent in 2007. The growth is the result of several factors, including additional indications for existing products, recent innovations, and the growth of biologic drug sales outside the U.S. Oncology, auto-immune agents, diabetes drugs and vaccines accounted for most of the growth. Last year, 22 biotech products exceeded $1 billion in sales, compared with just six products in 2002.

The forecast isn't entirely positive, however. Growth was down in 2007 compared to 2006. "Loss of exclusivity and competition from biosimilars, crowded therapy areas with weaker sales growth, payers showing more reluctance to fund innovative drugs without compelling value propositions, and safety concerns for some therapies will all contribute to a more moderate growth environment through 2012," warned Murray Aitken, the study's author. "[C]ompanies with biotech products in their portfolios will succeed only if they meet increasingly demanding regulatory standards, deploy effective commercial models that are accompanied by compelling evidence of their products' value, and develop pricing and market access strategies that ensure that patients have access to the benefits that these new products deliver."

Is drinking red wine the same as going on a diet?

Research says maybe so.

When considering factors that affect health, most people think about fatty diets, sun exposure, smoking, alcohol consumption, etc. But, research clearly indicates that one of the most important factors in quality of health is the simple calorie, which seems to one of the last health factors that people mention.

Everyone knows that obesity is associated with myriad health problems from cardiovascular disease, diabetes and stroke. Recent studies also link obesity to neurological problems such as Alzheimer’s disease. Obesity is caused by several factors including poor diet, sedentary lifestyle as well as genetic and metabolic issues. Certainly, caloric intake is a factor in obesity, but compelling research in rodents has shown that even a diet that does not lead to obesity may play an amazing role in age-related loss of function in the skeletal muscle, brain and especially the heart. When animals are restricted in caloric intake, but allowed normal levels of nutrients, vitamins, etc, their lives are significantly prolonged and their bodies retain a youthful physiology much longer than animals fed a regular diet.

I’ve seen the research data of caloric restriction on the musculature of the heart and the results almost gave me chest pains thinking about what my heart must look like in middle age.

Studies in several labs, including one recently reported by UW-Madison’s Tomas Prolla and Richard Weindruch, show that mice that are fed a component of red wine called reservatrol, along with a regular diet, showed healthier physiologies than mice who were not fed reservatrol. Significantly, the mice fed reservatrol and a regular diet, were as healthy as the mice on the calorie-restricted diet. In other words, feeding reservatrol to mice mimicked the beneficial effects of caloric restriction.

Both, Weindruch and Prolla, admitted to taking reservatrol supplements. But is this a good idea? Read more about this line of research here.

Quintessence moving forward despite discouraging data from competitor

A few weeks ago, I wrote that folks at Madison-based Quintessence Bioscience eagerly anticipated the outcome of a Phase IIIb clinical trial that Alfacell, a major East Coast competitor, would soon release on an anti-cancer therapeutic compound, Onconase™. Quintessence’s lead drug candidate, QBI-139, is very similar to Onconase™ and has not yet been clinically tested.

The results of the Onconase™ trial were just released and Quintessence Chairman and CEO, Ralph Kauten, said that he is “…disappointed that the results of the Onconase™ clinical trial were not an overwhelming success.”

Kauten shared with me a communication that Quintessence sent to its shareholders about the Alfacell trial. In it, they had this to say:

“Alfacell has released data indicating that their first-in-class drug, Onconase, failed to meet the primary endpoint in the Phase IIIb confirmatory trial in malignant mesothelioma. The trial compared the combination of Onconase plus doxorubicin to doxorubicin alone. The primary endpoint was an increase in overall patient survival. Alfacell’s initial analysis of the data showed no statistically significant improvement for evaluable patients receiving the combination of Onconase and doxorubicin.”

In other words, Alfacell tested the combination of Onconase™ plus the standard chemotherapy drug, doxorubicin, to doxorubicin alone in order to test whether Onconase™ would increase the survival of patients with mesothelioma, an extremely difficult to treat cancer that usually is associated with asbestos exposure. After the data were analyzed, there was no consistent difference in the two therapeutic regimens, which means that adding Onconase™ made no significant difference in the survival of the patients.

However, when the data were more closely examined, it appeared that a subset of patients who had failed the standard chemotherapy regimen for mesothelioma, showed a small, but statistically, increase in survival when treated with Onconase™. On this basis, Alfacell plans to submit an application to the FDA for using Onconase™ as a “second-line” therapy for mesothelioma patients who fail the standard chemotherapy. It is unclear how the FDA will respond to this parsing of the data. In the past, they have been averse to such sub-group analysis, but there are indications that this attitude may be changing, so Alfacell is forging ahead with the New Drug Approval process.

As I asked before, should there be cause for concern at Quintessence over these less than encouraging results from a competitor? As before, folks at Quintessence remain very committed to moving QBI-139 into clinical trials, probably sometime this summer. In their communiqué to shareholders, Quintessence went on to explain the following:

“Failing to meet the primary endpoints in the Alfacell Phase IIIb trial certainly makes approval of Onconase more challenging. However, Onconase still has significant potential to be approved as a second line treatment for malignant mesothelioma. While this change would mean a smaller market for the drug, our opinion has been and continues to be that any successful FDA approval of Onconase paves the way for general acceptance of RNases as cancer therapeutics.”

“Quintessence continues to make progress toward filing an IND and initiating a Phase I clinical trial for QBI-139. The majority of the data supporting the IND has been collected and analyzed and GMP manufacturing is underway. We are currently negotiating contracts with the clinical trial site as well as a contract monitoring group. We look forward to demonstrating the clinical benefit of QBI-139 in patients with cancer.”

The FDA’s response to Alfacell will be critical for the future of RNase-based therapies that Alfacell and Quintessence are developing. As I wrote in an earlier article, it is an unfortunate fact that if a drug is tested on the wrong disease and fails, it can be very difficult to resurrect its reputation in order to test it on another, more appropriate, disease. When a drug gets a bad reputation, it becomes much harder to garner enthusiasm from those who would fund the new study—investors and NIH grant reviewers.

Although, it may turn out that that testing Onconase™ on mesothelioma was a bad decision on the part of Alfacell, it was an interesting strategic decision that they made. Mesothelioma was chosen for the initial clinical trials because of its intractability to therapy, which allowed Onconase™ to be granted fast track status and orphan-drug designation by the FDA. This means that Alfacell was able to get Onconase™ into advanced clinical trials much sooner than it would have via conventional investigational drug approval procedures.

Mediocre therapeutic results against a cancer that no other therapy has shown much success against, does not mean that RNase-based therapies will not be effective against other types of cancers. As I pointed out earlier, there is good reason to believe that Quintessence’s lead RNase therapy, QBI-139, is superior to Onconase™.

For these reasons, Quintessence should and will continue to move forward with QBI-139 and focus on more common and easier to treat cancers than mesothelioma.