Life Sciences: From Research to Profits

By Dennis Boone

Making its rounds through area research circles, it was a story that reflected the intellectual curiosity of local entrepreneurs, the vision of innovators, and the aspirations of bioscience executives hoping to make this a more robust center for research and commercialization:

UMKC’s Reza Derakhshani, a professor in the computing and engineering department, had co-developed a new eye-vein recognition technology for the Department of Defense. Not just a retinal image, but one that uses unique vein patterns in the human eye to take identification scans to a whole new level. Toby Rush, founder of Rush Tracking Systems, saw far broader applications for that technology with cell phones, potentially eliminating the need for computer passwords. He licensed it, launched EyeVerify (with Derakhshani as chief scientist), and won a global entrepreneurial competition—and a shot at $1.3 million in angel financing—in 2013.

It’s a good example of how university research here can be translated into commercial success, researchers say, but also an instructive tale. The region is missing opportunities, they say, to connect more Rushes with more Derakhshanis, and as a result, is not capitalizing on what each expertise brings to the business-development party.

As the region continues to focus on raising its profile in the fight against cancer, burnishing its credentials in animal-health deliverables, or expanding its footprint in plant research, there is reason to wonder whether the handoff between lab and production line is going as fluidly as possible.

“With the university as an academic environment, the goals for research is discovery and teaching, not profit. In the business community, the goal is profit,” says Lynda Bonewald, vice chancellor for transitional and clinical resreach at UMKC. “The difficulty reaching across those two entities is communication.”

Getting that communication right is of considerable import to the Kansas City region. Since the opening of the Stowers Center for Medical Research in 2000 and the formal organization of the animal-health corridor in 2006, the region has dramatically raised its bioscience profile nationwide. The addition of National Cancer Institute designation in 2012 for the University of Kansas Cancer Center has furthered that regional goal. But those are just the highest-profile tips of a regional research iceberg.

Now, researchers and executives with non-profits operating in that realm say the Kansas City area is poised to take some very big steps. That’s significant, because jobs in that industry, on average, pay 80 percent more than the private sector average, and are growing faster. That sector has seen 17 percent growth since 2007, nearly twice the private-sector output, according to R&D management firm Battelle.

But it’s grown even faster in this region since 2003. Figures compiled by the Kansas City Area Life Sciences Institute through 2012 showed a 26.7 percent increase in the number of human-health focused companies here, a doubling of plant science companies (although the bar was fairly low in 2003, with only eight such firms) and a hearty 262.5 percent increase in animal-health companies, from 16 to 58—and with more in place since that study.

“What we’re ultimately trying to create is an ecosystem with enough critical mass to sustain itself,” said Wayne Carter, the institute’s president and CEO. A key piece of the underlying strategy, he said, was to identify areas of overlap—pharmaceuticals developed for humans that can be readily modified to treat livestock and pets, for example.

The region now boasts human health assets several times the size of its animal health segment, but the latter holds significant promise for growth in the region. All told, the animal health corridor from Manhattan to Columbia counts more than 300 animal-health company operations, touted as the world’s largest concentration of those assets. Companies with strategic locations there account for well over half of global sales in animal health products, diagnostics and pet food.

In less than a decade, 31 animal-health companies have moved into that corridor, Carter said, yielding 1,368 new jobs. Institute figures say that led to $78.6 million in new payroll and filling more than 1 million square feet of research and operations space.

A good start, executives say, but just that—a start.

“I think there are some encouraging signs, but I can’t say I think we’re there yet,” says Kent Glasscock, president of the Institute for Commercialization at Kansas State University. “The awareness and need for translating basic research into market-ready products and services is a complex and challenging transition.”

But more companies, he said, are “recognizing the need to go beyond their own research structure to identify and acquire innovation that then can be entered in their system and ultimately go to the market.  That in itself is encouraging.

Jeff Boily, CEO for Centaur Animal Health, said what’s happening in this region—from research and commercialization efforts to the tax burden and other business-climate indicators—suggests that despite the progress, the area must do more to raise its national profile. Progress here is undeniable, he said—but it’s also occurring in other cities and states.

“My sense is, it’s kind of in the middle” with the Kansas City region, Boily said. “It keeps fighting for its position overall. No doubt the aviation tech sector is highly developed and well known in Kansas, but the second-biggest thing that people are commenting about is clearly the whole animal-health corridor.  That is driving a lot of interest across the board.”

A Looming Boom
One mega factor behind that is taking place on the western end of the corridor. Much of the work on the central utility plant has been completed at the National Bio-Agro Defense Facility in Manhattan, and construction begins this summer on the labs for the $1.2 billion research center.

That’s expected to supercharge commercialization and business spinoffs well before NBAF is fully staffed in 2022. In adition, the university is moving forward with major plans to create its own research and commercialization corridor right at NBAF’s doorstep.

“If we are careful and judicious and aggressive,” Glasscock says, “we could see tremendous economic growth regionally, based on this world-class capability that literally no one else around the globe will have.”

At the same time says Stan Baker, a lawyer with Husch Blackwell in Kansas City, the private sector is adding to the momentum.

“The regional approach to promoting all the animal-health capacity of this region has been phenomenal,” Baker said. “But the other thing that has happened, in February 2013, Pfizer spun off their animal-health division to create Zoetis, and that created a whole new world for the animal-health business.”

Up to that point, Baker said, “there had been no such thing in the U.S. as a publicly-traded animal-health company; they were either small and privately owned, or divisions of large pharma.” The initial public offering for Zoetis, he said, “created an avalanche of money coming into that corridor.” Other companies in the region, such as Aratana Therapeutics, have capitalized on the growth, and global companies like Parnell, an Australian firm, have set up North American headquarters here.

“People are finally recognizing just how big a market it is and starting to pay attention,” Baker said. “I am unaware of any top 10 company that does not have a presence here.”

The broader significance of that trend, Glasscock said, is that it comes as the region solidifies its position in other areas. “A point we have to talk about here is that the connection between plants, crops, animals, animal health and nutrition and human health and nutrition is apparent and inescapable,” not just for K-State, but the region, he said.

The emergence of NBAF can be leveraged with other assets, and “that is the university’s intent,” he said. “We are not waiting for NBAF to have the ribbon cutting; we are leveraging our
own capabilities.”

On the human health side, the region is seeing key advances not just in the lab work of researchers, but in strengthening the infrastructure that supports those efforts. Among them:

•  The KU Cancer Center is pressing ahead with plans for next-level designation as a cancer center, adding to both it research and treatment capabilities. The adjacent medical center, meanwhile, has secured a $19 million grant from the National Institutes of Health grant to support a cell and developmental biology research program, and is building a $75 million health education building on the Kansas City campus.

•  MRIGlobal has secured a new $63 million contract from the National Institute of Environmental Health Sciences to provide chemical analysis for the National Toxicology Program.

•  And developers are moving forward with Oxford on the Blue, a planned 350-acre mixed-used development park in south Kansas City that will largely focus on biotech research.

In the lab, researchers at Stowers Institute have produced a promising treatment that uses anaerobic bacteria to destroy tumors, KU’s Cancer Center has identified a method that can block  formation of pancreatic tumors and their recurrence after treatment, Children’s Mercy Hospital’s Center for Pediatric Genomic Medicine has developed a gene-based test that can take years off the process of diagnosing complex childhood diseases, and Lynda Bonewald is working on a bone-cement formulation that the university, with fingers crossed, hopes can become to UMKC what Gatorade has been to the University of Florida.

Those are but a few of recent advances attributed to area researchers, with hundreds of other projects taking place throughout the region. And in each case, the question eventually becomes: Can it be commercialized? Followed by: How quickly?

Dave Alburty, who has two companies in Drexel called Innovaprep and Alburty Labs, says “technology transfer from local universities and other institutions has always seemed to be slower here than on the coasts.” Some of that, he said, might be attributed to Midwestern humility, but whatever the cause, “many outstanding ideas and technologies seem to languish here.”

Among the efforts to address that, he noted, were Whiteboard2Boardroom, a consortium of 21 universities, companies and school districts formed to match ideas and innovations not just to the executive talent needed for commercialization, but to investors. And he cited both KCSourcelink and the Small Business Technology Development Center at UMKC as places where entrepreneurs can connect with research efforts.

Bonewald said those kinds of efforts can lead to more start-ups like EyeVerify, but it’s going to take some work. She credited Maria Meyers, executive director of KC SourceLink, for expanding connections between business visionaries and researchers, as well as the Whiteboard2Boardroom operations. “Do we have it all in place and set up and running smoothly? No,” Bonewald said. “But hopefully we’re headed in that direction.”

Carter says the region’s best hope for broadening the bioscience sector lies in recognizing opportunities before they fully emerge, then fostering the collaboration needed to seize them. “Where is the next animal-health corridor?” he said. “We need to recognize those great opportunities, and we need to prioritize them and measure our progress toward capitalizing on them.”