Positioning the Northwest as a Biotechnology Leader

Finding solutions to the challenges that face Washington

by Lee Cheatham, Executive Director, Washington Technology Center

http://www.watechcenter.org/news/2004spring/biotech.html

Biotechnology will be a dominant force in the 21st century—a force that not only drives the economy of the Pacific Northwest, but regional and national economies around the globe.

But our region faces challenges. How effectively we deal with these challenges makes all the difference whether we realize the advantages of a leadership position or suffer mediocrity.
Challenge #1: Ensure more available capital flows into our local companies.

Let’s be clear. There is a shortage of available seed capital—those early stage investments of $50,000 to $500,000. The success of venture investment funds over the past decade has meant they simply can’t afford the effort to invest in small amounts. Angel investors are a great source for this seed level investment, but they are difficult to find.

More than three years ago, WTC recognized this lack of capital as a critical issue and acted to develop the necessary programs to address these needs.

Our first step was to leverage federal investment

opportunities. In 2001, with nine partner organizations around the state, we developed programs, tools, and training workshops that educated companies on how to access Small Business Innovative Research (SBIR) funds. Each year, the ten largest federal agencies make more than $1.5 billion available to small businesses. WTC’s program provides easy access to SBIR information and assistance to companies that apply.

Our second step was to create the WTC Angel Network. This program, funded in part by the U.S. Economic Development Administration, is increasing the investment pool by encouraging investors from around the state to participate. The program consists of a network of angel groups forming around the state in areas such as the Olympic Peninsula, Wenatchee, Tri-Cities, and Bellingham. By joining this network, these angel investors will realize benefits similar to larger angel groups.

Realizing that access to investors is critical for growth, WTC has also partnered with the Washington State Investment Board to make a portion of their private equity portfolio available to companies within the state. This program makes it significantly easier for our local companies to gain an initial review of their business plan by one of WSIB’s 87 general partners.

WTC supports the efforts of the Washington State Legislature, which last year created the Investing in Innovation fund. This legislation creates the mechanism for investment in proof-of-concept and early stage product development that can be especially helpful to the biotech industry.

In addition, the Seattle/King County Economic Development Council has launched a project to determine how a biotech seed fund might be created within the state. The Explore Life initiative is, in part, dedicated to developing private funding for early stage proof-of-concept projects. These and the other efforts to increase the available capital must be encouraged. Effectively addressing challenge one means increasing the number of financing options for our companies.

Challenge #2: Expand and renew our infrastructure.

It is safe to say that the biotech industry is driven by the skill and knowledge of its people. In the early stages of the industry’s evolution, those people are researchers and entrepreneurs. As the industry matures, the manufacturing experts join in.

But these people need a place to work and develop their ideas. A place that is different from the manufacturing, software or financial services industries. For biotech this place includes wet laboratories, clean rooms, and ultra-high speed computing and networks.

WTC operates a microfabrication user facility in the John M. Fluke Sr. Hall, WTC’s headquarters. The MicroFabrication Laboratory represents about $20M in facility and equipment investment. It provides critical equipment and processing capability in a clean room environment for a company’s product engineers and university researchers alike.

More than 25 companies are using this facility in their new product development. Significant university research laboratories are also located in Fluke Hall. As a result, Fluke Hall is a place where science and industry really do rub shoulders.

Further development of appropriate facilities around the state is critical for the growth of this industry. Research space for University of Washington, Washington State University and Pacific Northwest National Laboratory must be increased. Facilities that allow entrepreneurs and our existing companies to co-locate their commercial operations with these research activities must be developed next.

Challenge #3: Position our region among other regions around the world

Make no mistake. This is a competition. We’re competing for talented people, for money, for market access. We’re competing globally—against the best from around the world.

Unlike biotech initiatives of a few years ago, regions today are more focused and more selective. They are examining their strengths and defining their niche in the biotech industry accordingly. We have world-class public and private research institutions in our region. We are home to the world’s leading non-profit foundation and program for global health. Leading medical device and pharmaceutical companies are here. Our challenge, however, is to describe our competitive edge when we consider these institutions, and others, together.

Several efforts are underway to do just that. Through the support of Senator Cantwell, WTC is leading an effort to develop such a vision and strategy for micro- and nano-scale science and technology. With our partners, PNNL, Avogadro Partners, and the National NanoBusiness Alliance, we are working to ensure that this long term vision emerges. Its implementation will establish our region as a leader by applying “small science” to the discovery, production and marketing of diagnostic and therapeutic devices and processes.

The Bio21 effort launched by Governor Locke last year is an important component in meeting this challenge because it provides the backdrop required to position and brand our region. It is our first concerted attempt to develop a cohesive direction—21st Century Global Health—based on our region’s strengths. As Bio21 is refined, I believe it will prove to be the backbone from which many “implementation” initiatives can draw their context. Existing programs, like the Investing in Innovation Fund for proof-of-concept projects and WTC’s nanotechnology initiative, are examples of programs that will implement the Bio21 principles.

Challenge #4: Engage everyone

Finally, I believe our most difficult challenge is how to position biotech as an industry that has broad impact. Most people believe it’s just for Ph.D. scientists and it won’t really affect their lives. No doubt the biotech industry draws its ideas from the depths of research in biology, chemistry, physics, computing and engineering. But just like other industries, its greatest impact will only be realized when local companies and their suppliers are making products and selling them.

At one point the aerospace industry probably faced this same issue. Aircraft design, specialty materials, and complex electronics are all part of that industry. Over the decades, however, the industry’s suppliers made metal working and electrical subsystem manufacturing understandable and hired thousands of people to fill those needs.

How to meet this challenge is yet to be discovered. But it is the transition our biotech industry must make if we expect a similar impact to our region’s economy.

By addressing these challenges, and others that may arise, Washington Technology Center is prepared to contribute to solidifying our region’s position as a global biotechnology leader.

© 2004 Washington Technology Center