Biotechnology Round Table March 2010

The N.C. Biotechnology Center melds the state’s best scientific, technical and business minds into Centers of Innovation.

To speed products from lab to market, the North Carolina Biotechnology Center is working to align research and industry in what it calls Centers of Innovation. Funded by state grants, COIs target economic sectors that benefit from biotechnology. Their goal: to attract and create companies, business partnerships and jobs, plus increase federal and corporate funding for university research. Leaders of the Biotechnology Center and three of its COIs recently discussed the two-year-old program’s impact — present and potential — on economic development. Participating were Norris Tolson, president and CEO of the Research Triangle Park-based Biotechnology Center; Kenneth Tindall, its senior vice president of science and business development; Mary Beth Thomas, vice president in charge of the COI program; Cindy Clark, president of the COI for advanced medical technology; Greg Davis, CEO of Durham-based Tryton Medical Inc. and chairman of the COI for advanced medical technology; Brooks Adams, executive director and president of the COI for nanobiotechnology; Michael Batalia, director of the Office of Technology Asset Management at Wake Forest University in Winston-Salem and chairman of the COI for nanobiotechnology; Rick Williams, chief business officer of RTP-based Hamner Institutes for Health Sciences and original principal investigator and fiscal agent for the COI for drug discovery; and John Didsbury, acting director of the COI for drug discovery. Business North Carolina Publisher Ben Kinney moderated the discussion, which was sponsored by the Biotechnology Center and held at its headquarters. Following is a transcript, edited for brevity and clarity.

How did COIs get started?

Tindall: The Biotechnology Center, which has been around for 25 years, has had a number of programs working with universities to help technology development with grants. We don’t do grants for basic research. We want to see some sort of commercial product at the end. We put money into education and training — K-12 education and workforce training in the area of biotechnology. We have a loan program in which we put money into young companies. The Centers of Innovation took advantage of the concept of open innovation.

What’s its application to COIs?

Tindall: By focusing on places where we have strengths — advanced medical technologies, nanobio and drug discovery — we see the strengths of science and technology development not in any one professor’s lab or in any one department but across the state and beyond. To be able to partner with industry in a way that helps them solve problems allows for the creation of products and companies and allows for cluster growth and development. Centers of Innovation then serve as a hub working closely with university technology-transfer offices while at the same time working with industry — a kind of one-stop shop in North Carolina. That was the concept. And we were able to convince the General Assembly that this is an opportunity: We would put money on the table to help these centers get started, but they would be free-standing in bringing in their own revenue after four years. All clusters that we’ve started have the strengths to do this.

Tolson: Since COIs are fully funded by the state, we get asked about return on investment. One of the things that spawned COIs was a desire to commercialize technology. Because at the end of the day somebody has to sell something to get return on investment. And what we hope to do with COIs is to create a commercial stream that will allow technology to move from the lab bench out into the world where we get to use it.

Tindall: It’s really about focused industry creation and growth. It attracts industry to North Carolina. It grows new companies in North Carolina. The end result for North Carolinians is jobs and increased tax revenue.

Thomas: I view it from the perspective that Centers of Innovation are just a continued evolution for North Carolina, which has shown itself to be very good at evolving away from some of our traditional industries into more of a knowledge-based economy. This is where we need to go to be a part of the global economy. Centers of Innovation represent a way to build more of our own, to tap into the strengths that we have across a variety of industry sectors and build those inside the state. The three Centers of Innovation are the first that have moved into a mature phase. There will be more.

What about the current state of advanced medical technology?

Clark: We cover medical devices, diagnostic and imaging companies as well as other advanced medical technologies, such as software that helps run devices or transmit data from inside the body to your physician or from a patient at home to a physician’s office. There are 400 or more companies across the state that fall into this industry. They cover very broad therapeutic areas, and they’re all at very different stages of development. Our goal is to become ranked as one of the top med-tech regions in the country. We want to capitalize on what I call North Carolina’s techno-DNA — North Carolina has been very successful in technology development. We have a unique opportunity to be able to tell the public about the value that medical technology has to human health. Advanced medical technology tends to be cheaper and have fewer side effects. This is a very good story in the context of health-care reform.

Davis: I’m talking to pure biotech venture capitalists who would like to have a more balanced portfolio. One of the things we know about medical devices is that the time to develop their commercialization is a lot shorter than it is in biotech or pharma. North Carolina has been known worldwide for biotechnology. My dream is that within 10 or 15 years we’re also known for drug discovery, advanced medical technologies and nanotech, so that the next Greg Davis who wants to start a nanotech company has the infrastructure to do that.

"It’s really about focused industry creation and growth."

What about nanobiotechnology?

Batalia: Nanobiotechnology is a very broad field, encompassing many technologies including drug discovery, advanced medical technologies, regenerative medicine, ag biotech. Wake Forest has a center for nanotechnology and molecular materials. UNC Greensboro has a center for nanoscience and nanomaterials. UNC Charlotte has a nanoscale science program with a focus in optics but also a lot of capability to bridge into nanomedicine. And, of course, here in the Triangle we have Duke, UNC Chapel Hill, and N.C. State — all of which have very rich programs. In particular, UNC Chapel Hill is going into quite a bit of in-depth research for nanomedicine technologies to treat cancer. In the Triad, there are programs in the community colleges that are quite valuable. Wake Forest has launched nanotech companies in solar energy and lighting, aided in part because Forsyth Tech programs were preparing the workers for those types of manufacturing jobs.

Adams: We actually have 35 research institutes across the state in nanotechnology or nanobio or nanomedicine — a tremendous resource — lots of stuff coming out of that. In terms of industry, we actually have 30 emerging companies — small startups, relatively, that you could call nanobionanomedicine companies. And some of them actually have products that have made it to market. So I would continue to emphasize it’s a statewide activity that we’ve got going with lots of opportunities, and the Center of Innovation ties it all together.

What are the trends in drug discovery?

Didsbury: There’s a higher hurdle to get safer drugs to market. There’s a public demand for it that’s leading to longer development times. There are also huge cost-containment pressures in the industry, so you have to be cost-effective. And the pharmaceutical industry’s blockbuster strategy has largely failed because there are a limited number of these blockbusters, and as such, their emphasis had led to a lot of ignored diseases. There are smaller markets and huge potential for future job growth. There are two basic gaps: an early business-intelligence gap and an early R&D gap. The drug-discovery COI is perfectly poised to fill them. We’re going to be the broker for this — the finder, the matchmaker and the developer of new drug-discovery opportunities — and offering this in a unique model where it will be set up as a nonprofit organization with unique for-profit subsidiaries leading to new companies and job creation

Williams: One of the strengths we have is the major medical schools in the area. We’ve got the No. 2 pharmacy program in the United States at UNC Chapel Hill. We’ve got one of the top engineering programs in the world and top veterinary-medicine programs at State. We pulled these resources together and discovered that there were many more opportunities than we had thought. So as we looked at trying to create the Center of Innovation, we decided to focus on cancer as a way to jump-start the program. We began in March 2008 by meeting with pharmaceutical companies and asking them: Is this something that you would support? We met with probably 10 of the top 12 companies, all the way from the director level to CEO, and each one of them said, “We have great respect for North Carolina, for the research that’s being done here. We have a great respect for the way we’ve been able to collaborate in the state.” And they said very clearly they would be interested in supporting us. So again, we went out very quickly and got buy-in from the pharmaceutical companies, who are not only interested in just talking about this but also in investing money.

"We want to turn a great idea into something to make money. Making money is not a bad thing."

Talk about challenges and successes.

Tindall: There is no question that this industry is built on the strength of technology in North Carolina — technology centers, the knowledge base, the scientifics. But the people who are pulling this together — building the collaborations, building the relationships — are people who understand commercialization, people who understand business. You don’t start out creating jobs. Jobs come from the creation of an environment.

Tolson: It is an important point that is personified by the folks around this table: We operate in a world of technology, R&D and science all the time. But the crucial factor, and the crucial challenge for the COIs, is to make sure we maintain the business focus. We want to turn a great idea into something to make money. Making money is not a bad thing. And that’s crucial to COI success.

Davis: There are really three areas that we could focus on: No. 1 is to grow the existing companies, take them from the lab to commercialization. The other is to attract companies from outside. And the third is to work within the university to try to take ideas out of the university and commercialize them. As you take a look at the challenges for device companies, it really gets down to funding. Do I have the money to be able to move it down the road? And do I have the talent? If I’m going to design a stent, do I have 10 stent engineers that I can call upon? And if I don’t, how do I get those resources? So it’s really making industry and making the community aware of what is available, and that involves talent services and also funding for us. And that’s really where we’re focused and are really seeing some traction.

What other COIs are you looking at?

Thomas: The centers represented here are the most mature. They have all received approval for Phase 2 funding, creating business plans and setting up offices. They are beginning to actually execute that model. We have another center — marine biotechnology — that is in its Phase 1 stage. But I think the program has always been looking ahead: What’s next? That’s part of what I do every day — meet with folks around the state that think they may be part of the next COI.

Tolson: This is not a movement of desperation to try to get something going. This is the maturation of a process that is just natural. It follows along behind discovery and development to commercial success of that activity. It is a process that allows an idea to move through that process to ultimate commercialization. So we will have a lot of them. Marine biotech. Working in natural products in western North Carolina. Ag biotech. Animal agriculture. Forestry. Broad crops. Specialty crops. Aquaculture. I don’t care what the number is so long as they all produce jobs and new wealth in North Carolina.

So long as you get your ROI.

Tolson: Exactly. That’s the bottom line.

This article originally appeared in the March 2010 issue of Business North Carolina magazine.