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Sunday, January 11, 2004 - Page updated at 12:00 AM

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Locke's biotech vision: $250 million to foster biotechnology in the state

Seattle Times business reporter

Hed


"We're up against a time in which people believe we can't give birth to new companies like Boeing and Starbucks or Microsoft here again. The question is, can we believe in ourselves and do the hard work to make it happen?" — Maura O'Neill
President of Explore Life, a regional biotech-booster group

"You can't just put money in, take it out five years later and change your slogan. Having a commitment to this takes a decade or more." — Walt Plosila
Consultant on state biotech initiatives, Battelle Memorial Institute, Cleveland

"If you want to do something in the Legislature and it doesn't interest 28 counties, it's almost impossible to get anything done. Everybody wants to know what's in it for me. Why someone wouldn't want another Microsoft for a tiny sum compared to the 7E7, I just don't get it. Some other states are starting to get it." — Jeff Brotman
UW regent, co-founder of Costco Wholesale

"This could be a great project to foster more research and more collaboration in the state and a great opportunity to create an environment that will attract more federal research dollars." — Ed Fritzky
On Amgen board of directors

"We are desperate for economic development in this state, and we see the competition. We see other states trying to become centers of biotech research and development. We don't want to let go of our early advantages." — State Sen. Luke Esser
Member of the Governor's Bio21 committee

"Biotech will touch everybody personally and all of your relatives, and this state has the potential to be a leader. It will be much more important to this state than aerospace in 20 years." — Robert Nelsen
Health-care venture capitalist, Arch Venture Partners

"Jobs don't just happen because you want more jobs or because you say biotech is a priority. It happens if you have inventive potential. You either have inventive potential as a community or you don't, and the fact is this is one of the places that has it." — Robert Franza
University of Washington researcher

"We can't just throw money at it. We need to develop an action plan, a business plan. Right now, it's a patchwork quilt, and nobody's going to win." — Ruth Scott
President, Washington Biotechnology and Biomedical Association

"We've invested $3 billion into a high-risk enterprise, and if the 7E7 fails, who will move in to fill their place? It's not likely Airbus or the Japanese. But with biotech, you invest in infrastructure, and even if the first company fails, another one will move right in." — David Miller,
President, Biotech Monthly

"A lack of coordination could doom these ideas." — Jim Severson, Vice provost for intellectual property and technology transfer, University of Washington

With Boeing's next-generation jet landed safely in Washington state, Gov. Gary Locke has one big item left on his economic growth to-do list before he leaves office: strengthen the biotechnology business.

Over several months, Locke has gathered the state's top research institutions and corporations to put together a biotechnology initiative that is turning into one of the most ambitious industry-fostering plans the state has attempted.

The plan is arriving for this year's Legislature, as momentum is building for Paul Allen's plans to develop a biotech center in the South Lake Union area and with 40 other states spending billions on biotech plans. The rush is on, because with the 3 billion-letter string of human DNA on every biologist's computer, the study of life is being compressed into a digital science of 1s and 0s that will lead to understanding of genes and cells, breakthrough diagnostics and drugs, and emerging businesses. And it's all happening as baby boomers are growing older and demanding better health care.

Many who have advised Locke on the plan, Bio21, say they are working with a sense of urgency. They say Locke considers strengthening the state's edge at the intersection of computer science and biology part of his legacy.

And like the 7E7 derby, in which the state was told it had a 1-in-5 shot at winning, the biotech push has an alarming statistic of its own — the state government's ante for research ranks 46th out of the 50 states.

Details of the plan are still being hashed out, but Bio21 committee members said they have discussed committing $250 million from the state over five years, and possibly doubling that with matching dollars from outside sources.

Under the plan, the state's top research institutions — a group including the University of Washington, Pacific Northwest National Laboratory in Richland, Washington State University and the Fred Hutchinson Cancer Research Center — could vie for competitive, peer-reviewed state grants, with preference given to researchers that team up to speed progress. Venture capitalists and corporations like Microsoft and Amgen would be involved early.

An early draft suggested tobacco-settlement money could pay the bills without causing budget headaches, but Locke's advisers say the governor hasn't decided where the money will come from.

Locke says he's determined that a biotech growth plan will pass on his watch, that the state has computing and biotech talent he doesn't want to see wasted. With other states offering tax breaks and other money, emerging companies like ZymoGenetics in Seattle are reminding state officials how other regions would love to lure them away.

"We will do something," Locke said. "Everybody agrees we need to put more money into research and development. ... The payoffs are tremendous in diversifying our economy, creating more good-paying jobs, as well as benefiting the health of people around the world."

Ed Fritzky, former chief executive of Seattle-based Immunex, has been one of Locke's advisers. With health care expected to approach one-fifth of the nation's gross economic output soon, the region could cash in big, Fritzky said.

"If we're in the top 10 now, but we could be in the top three in one of the industries of the future, that would be huge," Fritzky said.

What is biotech?

Biotechnology is a buzzword to many. Few people, including state legislators, can name a single biotech company.

Biomedical research and pharmaceuticals have been around for decades, but biotechnology dawned 25 years ago when scientists at Genentech began cutting and splicing DNA to improve health and ultimately make money.

Biotech's first big achievement occurred in the 1980s with development of an improved human-engineered version of insulin that shifted diabetics from animal-derived insulin. Agricultural biotechnologists have copied genes into seed corn to help make crops resist corn borers and reduce the need for insecticides. Biotechs since have created drugs to help patients recover from chemotherapy, to treat rheumatoid arthritis and impotence, and to prolong lives by killing cancer cells without hurting healthy tissue.

Breakthroughs, however, have been few — and have taken a long time.

More than 3,000 biotech companies have been created in the 25 years, but only a few have made a profit. They attract educated workers from science and medicine, and pay an average annual salary of $68,000. But most run like a pharmaceutical-research farm system and never aspire to have Boeing-like payrolls. Their survival depends on Wall Street's appetite for speculation, so they suffer during recessions.

Industry studies have shown it takes at least a decade and costs $800 million or more to develop a drug that wins FDA approval. Animal testing alone can take five years. And only about one in five drugs that look promising in animals succeed in humans.

Many biotechs do research near academic medical centers, but when they are lucky enough to have a drug to mass produce, they often move factories someplace cheaper.

Washington state

Washington state is in the second-tier cluster of biotech along with North Carolina's Research Triangle Park and the nation's capital, according to a 2002 report by the Brookings Institution. Boston and San Francisco are the leaders.

The Washington Biotechnology and Biomedical Association says the state has 190 biotechnology and medical-device companies, employing about 19,000. Bothell-based Icos, a Bill Gates investment that has created a rival for Viagra, is the state's biggest biotech with 700 employees.

More significant, the early steps in the era of personalized, preventive medicine are beginning to blossom here.

Rosetta Inpharmatics, a Merck subsidiary moving from Kirkland to South Lake Union, has found patterns showing that some breast-cancer patients have a genetic makeup that causes tumors to spread or stay localized. A doctor could use that information to tell whether preventive chemotherapy is unnecessary for some patients.

Lee Hartwell, the Nobel Prize-winning president of the Hutch, predicts that within five years, new technology being developed by local biologists, Microsoft and Intel will be used to spot cancer at its earliest stages using blood tests.

Other states

Other states want a piece of biotech. In Florida, Gov. Jeb Bush and the state legislature paid $310 million to lure a wing of the prestigious Scripps Research Institute. Michigan had budgeted $1 billion of its tobacco settlement over 20 years to attract biotech but recently cut that amount. North Carolina approved $240 million in tax breaks and incentives for Merck to build a vaccine factory.

New Mexico, Kentucky and Wisconsin are among the many who have sunk money into venture-capital funds to start homegrown companies.

Many states have respected research institutions but are missing some of biotech's key ingredients: entrepreneurs, venture capitalists, specialized real-estate developers.

"There's a lot of dumb money being thrown around," said Alan Frazier, managing partner of Frazier Healthcare Ventures in Seattle, a leading biotech venture firm.

Risks

The risks are many. Carl Feldbaum, president of the Biotechnology Industry Organization, worries about a bioethics publicity disaster "in which the technology moves faster than public sensibilities." Stem-cell research, which requires harvesting cells from embryos to study their formation, is one of the ethical caldrons.

Robert Nelsen, a venture capitalist with Arch Venture Partners in Seattle, worries that a terrorist attack could crush investors' enthusiasm. Local researchers or ideas could be poached. Companies could fail or get bought. Research may not be nearly as productive as people think.

Asking the public for favors could go over with a thud. The industry has struggled to communicate to nonscientists, using jargon few can understand and hype few believe. Some states have invited criticism by overpromising.

Locke's plan is not tightly integrated with Paul Allen's plan for South Lake Union or with Explore Life, a plan led by former Seattle Mayor Norm Rice. Eastern Washington may wonder whether Bio21 is another giveaway to Puget Sound elitists, but Locke has lined up support from researchers in Pullman and the Tri-Cities.

Maura O'Neill, president of Explore Life, worries the public will be intimidated by biotech and cynical about taxpayer investment in it.

"People are hopeful about biotech when their sister gets cancer or Alzheimer's, but they also think, 'It's about jobs for everybody else, not me and my kids,' " O'Neill said. "People think, 'It's for those Ph.D.s that I don't understand, and it's scary stuff.' "

Payoffs

Many people working on behalf of biotech admit it's a hard sell and aren't sure who will rally support for the myriad plans.

"Right now, it's a patchwork quilt, and nobody's going to win," said Ruth Scott, president of the Washington Biotechnology and Biomedical Association.

Locke is not promising a specific number of jobs, but O'Neill says consultants have projected that the state's 19,000 biotech jobs could grow to 55,000 in the next two decades.

Jeff Brotman, co-founder of Costco Wholesale and a UW regent, plays up biotech's higher purpose for health, but makes his main argument economic — he likens UW Medicine's growth potential in South Lake Union to that of another Microsoft.

He has invested in the South Lake Union fund-raising campaign, but has had a hard time raising more. He would like to see the state put its money into the South Lake Union development.

"I say to people, 'If you could have another Microsoft here, why would you not want that?' " Brotman said.

Some apparently have been won over. Safeco Chief Executive Mike McGavick was skeptical a year ago, O'Neill said, but he recently touted biotech at a downtown Seattle Rotary Club speech.

Others doubt Washington's limited cash could make a dent. But Leroy Hood, president of Seattle-based Institute for Systems Biology, disagrees. Gates' $12 million gift to UW lured Hood in 1991 and attracted dozens more gifted researchers.

Hood said he hasn't yet seen a clear vision from the state, but he suggests something bold, such as buildings to make nanochips that all state scientists could use, possibly to create diagnostic cancer tests.

"We're all good at getting government money (for incremental advances)," Hood said. "What we don't get is the money to invent the future. But even $50 million a year would transform the state of Washington if it were really spent wisely."

Luke Timmerman: 206-515-5644 or ltimmerman@seattletimes.com

Copyright © 2004 The Seattle Times Company

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