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Wednesday, November 2, 2005 - Page updated at 12:00 AM

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Biotech industry nudged

Seattle Times business reporter

Life Sciences Discovery Fund


The fund

Created this year by the Legislature to use $350 million, roughly 8 percent of the state's tobacco settlement, to make research grants. A small state agency, the Life Sciences Discovery Fund Authority, will administer the fund.

Tobacco money

Begins in April 2008 with the first of 10 annual $35 million allocations. The authority can also accept and distribute money from other sources such as private philanthropies. Leaders envision more than $1 billion in investment.

Grants

The grants would go to researchers at institutions across the state, such as Washington State University and the Fred Hutchinson Cancer Research Center. The state Constitution prohibits gifts of public funds to corporations. Lawmakers instructed trustees to make grants based on factors including the quality of the research and its potential to find breakthrough treatments, lower health-care costs and generate jobs and royalty income.

Board of trustees

The authority's 11-person board consists of:

• Two members from each party and each chamber of the Legislature: Sens. Lisa Brown, D-Spokane, and Bill Finkbeiner, R-Kirkland; Reps. Jeff Morris, D-Anacortes, and Skip Priest, R-Federal Way.

• Seven members appointed by the governor, with consent of the Senate: Chairwoman Lura Powell, CEO of Advanced Imaging Technologies of Richland; former Gov. Gary Locke; Jim Cook, retiring dean of Washington State University's College of Agriculture and Life Sciences; Rita Colwell, former director of the National Science Foundation; Bruce Montgomery, CEO of Corus Pharma of Seattle, and chairman of the state's biotechnology-industry association; and Cheryl Scott, former CEO of Group Health Cooperative.

• One position remains unfilled.

• Lee Huntsman, former president of the University of Washington, is the authority's executive director.

Sources: Washington Legislature, Governor's Office

The $350 million state fund to finance life-sciences research is just getting organized and won't begin distributing public money until 2008, but it's already under pressure to deliver.

Gov. Christine Gregoire, who pitched the fund to the Legislature as one of her main economic-development initiatives, said Washington's life-sciences industry needs to show average citizens "there is something in it for them," or risk losing legislative support for the spending.

If people aren't convinced of the potential health and economic payoff, the Legislature "could take the money and use it for something else," Gregoire told about 540 members of the Washington Biotechnology and Biomedical Association (WBBA) at its annual meeting Tuesday morning.

She sounded the caution the week before the Life Sciences Discovery Fund's board of trustees is scheduled to hold its first meeting.

Three weeks later, lawmakers will be looking for a report on the potential to channel royalty income from state-sponsored research toward higher education. The following December — more than a year before the state money can be spent — another report is due on anticipated returns on investment including jobs, intellectual property rights and other long-term benefits.

Rep. Mary Lou Dickerson, D-Seattle, said she pressed for the reports because "I felt it was important to provide some accountability" for how the state's money is spent.

Anthony Dennis, who heads Ohio's biotech-industry association, knows the need to show citizens and lawmakers a quantifiable return. His industry, which employs a slightly smaller percentage of Ohio's work force than Washington's does, has received about $174 million in state investment through Ohio's Third Frontier Project in the past two years.

"It clearly raises visibility because the public becomes a great deal more interested in how those tax dollars are being spent," he said.

Washington's fund comes from a bonus earned for then-Attorney General Gregoire's role in negotiating the national master settlement with tobacco companies worth more than $206 billion over 25 years to states across the country.

Gregoire has no intention of seeing the bonus money, which represents about 8 percent of Washington's total tobacco-settlement income, diverted to another purpose.

"I'm determined that research is a part of our economic future ... and there is something in it for every citizen," she said.

Supporters want to see the fund make grants before the first of 10 annual $35 million bonus payments arrive in 2008.

They hope to do that by attracting investment from philanthropies and private industry, which are part of the strategy to reach a goal of $1 billion for the fund.

The fund can be helpful even without spending money, said Lee Huntsman, former University of Washington president and the fund's executive director, but getting into the grant-making business sooner is "far preferable."

There is a sense of urgency as more states and nations put money behind the life-sciences sector. Gregoire noted the "dramatic steps forward" countries such as Japan, China and Germany are taking to invest in this area.

A Battelle report found almost every state is investing in the life sciences, collectively spending billions to fund research, build facilities or seed companies. California has dedicated $3 billion to fund stem-cell research. Oregon is spending $500 million in the next 30 years to add 2.5 million square feet to Oregon Health & Science University. Florida put up $510 million in federal and local funds to attract the Scripps Research Institute to West Palm Beach County.

"There is a certain level of symbolism attached with the dollar amounts," said Dan Berglund of the State Science and Technology Institute, an Ohio nonprofit that studies states' efforts to bolster their tech economies.

The money gets the attention of researchers and entrepreneurs weighing where to start a company or a laboratory.

Before it can start accepting grant proposals, the Life Sciences Discovery Fund's board must write rules for how it will hand out money, hire staff and draw up a budget.

The stakes are not lost on those who see life sciences as the industry of the next century.

"This fund, if we do it well, will really supercharge our industry," said Dr. Bruce Montgomery, chairman of the WBBA and one of the state fund's 11 trustees. "If we do it poorly, it will be a black mark on us for a generation."

Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com

Copyright © 2005 The Seattle Times Company

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