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Biopharm Development & Manufacturing Perils And Challenges Of Building A Biotech In Kentucky By K. John Morrow Jr., Ph.D., contributing editor S tart-up funding for new biotechs has always been a dicey proposition. But today, investment opportunities are even more precarious, both from the private and public sides of the equation. According to Reuters data, venture capital investments in biotechnology declined by 33% in the first quarter of 2013, compared with the previous period in 2012, which had dropped 14% from 2011. On the public side, NIH will suffer the loss of a trillion dollars over the next 10 years unless the sequestration cuts are reversed. These cuts will dramatically impact the ability of NIH and other government agencies to support small biotech companies through the Small Business Innovative Research (SBIR) program. To date, more than $16 billion has been allocated by the federal government for support of innovative research leading to commercialization, but it is not clear how the program will be affected in the coming years. BIOTECH START-UPS: WHERE TO LOCATE? In this climate, biotech start-ups must do everything they can to optimize their chances for success. The path to this goal has traditionally been through the major hotbeds of biotechnology — San Diego, with at least 400 biotechs; the Bay Area, with several hundred; or Maryland, with more than 500 companies. A number of other cities, including Seattle, Boston, and Los Angeles (home to the behemoth biotech Amgen) have welcomed many start-up biotech firms. 34 LifeScienceLeader.com The basis for the decision to locate in a recognized biotechnology-friendly environment is guided by the availability of human resources and the proximity to academic centers, hospitals, and privateresearch institutions. Support services, such as biotech suppliers, are readily available in these zones. Venture capital firms are located nearby, and their management has an excellent understanding of the industry. Finally, these areas are noted for their high quality of life with excellent schools, recreational and leisure time activities, and cosmopolitan lifestyles. In contrast, the center of the United States has been defined by biotech executives as what they have to fly over in order to get from one coast to the other. Whereas major cities, including Chicago, St Louis, Cleveland, and Kansas City, are home to numerous medical device and major pharma companies, the biotech sector tends to be underrepresented in these regions. AN OVERLOOKED REGION OFFERS POSSIBILITIES So it is noteworthy that bioLOGIC, a biotechnology accelerator located in the metropolitan Cincinnati area, has adopted an unconventional approach to initiating small, innovative biotechs. As such, it tests a number of July 2013 standard assumptions that have guided the industry since its inception. The company was founded in 2006 by Nigel Ferrey and Dr. Ray Takigiku, who were dedicated to building a community of networking researchers. It now provides resources for about 14 companies — among these is Bexion, which seeks to develop a cancer therapeutic. Bexion was also founded in 2006 by Takigiku and rents office and lab space from bioLOGIC. The most significant factor that entered into bioLOGIC's decision to locate in northern Kentucky was the availability of a unique support vehicle for emerging technologies. The state provides generous sums for SBIR recipients in the form of 100% matching funds. These figures amount to a doubling of up to $150,000 for Phase-1 SBIR awards and up to $1 million matching support for a Phase-2 SBIR. In addition, the Kentucky legislation includes "Phase Zero" and "Phase Double Zero" support programs, which award up to $4,000 to help cover the costs of SBIR proposal preparation. Many other states provide supplements to SBIR awards, but none as munificent as the Kentucky program. While even doubling the size of an SBIR award is not sufficient to fund a biotech company, there is substantial prestige attached to a concept that is approved by a peer-review panel. This provides an