Alex Philippidis Senior News Editor Genetic Engineering & Biotechnology News

Florida Sees Promising Research, But It Has Come at a Price

At Sanford Burnham Prebys (SBP) Medical Discovery Institute in the Lake Nona section of Orlando, FL, Laszlo Nagy, M.D., Ph.D., recently led a research team in discovering that macrophages not only rid the body of microbes and damaged cells, but also promote tissue repair following muscle injury by producing the protein GDF3, which enhances formation of new muscle fibers.

In June, about 120 miles southeast of SBP in Port St. Lucie, FL, the Torrey Pines Institute for Molecular Studies (TPIMS) became Florida’s first research institute selected as a specialized center in the National Cancer Institute Experimental Therapeutics (NExT) program, designed to support development of new cancer treatments.

These and other advances were what the institutes envisioned a decade ago when they expanded from California into the Sunshine State. But research progress has come at a price, starting with the approximately $1.3 billion showered by Florida’s state government and several counties. SBP and Torrey Pines have struggled to meet what turned out to be overly optimistic job-creation estimates, spending additional millions to build new facilities and recruit researchers.

Florida now seeks to take back some of the money committed to both institutes. The state Department of Economic Opportunity (DEO) on November 14 declared Torrey Pines in default of its 2006 agreement with the state, citing three years of falling below job-creation goals. The DEO, which had awarded $27 million to Torrey Pines, warned the institute that it would redirect $3.5 million approved for it back into the state’s general revenue fund.

The state at deadline had not followed through on that redirection, Torrey Pines President and COO Gregory S. Welmaker, Ph.D, told GEN. He said TPIMS has created more than 130 jobs in Florida, below the 189 jobs committed to by the institute, as well as four spinout companies, with a fifth spinout in the process of being created.

“The Treasure Coast area has not grown as originally expected over the past 10 years, just like TPIMS has not grown over the past 10 years. However, the area will eventually grow, and TPIMS expects to grow with it,” Dr. Welmaker said. “Although there have been challenges meeting the predetermined employment target numbers, TPIMS in Port St. Lucie remains an attractive location to perform research.

“TPIMS is solely focused on research to improve human health, and would be attractive to any scientist who is motivated, successfully funded, and interested in pushing the limits of his/her research,” Dr. Welmaker added.

In October, the DEO also cited three years of weaker-than-expected job creation in demanding that SBP repay $77.636 million in state incentive funding—half of the $155.272 million state portion of the approximately $350 million committed to the institute by state and local governments.

“We do not believe there is any merit to the State’s claim for a refund,” a spokesperson for the Institute said. “The scientists and staff at Lake Nona have added significant economic and reputational value to the life science cluster in Florida.”

“The research being done in metabolic disorders, including diabetes and cardiovascular disease, are particularly relevant to Florida’s demographics/aging population,” SBP added.

SBP takes issue with Florida officials calling the 303-job target an obligation, citing the Institute’s 2006 agreement with the state, which says SBP will use “reasonable best efforts” to achieve that number. SBP told GEN its Lake Nona workforce grew to a peak of 262 jobs last year, but has since slid to 238 as of June.

DEO says it won’t take no for an answer: “DEO remains committed to holding Sanford Burnham accountable for all taxpayer monies received and will continue to investigate our options for any repayment necessary of incentive funds that were provided to Sanford Burnham,” agency spokeswoman Morgan L. McCord told GEN.

The SBP spokesperson acknowledged that during its 10 years in Florida, its level of grants and philanthropic dollars has “been significantly below the levels originally projected and needed to be self-sustainable. We are exploring ways to improve the prospects for long-term sustainability.”

“Attracting a critical mass of high-quality scientists away from well-established scientific and academic research institutions to help grow a Florida greenfield into a world-class facility has proven more challenging (and more expensive) than anticipated,” SBP added.

One encouraging sign, according to SBP, is that grant funding for research at Lake Nona has average 20% percent increases over the last five years. However, the grant total of $132 million for the Lake Nona site is significantly below Institute projections made in 2006, before the 2007–09 recession and years of yo-yo NIH budgets.

The DEO also demanded that both institutes commit to staying in Florida for the 20-year length of their agreements with the state. Earlier this year, SBP spent 10 months in discussions to transfer all its Florida assets to University of Florida, but talks fell through in October.

“We are exploring ways to improve the prospects for long-term sustainability,” SBP said in a statement to GEN.

Torrey Pines—which has relocated its headquarters from San Diego—”fully expects to operate in Port St. Lucie, Florida, for the complete term of the agreement and decades beyond,” Dr. Welmaker said.

Torrey Pines and SBP were among a half-dozen research institutes that were showered

“You've had a number of states, and Florida is a leading one, that have thrown a lot of money at either research institutions or private firms, with negligible results,” said Joe Cortright, president and principal economist of Impresa, a Portland, OR, consulting firm specializing in regional economic analysis. Little has changed, he said, since he co-authored a 2002 study for the Brookings Institution detailing the geography of biotech. According to Cortright, the industry continues to cluster around top-tier clusters like the San Francisco Bay Area and Boston/Cambridge, MA.

Cortright pinpointed access to venture capital as a key reason. Over the first three quarters of this year, Florida racked up $21.744 million in just three VC deals, according to the quarterly MoneyTree Report by PwC with Thomson Reuters data. By comparison, San Francisco recorded $1.713 billion in 79 deals; Boston/Cambridge, $2.386 billion in 80 deals.

Florida’s focus on research institutes, Cortright said, was flawed since they are likely to produce far more research than can be translated into commercialized, job-producing products.

“There are really powerful economic reasons as to why the best researchers, the ones with the most commercial acumen, why the new companies, and why the venture capitalists are all in just a few places. It’s because they want to maximize their chances of success,” Cortright said. “That’s hard to do when you’re in some location like, say, Florida, where the talent supply is very thin, there is a very thin market for researchers, and so on.”

Florida believed it could build a talent pool of researchers by offering institutes sweeteners like the $250 million Innovation Incentive Fund. It was scrapped in 2008 to plug a $2 billion deficit by Bush’s successor Charlie Crist.

Yet Crist wasn’t above throwing state cash at research institutes: In 2010, he and state lawmakers hammered out a three-year, $130 million funding package for The Jackson Laboratory toward a planned campus near Naples, FL. The Lab opted instead for Connecticut, where in 2014 it opened a $111 million Jackson Laboratory for Genomic Medicine in Farmington with $291 million in state bond funding.

Florida DEO says current Gov. Rick Scott (R) has overhauled state incentive policies by tying state funding more tightly to fulfilling job-creation pledges, making it unlikely that research institutes will see another windfall of state largesse without the jobs that are supposed to come with it.

“Under Governor Scott’s leadership, DEO has reformed the incentive process, requiring companies to meet strict performance metrics, including total jobs and capital investment, before receiving any payments. This highly accountable process works to recruit businesses to our state, while at the same time protecting Florida taxpayers’ hard-earned money,” McCord the DEO spokeswoman said.

Growing Biotech in Palm Beach County

Years of unfulfilled job promises by some research institutes in Florida is cause for concern in at least one area of the state that has acted this year to grow its life sciences industry.

“We are seeing significant progress in Palm Beach County. Unfortunately, the impact may be that state legislators will be leery about funding similar operations in the future,” Kelly Smallridge, president and CEO of the public-private Business Development Board (BDB) of Palm Beach County, told GEN. “But our strategy doesn’t necessarily depend on providing large incentives to research organizations to move to Florida.”

She said incentives are less top-of-mind for companies considering Palm Beach County than other factors, starting with taxes.

“Most companies see the incentive to move here in the fact that we have no state tax on personal income. After they realize the savings there, they are then interested in collaborating with a hospital or research university,” Smallridge said. “From there, they want access to a skilled workforce and want to determine the willingness of industry partners to collaborate.”

The county has seen both the promise and challenges of growing biotech in Florida. In 2003, The Scripps Research Institute (Scripps Florida) was the first institute to agree to expand into the state, receiving the largest share of state largesse, $310 million, plus another $203 million from the county.

Scripps Florida has grown since then to more than 600 scientists and support staffers. However, in July, Scripps Florida laid off 14 staffers, while publicly declaring its continued commitment to carrying out research in the Sunshine State.

Scripps Florida is based in Jupiter, FL, which is also home to another top-tier research institute, Max Planck Florida Institute for Neuroscience, and Florida Atlantic University (FAU)—co-anchors of a growing research-focused biocluster that has extended into commercialization efforts. Last month, FAU licensed to Neuro Pharmalogics a portfolio of patents focused on the protein kinase G (PKG) pathway, which plays a pivotal role in several neurological conditions. Neuro Pharmalogics is one of 15 companies supported by FAU through its Tech Runway® public-private support platform for tech startups and early-stage companies.

In October, two companies announced plans to move to Jupiter, with incentives much smaller than those given to the institutes. Drug developer CTD Holdings is promising 51 jobs and $2.75 million in capital investment, in return for a $357,000 state/local job growth incentive award, and $117,300 in Florida Flex workforce training grants. BlinkBio, whose Bioorthogonal Linker chemistries are used in drug conjugates for cancer and other diseases, plans 25 jobs and $1.65 million in investment, after inking a use agreement with Scripps Florida.

Earlier this year, the public-private BDB moved beyond a draft report to develop a full-blown strategy intended to guide county efforts to attract and grow life-sci companies.

Among their recommendations: 

  • Expand an existing task force into a broader life-sci focused leadership group to implement a strategy.
  • Promote the county’s bioindustry identity among officials, developers, and the business community.
  • Identify industry-specific sources of capital and life-sci executives with C-suite experience.
  • Step up networking efforts.
  • Develop a life-sci identity or brand for the region, foster long-term efforts to grow local biopharmas.
  • Partner with anchors FAU, Scripps, and Max Planck.

Next year, the BDB plans to target business categories that include pharma manufacturers, personalized medicine companies, anti-aging product developers, and “dry science” firms such as clinical trial managers and vendor contract managers.

BDB’s future plans also include forming a venture capital fund to tap into the county’s wealth. “Prior to creating the fund, we need to make sure that those seeking funding for various stages of their growth, are positioned properly to make the pitch. This fund would be new to the area but will take us a while to create,” Smallridge added.

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