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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowIndianapolis Business Journal gathered leaders in the state's technology industry for a Power Breakfast panel discussion April 24.
Panelist members included Ron Ellis, Endocyte president and CEO; David L. Johnson, Central Indiana Corporate Partnership president and CEO, BioCrossroads president and CEO; Wade Lange, Lange Advisors Inc. vice president; Ping Poulsen, Safis Solutions LLC president and chief financial officer; William Weldon, Elanco global vice president of research and development; Alisa Wright, BioConvergence LLC founder and CEO.
The discussion was moderated by IBJ reporter J.K. Wall.
The following is an unedited transcript of the discussion.
WALL: We'll talk about a variety of things.
Of course, in the life sciences some of the key
ingredients to success are forming companies, getting
capital to those companies and attracting talent to
those companies, so we'll talk about all of those.
But to start off with about forming companies, I'm
interested how Indiana's doing on that front and what
the state and the folks here might do differently to
see more companies launch in life sciences. There
have been a variety of suggestions for this, some
have said "Hey, we just need more capital, more
talent." Some have said "Hey, let's create some
funding more for individuals who are trying to
advance a new idea." Some have even said "Hey, we
need another research-focused medical school in
addition to the IU Medical School." Some have said
"Hey, let's have more graduate students and post-docs
take the lead trying to commercialize innovations
because they've got more time to do it than tenured
professors do." So there are a variety of ideas out
there. I would be curious what you all think might
be the best route for it, and if you don't mind, Ron,
can you kick us off and give your thoughts?
ELLIS: Well, I think, first off, we've made
a lot of progress and I think there's been a big
change from I think when Endocyte started back in
'96, 20 years ago, to the just whole environment for
getting this company started and up and going. I
think kind of maybe two key ingredients in building
new industries is patience, these things don't happen
overnight and you need sort of a Chinese view or an
Asian view of making changes as these are sometimes
50-year or hundred-year projects that you just have
to keep at it and not make it five years and then
sort of jump to something else. I think another
really important part which is key to getting
companies going and attracting talent and bringing in
the right kind of workforce is a great education
system. You can't underestimate that when you
recruit people in to West Lafayette, one of the
really key parts of that is what are the schools like
for families and people who are coming in and we have
great schools and that's been a big attraction for
people who come in and say they want to get their
kids in good schools and stuff, so that's an
important part. I think third is you can never have
too much capital, just as a general rule, there's
never too much, so we always need more. I also
wanted to comment on Wade putting his high school
picture in the brochure.
WALL: Well, Wade, after that comment, why
don't you jump in.
LANGE: Well, I think we need to find Ron a
new job. One of the questions you asked and we've
kind of turned the corner on all of this and I think
that there's a lot more — I remember when I first
really got into this kind of world with the IHIF back
in 2000, I think you probably didn't need one hand to
list the number of start-up companies, there was
Endocyte and there was Endocyte and that was about
it, there were probably a couple, but there were very
few, and I think now there are a lot more companies
that are starting or emerging, you can just look at I
think even what's at Purdue and the Foundry and Joe
Trebley's SpinUp Program, there are a lot of
start-ups here. Getting started, that's almost the
easy part, but how do you help them advance. One of
the things that I've thought about, and I'm looking
at my friends Rosemary and Kristin over here, I think
the connection of the companies and the people within
the big companies that we have here, which I think we
would all admit is a huge advantage we have in
central Indiana, is the presence of Lilly and Elanco
and Roche and Dow and Cook and others and the ortho
companies up in Warsaw, but my sense is that the
connection between those companies and the start-up
companies is fairly infrequent. I'll just use an
example. One of the board members at ImmuneWorks,
which was generously appointed by David and
BioCrossroads' Seed Fund, is a guy by the name of
Shaun Hawkins, who's a business development
professional at Lilly, and I can tell you that Shaun
has fundamentally impacted ImmuneWorks because of his
experience he has in the industry and making
connections to investors, it's just been invaluable
to us. I have a friend/colleague at Lilly who is
actively working on an MBA and actively mentoring
companies in Boston and you kind of go "So why is
that not happening here?" I mentioned Rosemary and
Kristin. I do think that the mentoring program that
they are establishing can fundamentally help that and
kind of encourage those kind of interactions between
professionals at Lilly, and not just Lilly, but
science and business development and other parts of a
company, so I think those kind of close connections
will be a big help and some even I think relatively
easy to implement.
WALL: That's an IHIF program you're talking
about, right?
LANGE: Right.
WALL: Okay. Who else has thoughts on this?
David.
JOHNSON: One footnote to Wade's, I think one
way that that interaction happens is if you have
places to do it.
LANGE: Right.
JOHNSON: And we are still place-deficient
when it comes to areas to encourage entrepreneurship
innovation and that's why we're all going to be
talking a lot more about Innovation Districts here in
the near future, it's a term that Brookings has given
us, it's a very useful way to look at they call it
"mash-up" of talent, which I think is a pretty cool
concept, and it's obviously more than just life
sciences talent, it's tech-related talent, we need a
place to be able to do that so that people from
larger company environments and start-ups and
academic colleagues can have places to encounter each
other and work together, and the communities that
have been the most successful in this area have
multiple places like that, we really don't, and we've
struggled with that, we've tried to have various
things over the years, and, Wade, you've been
involved in a number of them, too, as have I, but I
think that we have to work harder on that part of it.
LANGE: I would agree, that physical place.
JOHNSON: Physical place matters.
LANGE: A lot.
WELDON: Because if you don't, people go with
the people that do.
JOHNSON: And they've got to go somewhere to
see them.
WELDON: Yeah.
JOHNSON: Yeah.
WALL: Do you have any other thoughts on
this, Bill?
WELDON: I think it is kind of cutting across
having the established companies and having the
start-ups, I really see this whole kind of ecosystem
has really developed with a lot of leadership from a
lot of folks at this table getting us to a point
where we have that whole spectrum and I think
connecting it better is going to be maybe how we take
that next step in terms of really accelerating it
further.
WALL: Alisa Wright, do you have thoughts on
this?
WRIGHT: Yes. I met Wade through IHIF,
Kristin, David, other people from BioCrossroads. I
think we have a critical mass of really committed,
passionate thought-leaders, and I think it's
important for those people to continue to be
recognized and those efforts continue because we
would all be headed in totally different directions
if we didn't have those conveners and the IBJ getting
us together this morning and I call it the
opportunity to mix well and you meet people that you
wouldn't have met before and that's how those ideas
that the opening speaker talked about, you start
sharing those ideas with people that see things very
differently and that's when things start to come
alive and ideas become seeds and seeds get planted
and start to grow, like it could be happening in this
room today.
WALL: Let's hope so. So, Ron, I'll maybe
come back to you on one last point. Endocyte did
start from a professor at Purdue, Philip Low, who was
a panelist here a couple years ago, and his research,
and he's started other companies, and the activity at
Purdue seems to've only increased in the last few
years, but are there barriers to more innovations,
more intellectual property from universities actually
getting it turned into viable enterprises?
ELLIS: Well, I think it's changed for sure
in 20 years, the attitude of universities. Mitch
Daniels brought in Dan Hasler to head up the Purdue
Foundation for Technology Transfer and they made a
lot of changes. For example, it used to be going in
to negotiate a license deal was a painful process,
and when I did our first one it was so slow and we
were trying to get the deal done to get the license
so we could get money so I could get paid, so it was
a big, big motivation for doing that, and I'd go up
there and I'd go into the Office of Technology
Transfer and I couldn't really get an appointment, it
would be a week or two out, so I'd just go in and sit
down and say "Okay, if you get a minute I'd like to
talk to him about getting this deal done," and so
after showing up every day for a couple weeks we kind
of got things done, and I'm not exaggerating, I just
had to go up there and sit. Now they have kind of a
standard deal sheet that if you want to license
something for Purdue they hand you this and say
"Here's our standard deal sheet, we've already worked
through this, we agree to all these terms," I've
heard that that's going to make things much easier
and simpler and a lot less attorney fees and time to
get things licensed, and so I think there's been a
lot of progress at Purdue in that. The other side,
of course, is the Research Park and they've done a
lot of work there. So the environment, I think
Purdue at least, is really good for start-ups.
WALL: Go ahead, David.
JOHNSON: And I'd have to say I think it's
just better all around. I agree, I think Purdue
started out very strong in this and has only gotten
stronger, and Indiana University has made enormous
progress in user-friendly tech transfer processes and
licensing arrangements, and you now have the
University of Notre Dame in the business, too, which
certainly wasn't the case when all of us were
starting all of this a few years back, so the tech
transfer hurdles and obstacles, there's always
negotiation involved in it, but I think there's much
more of an appreciation of what the market needs and
how this needs to work and I think the challenges we
have with growing new companies are many but I don't
think they're the challenges the universities are
causing, I think they're challenges that the
marketplace is causing trying to get enough money and
talent in those companies to help them grow.
WALL: So, Wade, did you have thoughts?
LANGE: No.
WALL: All right, well, let's talk about
money then. As Ron said, there's never enough. The
state and the life sciences companies here had a good
year in 2014. Life sciences companies around the
country had a good year. I think here in the state
we had more than 100 million dollars invested into
companies and I think that was the best year on
record since people have been keeping numbers since
2007. Nationally it was six and a half billion
dollars, I think, according to EvaluatePharma, so
it's a hot area and there have been a lot of IPOs,
that always helps, the values of those IPOs has been
good, so the environment's good. It was a good year
for Indiana. Is the state really getting as much as
it should, as much as it needs in terms of capital?
David, do you want to take first crack at that?
JOHNSON: Sure, and you gave me a heads-up
you might ask, so I brought along a product to plug.
This is a report that BioCrossroads did last year to
really look at this question and to really go back,
frankly, 20 years to see what the capital environment
was like in 1993 for life sciences companies and,
more or less, what it's like today. This report's a
couple years old, it's on innovation capital, you can
access it on our website, it's got lots of good data
in it. It's worth looking back just to see how far
we have come, not nearly far enough, but how far we
have come. At the turn of this century we were
essentially nowhere from the standpoint of having any
kind of growth capital and I don't mean just venture,
I mean even state funding, the 21 Fund, venture
capital tax credits, none of that stuff was out there
and available to help companies get started, and as
of 2013, at least, Battelle did a good job of digging
into the data here, they identified 160 companies
from the period of 2003 to 2012 that brought in about
150, 160 million dollars of innovation capital, again
seed funding and angel funding and 21st Century
Funding, that sort of thing, leveraged maybe 250, 300
million dollars worth of funding and pretty good from
the standpoint from supply and demand being able to
find each other for company growth. Wade made a
comment a moment ago which is absolutely right and
that is when we started — Wade makes 95 percent
correct comments, but this one in particular struck
me because he said when we were all getting — early
days for this, back a decade ago, I remember, J.K.,
talking to a colleague of yours when we got the
Indiana Future Fund started and he said "Where are
you guys going to invest it?" and I mentioned that we
would probably be making an investment in Endocyte
through one of the VCs, and he said "Well, everybody
knows about Endocyte, who else are you going to
invest in?" and I honestly couldn't give him any
other answers at that time because there just
weren't — There were very, very early companies but
there weren't really companies that were ready for
venture funding. We do not have that problem today,
but the market continues to move so that the venture
folks make it harder and harder to get to them, so a
company that could've been funded with venture
capital a decade ago now has to wait a whole lot
longer to get that funding from the VCs who are
increasingly risk averse and increasingly act more
like, frankly, private equity guys some days than
they do like venture capitalists. So the result is
we never have enough, I agree with that comment for
sure, but we need more funding earlier on in these
sort of unconventional vehicles of innovation
capital. We certainly need the state to be playing a
stronger role with the 21st Century Fund back in the
life sciences area again, we need more angel
investors. We didn't have any when we started in the
life sciences area, now we certainly do. I'm looking
at you and a number of other people here whose
companies have been built by angel investors here who
just weren't playing a decade ago. We also probably
need a kind of venture capital firm in the life
sciences area that we don't exactly have here today.
I'm thinking about what Don Aquilano and his
colleagues have with Allos on the tech side. We need
a locally-based firm that is not a 200 million dollar
venture capital firm but has enough dollars to be
able to make really early investments in our start-up
companies that can then be, frankly, an attraction
point and a funnel point for others to come in from
the outside. We try to do that with our
BioCrossroads Seed Fund and I do believe our seed
fund gets better every year in terms of our ability
to make smart investments with it, but that's an
eight million dollar vehicle and that's not really
enough to be able to do what I'm talking about. We
currently really don't have any locally-based venture
firms that fill that and, again, that's largely not
the fault of us, that's the way the venture market is
moving, which is having fewer firms and bigger firms,
and so it's just harder to do a real full-scale
venture capital firm locally today in the life
sciences area, but we need to try to do that because
we need at least to have somebody who is a genuine
Series A investor playing in this field to bring
other colleagues nationally in. The competition that
Wade and seeing Joe Muldoon and other people here,
all folks that we've worked with now for funding that
they have, the good news is the VCs will come here,
the tough news is it's a national competition for
those funds and we need more headstart.
WALL: You said your eight million dollar
fund isn't enough. How much more do you think would
be in that space?
JOHNSON: Well, for us an eight million
dollar fund is a lot of money. I mean, seriously,
seed funding is really hands-on, high-diligence
investment, and for BioCrossroads to be running a
five to ten million dollar fund is about right for
us, but I do think it would be helpful if there were
a couple other people doing what we're doing and then
it would be helpful if you had some type of a, again,
limited partnership venture capital fund that was
based here and doing the same thing we're doing but
just playing a little bit later or a little bit
higher in the risk group.
WALL: Wade Lange, I'd like you to weigh in
here. You have lived through this. You did raise
money for ImmuneWorks. You tried to raise more and
didn't succeed in that, or at least not yet. Can you
tell the ImmuneWorks story, what it faced, how it
went and where it stands now and maybe what you think
more general?
LANGE: First let me say "Amen, Brother" to
what David just said about needing that early stage
venture capital. Quick story, I've been so
impressed, so Atlas Venture, now these are big, these
are, what, 180 million, these are big funds, but
Atlas Ventures, Third Rock, I mean these are venture
firms that actively start companies and they'll even
bring in like more of the guys we've competed against
in the IPF space. Mike Gilman ran a company called
Stromedix that Biogen bought but then Mike went to
Atlas as an entrepreneur-in-residence for a year,
then started within the last, I don't know, four,
five, six months and started another company, so that
kind of really early-stage, well-organized, well-
financed money to help get companies going is really
important. So the ImmuneWorks story, so as David
suggested early on, you know, the BioCrossroads Seed
Fund, the 21st Century Fund, some angels, a family
office, were really the foundation of the company.
If it hadn't been for a half million dollars from the
Indiana Seed Fund and two million dollars, a million
and a half initially from 21st Century Fund, I
wouldn't be here today because you wouldn't have
heard of me and ImmuneWorks probably wouldn't have
gotten started. It's that kind of money at that size
that was just really critical to our early success.
So the funds, the money that came in early, I would
categorize it all as relationship-based money, so we
had a relationship with BioCrossroads, we had a
relationship with the 21st Century Fund, the angels
were personal relationships of mine, the founders of
the company, a family office that came in, which is a
billion dollar family office, the fund manager was
the brother of one of the founders of the company, so
that early money is really sort of relationship-based
and that's a challenge with not having that kind of
money here. It's really hard to build a relationship
with a VC in Palo Alto or Kendall Square when it's
like a special trip to get out and see them. So we
raised four million dollars initially, eight million
dollars through a partnership with a pharmaceutical
company and they eventually backed out about two-
thirds of the way through our Phase 1 clinical trial,
unfortunately, and so we continued to search for
capital or a partner to advance the asset. We had a
term sheet lined up with a venture capital firm,
unfortunately couldn't find a second institutional
investor to join in the fund, more of the financing
round, and unfortunately that went away at the end of
last year. So one of the things about venture firms
is because relationships are so important generally
that the VCs in Palo Alto primarily invest in a
fairly short distance from there and then Boston the
same way. There are a handful around, Lumira
Capital. The one that we signed a term sheet with,
Epidarex in Scotland, there are a few of these that
like to invest in areas that they believe are
undershopped, underserved, and the midwest would be
one of these places. In fact, Epidarex is based in
Edinburg, Scotland, their first three investments
were in St. Louis and Louisville, so, clearly, people
are shopping outside of their own regions, but you
have to find the right kind of people. So we're
continuing to search for financing through a
partnership with a pharmaceutical company, hopefully
we'll have good news to share in the coming months,
but it's a challenging time and we're challenged,
frankly, in the midwest by lack of proximity to the
venture capital sources in the country.
WALL: Who else has thoughts on the capital
question? Ping, go ahead.
POULSEN: I have just seen so many companies
that because of lack of capital that they failed, so
it's critically important.
WALL: Has that been the case — Oh, go
ahead, Bill.
WELDON: I was just going to say that whole
ecosystem from the idea at the universities through a
company like our bringing a product to the market, if
you don't get that piece right, it never gets to the
deep part of what we do and a lot of good ideas or a
lot of value can end up on the side of the road for
quite some time, so I think keeping that or getting
that right is going to be a key element of how you
continue to expand the importance of life sciences in
this area.
POULSEN: Right. We have evaluated lots of
interesting ideas and technologies and it's just so
sad to see that in Indiana we don't see enough
funding activities, so that's very critical.
LANGE: If I can add one other thing.
WALL: Go ahead.
LANGE: This whole comment will reflect kind
of who I am and my role in this industry, but, you
know, money's part of it. I think as Ron has
demonstrated and the folks at Marcadia have
demonstrated, with the right management team, they're
well connected, the money's there, the money is
there, it's just a matter of having the people with
the reputation who have raised money before, or, you
know, when Gus and Richard and Fritz started Marcadia
years ago, these were people who were highly
respected in their industry, I'm sure it wasn't as
simple as handing out a napkin with a business plan
on it and people writing checks, but they started
with a heads-up. You know, the other thing is we're
talking a lot about venture capital, but I think, you
know, sitting here looking at Alisa and Ping, we
can't forget about the companies like theirs that can
successfully grow, and I don't know how many people
you folks employ but I'm sure it's in the dozens,
that we will never measure their success based on
venture capital coming into the state, they're going
off of revenues, largely, and angel investors early,
so I think you have —
JOHNSON: Revenue's a rare thing.
LANGE: Revenue's a rare thing, I can tell
you all about that, but they've successfully gotten
there. So anyway, I think the service industries are
potentially big employers and are differentially, I
wouldn't say easier started, but they're
differentially started and don't require venture
capital.
WALL: So we started and you were talking
about management teams here, so let's talk about
people a little bit more. I found a really
interesting analysis that some folks at Cleveland
State University did that came out in the fall that
looks at Census Data, the yearly survey done, on a
number of people with an advanced or professional
degree in different metros around the country and
Indianapolis did quite well in that analysis, I think
it ranked 9th overall in 2013, the most recent data,
and that was up, I think it had advanced more spaces
in all but two other metros since 2005 when the
Census started to do this yearly survey. Those
numbers aren't specific to life sciences, but I'm
curious whether you're seeing any of that, whether
you're seeing a larger pool, a deeper pool of talent
in the life sciences in the central Indiana area or
not. It could be that all of those folks are not in
life sciences. Ping Poulsen, you've got insight into
lots of different companies, not just here, can you
talk about this first whether you're seeing any
difference in the talent pool here?
POULSEN: Right, talent pools as far as
management team is concerned and also the resources
are concerned are vitally important. When we talk
about money, technology, and above all it's really
the talent. Either for my company or for the
customers that we have served, the management team is
really the key issue. The talent that we have in our
company, we really have to search all over the
country. If we have to bring in some former FDA
reviewers from DC or if we have to bring in clinical
directors or any high level of talent from New York,
we have to, so we do all our best to bring the talent
into Indiana. Regarding the talent search, for the
resources to work we really want to work with the
universities over here, to work with the graduates
from our own schools, but in our industry, in our
field because we're consultants, we work with device
companies and pharmaceutical companies of all sizes,
you know, billion dollar companies, why they work
with us? Because our brain and also our experiences
across industry and also across the world, so the
talent is really No. 1 challenge even for ourselves.
We're also seeing the clients all over the world and
all over US, sometimes they do have money, they do
have good technology and good business model, but in
the people, you know, if the talent, you know, and
management team, that they don't have the right
combination and also their management principles,
sadly, you see some of the companies fail or not
doing as well, and searching the resources we could
only accommodate a few interns from our own schools
from time to time, but, really, we have to look not
only here but outside of Indiana, so keeping the
talent and also training our own talent here and keep
them improving is also important.
WALL: Bill Weldon, you have thoughts?
WELDON: I think life sciences has been a
part of this, clearly, if you look at the growth of
the companies in this region and Indiana that have
been growing over the course of the last decade, I'd
have to say that some of the reason that they're
seeing those things is because of that. I think,
though, like Ping said, we all probably here do
global and certainly national and global searches for
the talent that we need to bring. I think as,
though, we continue to develop this pool of people it
creates an environment that allows us to attract
talent easier and gives them the ecosystem that they
can live in and feel better about it, so if you
looked at those statistics and divided by the average
high temperature, I'm guessing we'd be very high in
the overall rankings because the weather doesn't
necessarily help us if you're trying to recruit them
in the winter, but I think that becomes really
important because more and more it is a global
environment, it's a virtual environment and there's a
lot of things that we have to have to draw people
here so we can continue to build the industry and
build that talent pool.
WALL: Who else has thoughts? Alisa.
WRIGHT: There's another demographic that's
been critical. Lilly had an early retirement program
I think around '90 or '93, or something like that,
and a bunch of people retired very early but weren't
ready to just play golf, not that there's anything
wrong with that, and it helped the companies that I
was involved in because these people with vast
experience, expertise, a desire to work with the
young folks and pass along their experience, it set
up an incredible dynamic that was very useful to
contract service providers getting started up in the
state, and then retirees since then, I think
everything we can do to continue to let the retirees
know from the large companies that there's a need for
them to help the smaller companies or other
entrepreneurs and the connections we can make, we'll
do ourselves a lot of good because those retirees
know a lot, and often they want to play golf, but
they're willing to do other stuff, too.
WALL: David Johnson.
JOHNSON: Just a couple of footnotes on that
again. That Cleveland State report is very
interesting and we spent a lot of time and a fair
amount of money looking behind that and are about to
put out a report sometime this summer on the overall
sort of supply of talent, particularly because we are
very focused on this concept of an Innovation
District that I mentioned earlier and we're very
curious if we have some of the right skillsets here
for people to work there, and the preliminary
findings that we have are quite good and consistent
with that report. Interestingly, the average level
of attainment in Indianapolis, this is an area that
continues to attract a large influx of population,
the attainment level is going up here, education
attainment level is going up and there's a pretty
good suggestion that that's happening because of
people with advanced degrees moving in here, so
that's all good news. The challenge is, you know,
"talent" is a big term and we don't necessarily have
all the niches of talent that are needed to be
covered and there are two in particular that we're
very focused on right now. One through the
Biosciences Research Institute, which we may talk
about a little bit here today, is getting the right
kind of additional talent to come in to help us in
certain deep areas of science and science development
around metabolic disease and obesity. We have a lot
of that talent here today but we just don't have
enough of it and we need to be able to attract that
for our industry base to be able to do that. Again,
by having what we start with we're in an attractive
place to do that but we need to have a deliberate
plan to do it. The other kind of talent is what Wade
mentioned a moment ago and that's back to your first
question, the people that launch companies and start
companies and build companies. We have a wonderful
cadre of those folks, many of them who are in this
room here today, but we do not have enough of them,
we do not really have yet the teams of people that
are really required to make and build a company and
make it work. Wade mentioned Marcadia. If you look
at the team that built that company and now look at
where they've gone and the two or three other
companies they're involved in, again, we need to have
five stories or ten stories like that and it would
make some of the other issues we're talking about
here easier, it wouldn't go away, but it would be
easier because of those people, and those are, again,
folks that we're either going to have to produce them
by their successes with the companies they're in or
we're going to have to go find them and bring them
here.
WALL: Ron Ellis, do you have thoughts on
this?
ELLIS: I saw the report, I thought it was
really interesting, I wonder what's driving that or
what the degrees are, where they're coming from, but
there's no question that having a highly educated
community or workforce or environment is essential
for a whole host of things, particularly economic
growth and development and hiring, et cetera. We've
not had real struggles in hiring. We've been doing a
fair amount of remote, you know, letting people work
remotely. Never thought we would do much of that but
we're finding that a lot of people who are great and
can do a great job working in North Carolina or New
Jersey and let them commute back and forth a little
bit, but mostly they work from home and that's
another way to address some of the talent issues.
WALL: We do have a question from the
audience, from a guy named Jack Phillips in the
audience, and he asked about the Indiana Bioscience
Research Institute, which David just mentioned.
David, can you give us an update on that? And Jack's
interested in how that might help with some of the
access to national VC funds, and I might tack on to
that how do you think it might help with some of the
talent issues we've just been discussing?
JOHNSON: It's a large topic, but just
briefly, the Biosciences Research Institute has been
set in motion by the life sciences business sector
here to try to work together and to work with
academic partners on areas of deeply shared interest
around metabolic disease, diabetes, obesity and
nutrition, it's a wonderful relationship that also
brings Dow AgroSciences, Elanco, Lilly, Roche, Cook,
a number of players, IU Health, and IU School of
Medicine and Biomet to the table around shared
interests and, again, a shared need for talent and
also a shared need to be able to pool some kinds of,
many kinds, in fact, of basic scientific research.
It's a model that takes place at a time when federal
funding, NIH funding, is declining for that kind of
research, so the role of industry funding is all the
more important, and it is a model that has deep
commitment from the business leaders who have started
the IBRI like no collaboration I have been involved
in, ever, and so it's been very exciting to be
involved in trying to develop it. We are at the
point, I can't go any farther today, but just to
suggest that we are almost at the point and not very
many days away from being able to make some
significant announcements about both buildings, sites
and people, with regard to the next steps of the
IBRI. It will be a very exciting project. As I
think Ron mentioned at the beginning of this, it's
not something that will be built in a day, it will be
built soon, but it will take years for the thing to
scale and ramp up and be everything that it can be
because it is that scale of an idea and that size of
an idea. The goal would be to be able to attract
some additional talent to the game, some more people
in the vein of a Richard DiMarchi, for example, who
are brilliant scientists and also are brilliant,
successful, entrepreneurial talent who want to work
with others like them and want to work with
university colleagues as well, and, yes, we think
that that will have a tremendous impact on both
putting some new companies and new players into the
marketplace and also probably exciting drawing out
people who are already here to do some things that
they haven't been able to do before because there
will be, again not only resources but back to the
point I made a moment ago, a place to be able to
really gather that together. Surrounding the
Biosciences Research Institute is what we hope will
be this Innovation District and we are additionally
hopeful that that will represent an opportunity not
only for the start-up environment to be nurtured but
even for some of our established companies to have
facilities more closely located near to this kind of
innovative activity, and if you bring all of that
together, again it's not going to happen in a day,
but if you bring all of that together over the course
of the next three to five years, it's going to be a
pretty exciting development.
WALL: Great, thanks. Does anyone else have
thoughts on the Institute and what impact it might
have? One other recent initiative has been focused
more on ag-biotech and identifying and kind of using
and growing the assets that are already here in the
state, there's a million dollars that was put into
the effort of AgriNovus starting last year. Bill
Weldon, can you talk about ag-biotech from your
vantage point? You're going around the world looking
at the latest research that's happening because
Elanco likes to sort of acquire or do some sort of
partnership and then further develop that and bring
it to market. What are the opportunities there for
Indiana and as you're going around the world how does
this market compare to some other pockets of ag
innovation?
WELDON: I think ag innovation has really
kind of come on the scene here in a big way in the
last four to five years where people are really
starting to see its importance. I think a lot of
people think farming or they think kind of low-tech
and, realistically, it's about providing food for
people and it's about being able for people to take
care of their pets and the emotional things that come
from that, so it's really come on to the scene, and
this idea of sustainable, how do we use innovation to
sustainably feed nine billion people that we're
heading to in 2050, so I think it's gotten a lot more
notoriety and people understanding that and seeing
that importance. So if you think about it, we use
really an acquire-and-develop type of model, so we
look to actually partner with some of these smaller
companies in the biotech space and bring their
innovation and they may be developing it for human
health, but when you get to the actual scientific
level, typically it can work for animals, it can work
for plants in some cases, so how do we take that and
leverage those types of technologies into either more
affordable and safer or increasing or enhancing the
life of pets, so that's really, if you think about
that, you know, we talked about this structure from
university ideas all the way through products, you
know, having that ecosystem is really important, and
there's some parts of the country that have maybe the
biotech space, so places like San Diego and Boston
that people often talk about, but I think the
AgriNovus initiative that we've been involved with as
well, we have a unique place here in the midwest
where agriculture is all around us, so driving in
from Greenfield this morning there are plenty of
cornfields, so agriculture is kind of all around
where we live, and with Purdue and some of the other
universities here, it builds a nice structure for us
to be able to leverage that. I would say 10 years
ago we saw almost no opportunities that came from
companies within Indiana, we were really looking at
things that were coming in from the places that I
just mentioned, but I'd say today a good portion of
them, we actually are talking to companies here in
Indiana. In fact, Wade and I had a discussion this
morning about some things that he and I need to talk
about that we might be able to do some of those
things as well. So I would say a lot of these
initiatives are really working together. If you
think about then kind of the unique situation of
having life sciences, a company like Lilly that we're
part of, Dow AgroSciences, Roche Diagnostics, that
type of infrastructure and a little bit different
industries, it gives us an opportunity to really
connect, and we haven't done as good a job of that as
we need to, but I think going forward there's great
opportunity here to capture that and to take those
technologies and build them out not just for people
but across the agriculture sector as well.
WALL: That's helpful. Do you feel any more
pressure now I think after Lilly's acquisition of
Novartis Animal Health? Animal Health is almost 20
percent of Lilly's revenue for 2015. Does that make
you sweat any more than it did last year?
WELDON: Well, certainly it puts us in a
little bit different — it gives us a little bit
different scenario as we go forward, but certainly it
kind of shows the importance of the opportunity that
we can have to enrich people's lives through food and
their pets.
WALL: Alisa Wright, do you have thoughts on
this? BioConvergence does some work in the
ag-biotech space. Does this initiative present some
more opportunities for you, and what do you think the
state needs to do to keep growing the opportunity?
WRIGHT: Well, we definitely think it
presents opportunities and we already work with some
of the animal health companies, product companies, in
order to help develop drugs for animals, whether
they're our companions or otherwise, so in terms of
the drug development progress there's not a lot of
difference, that's the scientific part you were
talking about. I think it's very interesting to work
with the ag-biotech sector versus most of my
experience is in pharmaceutical and it seems like
there's really a no-nonsense, passionate
entrepreneurial way of doing development and I think
that we'll learn how to incorporate that more into
the other parts of drug development for
pharmaceuticals, and I don't know what diagnostics is
like as much, but I think that can really make us a
real player in more animal health work for the state
or for the businesses here because when you know how
to do something and there's companies that are
getting that done from wherever they are in the
world, they find the people who have the know-how.
And Ping and I are in the same sort of area, we're
contract service providers, we're not betting on any
one drug or device or diagnostic making it to the
market, we're like Levi Strauss in the gold mining
days, we sell jeans, we sell services, we help people
produce products no matter what the product is, so we
have a lower risk, unless something happens in the
general market which causes everybody to become risk
averse, so we think the ag-biotech initiative is
wonderful and Indiana I think has a lot to leverage.
WALL: Who else has thoughts on this? David
Johnson.
JOHNSON: I'm sitting here looking at Brian
Stemme and I've got to give him a shout-out for this
because Brian and the BioCrossroads team, along with
Beth Bechdol, have been organizing the AgriNovus
Initiative and they're doing just a tremendous job of
going through the process it takes to put something
together like this that really works and represents
tremendous collaborations and really good companies,
some that people have worked with for a while and
some new people that haven't been part of something
like this for a while, too, and finding some things
that these companies can do together, can work on
together where there's really going to be progress in
this sector and it really puts us on the map. The
state of North Carolina at this point, when they talk
about biotech, they're almost completely talking
about plants, they're talking about agriculture,
they're not really talking so much about the human
side of it, that's where they're putting all their
bets and all their investments. Indiana, Lt.
Governor Ellspersmann, has the same view and ambition
for us, and this initiative is extremely well timed
but it has been very capably led by Beth and Brian
and the people who put this together, and Bill's been
a tremendous participant in helping to build it as
well.
WELDON: The other thing I'd —
WALL: Go ahead.
WELDON: The two things really fit together,
like I said, a lot of the folks that we work with may
be working on a human drug, a drug or a technology,
but we give them another opportunity that comes maybe
a little bit sooner, some additional investment
actually can play a role in some of this funding that
we were talking about earlier in terms of leveraging
that into animal health and then also providing some
more information that they can use in their program.
Sometimes we think about them as very separate but in
reality I think it's a real continuum and it gets at
a lot of the same sorts of things.
WALL: You're giving Prozac to puppies,
right, so are there other examples where you're
taking a human product and using it in animal health?
WELDON: Yeah, actually, if you look at most
of the animal health drugs, products I should say
because they're not all drugs, most animal health
products, certainly in the pharmaceutical space,
started either in human health or in crop protection,
so really that's kind of been the history of animal
health if you think about it that way.
WALL: Okay. Someone from the audience,
going back to our conversation about forming
companies, taking innovations out of universities,
mentions that Stanford University kind of sets itself
apart because it rewards faculty and the tenured
decisions are in part based on business creation as
well as academic publication. Is that happening at
Indiana universities, Purdue, IU, Notre Dame, and if
not, is there any way to get it to happen in order to
encourage more professors to commercialize their
science? We don't have someone from the universities
here, but does anyone have thoughts on that? David.
JOHNSON: A couple quick ones. For one
thing, Stanford's been doing this since Bill Shockley
moved to Palo Alto back in the 1960s, so Stanford has
been at this game and really helped to form Silicon
Valley. The university has all kinds of experience
in doing that, MIT has a lot of it, too, but this is
an acquired and a learned thing where the
universities have to see the value of it going
forward. We've seen with both IU and Purdue and now
Notre Dame as well a real recognition that the kinds
of things we're talking about here today are
important, that they are activities that faculties
should be awarded and promoted for, which is a really
significant step, and there's very good interaction.
You know, how that all ends up translating into
specific programs, again, that evolves over time, and
I think we on our side of it, the business side of
it, have to show that it is also worthwhile for them
to participate with us over the long-haul on all of
this, but the examples of universities that have been
able to do this successfully are still relatively
few. This is an area, though, in this region, life
sciences in this part of the US and in the state, we
ought to be able to make that work and I'm pretty
optimistic we will.
LANGE: You would hope. So we have a dean of
a medical school who has experience starting a
company, right?
JOHNSON: Right.
LANGE: The dean for research, David Wilkes,
my close colleague of ImmuneWorks, I mean, I can tell
you a story. So since 2006, 2005, when ImmuneWorks
was kind of a glimmer in somebody's mind, Mike
Klemsz' mind, approached David about starting a
company and, frankly, you know, David was "Fine,
start a company, just don't bug me with it." You
know, I'm not really talking out of school, David
will admit that. Fast-forward, fewer than eight
years, but to now, David is a very big advocate of
creating companies within the medical school, so I
think part of it is just seeing that it can work, and
I know for David, you know, clearly the opportunity
to make some money off of a company is probably
enticing to most people, but I think, frankly, for
David, here's a guy who has spent his career focused
around a specific scientific hypothesis and this is a
doctor who treats patients and he's had patients
dying in his practice of idiopathic pulmonary
fibrosis. For him the real driver is to get his idea
into patients and I think the more you start to
realize this is not just about crass
commercialization, that it's really about
transforming the health of the patients that these
doctors see, that I think it's almost like how can
you not do this, and again I think that David, his
evolution over time with Dr. Haas and his position
having started the company, I think the proof will be
in the pudding and see if it actually happens, but I
think you've got some signs, I think clearly what Dan
Hasler is doing up at Purdue will be a great example
of just — So, yeah, he's president of this PRF, but
he's also the Chief Commercialization Officer at
Purdue, right? I think that just says a lot right
there.
JOHNSON: The other one in that is the
Clinical and Translation Sciences Initiative with
Dr. Anantha Shekhar which involves all three of the
universities. No other state, by the way, has three
universities participating in one of those and that,
again, is a program that rewards and uses NIH funding
to reward translational activity, outcome-driven
research that finds its way into the clinic and has
got tremendous reception from all of the university
partners. It's quite capably led by Dr. Shekhar as
well and that really helps, but we're very optimistic
when we see that.
WALL: David, another question for you. You
and I had a phone conversation a few weeks ago. I
wrote a story about —
JOHNSON: Yeah, you got me in trouble.
WALL: — a couple of companies whose nominal
headquarters had been in Indiana and no longer is,
AgeneBio and Assembly Pharmaceuticals, and you argued
that that wasn't really a bad thing or didn't have to
be a bad thing for Indiana. I will tell you that
some of the comments I got afterwards didn't
necessarily agree with you. Can you maybe explain
how you were thinking about it and whether we need to
think about these innovation-driven small companies
differently now that so many of them are virtual or
nearly virtual?
JOHNSON: Well, redemption's a great thing,
J.K., so I appreciate the chance to try this again.
I think I got pretty excited in that conversation in
part because you mentioned Assembly Pharmaceuticals,
which is a hepatitis company that the Indiana Seed
Fund has invested in and is now listed on the NASDAQ,
we've never had a company that's gone public in that
way but it did through a reverse merger with a
company that's located out of state, and when I look
at that and I say would I rather have a company that
has ample access to capital, has tremendous
leadership that is based here, is growing, is putting
us on the map, and, by the way, is based on Indiana
science, am I losing something if the so-called
headquarters of that company is not here, and what I
think I told you at the time, probably a little bit
too flippantly, is I'll take the team, I'll take the
scientists and I'll take the money because that's
really what this is all about in terms of trying to
grow this sector. The headquarters idea that we all
talk about in economic development, you know, when
you think about what makes it important to have a
headquarters operation for a company, it's those
things, it's resources, it's money, it's decision-
making, it's employment, it's where the base of the
company is. Today these companies being started,
it's a distributive model in the extreme, you're
drawing from science all over the world, you're
typically drawing from funding all over the world,
and you're often drawing with management teams at
least from all over the United States to build them,
and it's kind of an art to figure out where a company
is actually even located, it sort of depends on where
its corporate filings are and everything else, but
where is it really headquartered. So we tend to look
at in that virtual environment where the company is
in terms of those assets, the talent, the financial
resources, including the investors in the company,
and the science, and if we are continuing to see our
science being translated coming out of IU and Purdue
and Notre Dame and elsewhere into companies and we're
seeing our entrepreneurial scene as being able to
launch successful businesses and attract capital,
then we think we're doing pretty well in the
business, again, even if the company may not be
technically headquartered here. Secondly, you know,
I'm sitting next to one of the few start-up companies
that is a true start-up company, product of the
company that has started here, is headquartered here
and where that term truly means something, but Ron
Ellis and Endocyte are unusual in that. Today, most
companies that get started in the life sciences
sector, in part because of the expense of building
them and the time to build them, end up needing to
partner, end up needing to be part of another
combination with another company or another series of
companies long before they get to the point where a
company like Endocyte is today, this is really the
exception and it's a wonderful exception, but to the
growing norm, and, frankly, that's not just true in
the life sciences sector, if you look at ExactTarget,
okay, so Salesforce is now the company that it's
called and yet ExactTarget is still a significant,
substantial presence in Indiana, as we saw in
abundance over the last month in dealing with the
Religious Freedom and Restoration Act, they believe
that they are here. So just because, again, your
technical headquarters isn't here doesn't mean that
the company isn't really significantly based here,
and increasingly as the growth model is through
merger and acquisition and partnership it's going to
be harder and harder to sort of say this company
started here and is still here and so we need to hang
on to the headquarters. And then finally, Wade made
a very good point, it was something I was going to
say this morning, too, and in looking at Alisa and
Ping and thinking about Covance as well that Bill and
I were talking about earlier, you know, if you think
of where employment comes in start-up life sciences
businesses, again, Ron is the exception because he
has a company that employs a pretty significant
number of people, but most start-up life sciences
companies remain virtual because of the things I just
mentioned, because they're on their way to somewhere
else often or some other business form, and the place
where you're really seeing employment take place is
in the contract service sector that helps to build
those companies, that is something we need more of
here and we need to encourage more of those kinds of
service-related companies to grow because, again,
that's where we're going to see a lot of the
significant headquartered economic activity. So I
don't know if I've redeemed myself with any of that,
but it is a complex subject and, again, the notion
that we're going to do what Jack talked about earlier
and having another Roche here by having a guy like
Bill Eason who started in his garage to build a
Unimeter is unlikely, and even in Jack's example, it
isn't still Bio-Dynamics, it's Roche Diagnostics, I
mean you had the right person, he found the right
market, and the market came to him to build the
company, even though it's now a bigger company based
here.
WALL: Who else has thoughts on this? Ping
Poulsen.
POULSEN: I think if you want to have a
difference of opinion or controversial opinion, this
is the best question. I think traditionally when
people talk about business, people talk about three
words, "location and location and location," but
nowadays, and I think it's really like David
mentioned, it's so different, it's a different world.
We have some clients and they're a virtual company
and two leaders, one is in Indiana, the other one is
in Florida, but it's a virtual company and they get
their medical product approved and so they can go
from there. In a sense for early start-up companies
it really doesn't matter too much, but for like a
company like us, and we have been in business for
over a decade, around 13 years, we also face that
challenge. We not only work with US companies that
go through the FDA approval, we also help American
clients from all over the US to go through Chinese
CFDA approval, so we have been debating whether we
want to have an office in China, but then again
setting up the company and investment and regulations
and rules and tax and everything, it's just too much
for us to handle, and then hiring a team on the
ground in China, and we've been pondering this for a
long time, and then really work with a company that
helps us clear the customs and sending the products
to the testing center from Beijing to Kenjing
(phonetic) for product testing and then come back to
Beijing and go through the CFDA for product approval,
so what we did, first of all, we're thinking about
setting up a company in Beijing and it was really not
worth the effort and so then we started to think
working whether with a virtual company or working
with a partner, and eventually we decided not to have
a company over there but then start to work with a
partner and they set up a company, local company, and
then handle all the business regulations and rules
but handle our custom clearing and product testing
and logistics, sending the submission packages,
talking with the CFDA, and then get back with us, so
we use our company, the staff over here, use our
brain to answer the critical questions and doing the
cyber negotiations, so it's kind of like a
combination, and some of the customers they do the
same, but I think when you start to have revenue,
when you start to be very successful, location
probably is more important to the state, like Eli
Lilly is in Indianapolis and pays lots of taxes and
stuff and also do a lot of good things for the local
community, but for start-up companies it really
doesn't matter that much.
WALL: Who else wants to weigh in? Alisa?
WRIGHT: I was in California a couple weeks
ago near the San Francisco area and met with one of
our small clients and it was really interesting to
hear the CEO of that company talk about what his days
are like because I found out that he only spends two
days a week in San Francisco, he lives in San Diego,
and he has another business in New York, so I think
the location part is just becoming incredibly
virtual, even when it comes to the people that lead
companies, and we started this off talking about the
relationships and things like that, so there may be
an angle on this that says the better we get at being
mobile, the better we'll do in general.
WALL: Does anyone else want to have the last
word? Ping, go ahead.
POULSEN: I have a mixed feeling about
location. Our office started from ETC, so we started
from there, and we have been here for the whole time
in Indiana, and I'm very proud to have a company and
to live and to work in Indiana, but when I go to east
coast and west coast and go to international
businesses and people ask me "Where are you from?" I
say "From Indiana, Indianapolis," they say "Huh?
Where?" If I say "from Boston," "from California,"
everybody knows, but from Indiana it just give me a
little bit disadvantage, but then once you break the
ice, once you start to talk about business, about
your success, track record, about your capabilities,
it doesn't matter anymore.
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