High-Tech Firms at Risk in Down Economy

Just like companies in many other industries, tech firms face heightened financial risks during an economic downturn. Failure to follow good risk management practices and sidestepping prudent business procedures can leave a tech company with greater exposure to a professional liability lawsuit.

Financially stressed customers often drive these types of shortcuts as they become dependent upon technology solutions to improve operations, increase revenue, and/or reduce expenses. As margins shrink for these customers, the successful implementation of technology solutions becomes critical to their survival and the costs associated with such solutions are more heavily scrutinized. This not only raises the stakes for a tech firm to ensure the technology meets expectations but also to deliver the technology on time and within budget.

The additional pressure caused by financial conditions can lead customers and tech firms to rush projects through the process and make modifications on the run. This tends to compromise the normal quality and documentation practices that are established to ensure the successful implementation of deployed technology solutions. Elizabeth Feil Matthews, tech insurance specialist at Hanckel-Citizens Insurance in Charlottesville, VA. states, “Unfortunately, these pressures to implement technology solutions as quickly as possible often lead to escalating project costs and more importantly, failing to meet the customer’s expectations. While the customer may drive the decision to hasten the development and implementation process, it is frequently the tech firm that becomes responsible for the problems that result. Especially during economically stressful times, these problems can reduce or possibly eliminate the benefit of the project to the customer and as a result, the customer pursues legal action against the tech firm for lost revenues, cost savings, as well as, a long laundry list of other incurred expenses.”

To protect against these types of lawsuits “Good project management and documentation is essential,” says Matthews. Unless best practices are in place and followed, a software client and the developer can have a general idea about a project, what it should accomplish and what it should cost. But often, this general idea is not adequately documented and the client’s expectations for the project are not aligned with what the tech firm is attempting to deliver. This divergence in expectations creates a lack of understanding of the project’s functionality, time and cost. The result? Delays, customer disappointment with project capabilities, and/or disputed bills that can lead to a legal action against the tech firm.

This is just one of many risks faced by tech firms in today’s challenging business environment. The good news for techs firms Matthews adds is “while financial institutions face double digit rate hikes, rates for the technology sector remain flat. Additionally many insurers are creating custom professional liability products to cater to this niche.”

Two days left to apply for the SEBIO Investor Forum - Deadline July 24th

Companies have only two days left to apply for the Southeast's premier biotechnology investor event, being held on December 3-4, 2009 at the Charleston Place Hotel in Charleston, South Carolina.

Since 1996, companies that have participated in the SEBIO Investor Forum have gone on to raise over $2.5 billion in venture capital funding, making it the region's most successful venue for linking industry investors with the Southeast's top life sciences companies.

CLICK HERE TO APPLY NOW

Companies Apply To:

• Meet, talk with and introduce their company to target investor groups
• Network with peers, potential investors and partners
• Hear presentations focused on industry trends and emerging company issues
• Be recognized among the Southeast's top emerging life science companies

Two Application Opportunities:

The SEBIO Early-Stage Event is for life sciences companies seeking their first round of venture capital and/or angel investment. Company representatives will meet privately with an advisory panel to present their opportunity and receive feedback from the panel. Each advisory panel will select one company to make a presentation to the full conference audience and be judged by an elite group of venture capitalists.

The SEBIO Main Stage Event is for companies that generally have completed at least one round of institutional financing. Main stage company presentations are typically 12 minutes in length and are made publicly to the full conference audience. A single-track format is normally followed so that all conference attendees have the opportunity to view all presentations.

Transforming Science Education in America: A Stakeholder Conversation

Leading stakeholders in the future of science education in the U.S. will gather to discuss two recently released reports that are sure to impact this nation's science education agenda for years to come.

The basis of the conversation will be The Carnegie Corporation's new report, "The Opportunity Equation," which calls for a national mobilization to achieve higher levels of math and science learning, and "Taking the Pulse of Bioscience Education in America," a report that finds that the U.S. is failing to prepare students for pursuing biosciences in higher education.

Speakers to date include:
• Bruce Alberts, Editor-in-Chief, Science, AAAS, and former president of the National Academy of Sciences
• The Honorable Jim Greenwood, President and CEO, Biotechnology Industry Organization, and former Congressional representative from Pennsylvania
• Joan Ferrini-Mundy, Executive Officer (Acting), Education and Human Resources; Director, Division of Research on Learning in Formal and Informal Settings, National Science Foundation
• Susan Sclafani, Director, State Services, National Center on Education and the Economy

When:
Tuesday, July 14, 2-4:30pm

Where:
AAAS Auditorium, 1200 New York Avenue NW, Washington, DC
Registration deadline:
Email name and affiliation by July 10 to registration@biotechinstitute.org.

More information:
Visit http://www.biotechinstitute.org/programs/educationreport.html

Howard Dean on Biosimilars: At Least 12 Years Exclusivity

Legislation on innovative drugs is key to health reform

July 8, 2009
The Hill, Opinion
Howard Dean

More than 60 years after President Harry Truman called on Congress to provide Americans the “opportunity to achieve and enjoy good health” and “protection or security against the economic effects of sickness,” we are still fighting for healthcare reform.

Since Truman’s time, the health landscape in this country has changed dramatically. Diseases such as polio and tuberculosis are no longer the scourges they were. Advancements in biomedical research have led to treatments that have helped people with cancer, cystic fibrosis and a host of other diseases. In the 1950s, the cure rate for cancers was 33 percent, whereas today nearly two-thirds of people diagnosed with cancer live five years or more after their diagnosis.

As we move toward a universal healthcare system, most of the debate centers on big-picture issues such as how to craft and finance a public health insurance option. There is much less focus on smaller, but equally essential issues. One of these is patent reform. Another is maintaining America’s leading edge in research and innovation.

The Congress is now developing a regulatory pathway for the approval of biosimilars — medicines that are similar to, but not the same as, breakthrough biologics. Some inaccurately suggest that biosimilars are essentially generic versions of traditional pharmaceutical drugs. Biologics are actually much more complex than traditional drugs and cannot be copied using existing science. By expanding market competition, biosimilars can expand access to and reduce the cost of these cutting-edge drugs. But if the initial breakthroughs are not supported by adequate patent protection, innovation in America will die. And given the complexity of biologics, a properly constructed biosimilars pathway must provide necessary protections to ensure patient safety.

A commonsense and fair approach, similar to the process and timeline currently in place for generic versions of chemical-based medicines, would allow the original developer of the biologic to protect the proprietary data used to develop the medicine for at least 12 years. A shorter exclusivity period would prematurely rob biotech innovators of their intellectual property and destroy incentives to develop new cures. Most firms would be unable to recoup their investments in new medicines, which ordinarily top $1 billion and involve 15 years of research and development. If we discourage investment, we jeopardize the development of the next generation of breakthrough medicines and cures.

These principles are incorporated in biosimilars legislation sponsored by Reps. Anna Eshoo (D-Calif.), Jay Inslee (D-Wash.) and Joe Barton (R-Texas) in the House (H.R. 1548) and in The Biologics Price Competition and Innovation Act introduced by Sens. Edward Kennedy (D-Mass.) and Mike Enzi (R-Wyo.) in the last Congress. Both bills include a balanced approach that protects patient safety and encourages research that helps bring new, more advanced treatments — and even cures — to patients around the world. To encourage market competition, this should be combined with provisions that allow the patent life to begin running at the time of FDA approval, not at the time of application. Frivolous lawsuits over patents also should be eliminated at the end of patent life.

Today, too many diseases and disorders remain with no treatment or treatment with limited therapeutic benefit. With the right balance, we can set a path for biosimilars that maintains the highest standards for patient safety, lowers costs and increases access today while providing the necessary incentives for new therapies and cures tomorrow.

WaPo: Biotechs React to No SBIR Set-Aside in Stimulus

Start-Ups Say Innovation Doesn't Grow on Trees

By Kim Hart
Monday, July 6, 2009

Biotechnology start-ups have long relied on grants from the National Institutes of Health to fund the research-and-development process for new drugs, medical devices and disease treatments. Every year, the agency is required by law to set aside 2.8 percent of its research budget -- $650 million in 2009 -- for small businesses and the commercialization of technologies developed at universities.

But when nearly $10 billion in stimulus funds went to the NIH, a last-minute change in the legislation exempted the agency from the requirement. That means the NIH does not have an obligation to reserve a portion of the money to small businesses.

This has created a stir in the area's biotech community. The companies say that without the requirement to set aside money for the Small Business Innovation Research program, they have a tougher time securing funding that could help them develop new products and survive the recession.

"It has just been a slap in the face to small businesses, especially because it's been a lifeline to biotech," said Aprile Pilon of Clarassance, a Rockville-based biopharmaceutical company that develops treatments for respiratory diseases. "We don't have access to institutional investors. We're going to lose a lot."

The SBIR program has been a key part of the grant-giving process for many agencies that support research and development, including the Energy Department and the Agriculture Department. For biotech companies, the NIH grants typically help companies pay for clinical trials or move their products through the regulatory process. Universities and other academic institutions also receive a large number of grants for scientific research.

In February, executives from 20 companies sent a letter to Maryland's senators, Democrats Barbara A. Mikulski and Benjamin L Cardin, asking for help in applying the small-business set-aside to the stimulus funds. Two weeks ago, Cardin, Rep. Chris Van Hollen (D-Md.) and Rep. Donna F. Edwards (D-Md.) held a hearing in Rockville on the issue. Jonathan Cohen, chief executive of 20/20 Gene Systems, Joe Hernandez, chief executive of Innovative Biosensors, and Pilon testified before the panel. Raynard Kington, acting NIH director, did not attend the hearing. Instead, Sally J. Rockey, director of extramural research, sent written testimony outlining alternative funding programs that did not reach the members of Congress until after the hearing.

Cardin, Van Hollen and Edwards sent a pointed letter to Kington after the hearing, saying that his "absence sent a message of indifference."

In an interview Friday, Rockey said no one was available to appear at the hearing. She also said that, although the NIH is not required to provide a set amount of funds for small businesses, the agency has encouraged them to apply for several other funding opportunities supported by stimulus money. These programs, she said, have received a lot of interest from biotech firms.

"When the Recovery Act was first being discussed, we were concerned, because the number of [small-business] applications had dropped dramatically," she said. "And we were concerned we wouldn't have enough applications to distribute funds expeditiously."

Pilon argues that small-business applications get tougher scrutiny than those from academic institutions, and she claims that the board reviewing the applications is largely made up of university representatives.

"Small businesses are at a disadvantage in terms of preparing grants," she said. "We don't have the resources that universities do. We have to think hard if we have the time and money to write a grant, and if we don't get grant funding, the penalty is much greater than if a university doesn't get funding."

Cha-Mei Tang, chief executive of Potomac-based Creatv MicroTech, said she submitted a grant application last week to help hire more employees to gather patient samples and statistics in the development of a tool to detect chronic lymphocytic leukemia. She said past efforts to compete for funds that are not reserved for small businesses have been unsuccessful, so she is concerned that companies will not have much of a shot at stimulus money.

"Everything we sell is based on SBIR funding," Tang said. She said she plans to visit lawmakers on Capitol Hill this week. The House is scheduled this week to take action to reauthorize the SBIR program, which expires at the end of July. The biggest issue in question is whether venture-backed firms should have access to SBIR grants.

Allen Cunningham, chief executive of Charlottesville-based Gencia, said his company received an NIH grant that is not tied to stimulus funding for the pre-clinical development of a therapy for Alzheimer's disease, so his company is not in dire need of additional money at the moment.

But he said he agrees that setting aside some portion of the stimulus funding would be invaluable for small firms.

"There's no doubt that if the exemption wasn't there, that more money would be available for applicants and in line with the goals of the stimulus," he said.

Danville, VA Highlighted in Bioscience Dev Piece

Life Science Leader magazine Danville, Virginia highlighted in article about bioscience economic development!

Survey Identifies Widely Varying Pharma/Bio Site-Selection Drivers
Regional and local economies provide financial incentives to attract life sciences companies, but financial incentives don’t always trump business opportunities and quality-of-life issues.

Life Science Leader, July 2009
Written by: Ann Roberts Brice

At one time or another, most life sciences companies add facilities, spawn new units, or simply seek greener pastures. Site-selection managers and executive leadership teams need to stay on top of their games to find optimal environments. Companies often begin with a review of key regions around the country for life sciences, but the overall relocation experience is also an important consideration. Financial incentives, business opportunities, and quality-of-life issues all become persuaders in relocation decisions.

To provide an edge, Life Science Leader (LSL) informally surveyed several U.S. areas known for growth and innovation in the life sciences industry. The survey was completed by state economic development officials and, in some cases, private sector partner groups at state and regional levels.

Tax breaks, grants and loans, and workforce training topped the list in response to our question: Identify the five key incentives used to entice biotechnology and pharmaceutical companies to locate in your state or region. The states polled said that incentive programs typically revolve around tax credits for R&D, job creation, and investment capital, as well as a variety of conditional grants, assistance loans, loan guarantees, and state-assisted workforce training programs (often held at local two-year community colleges).

Many officials said the basic structure of most states’ incentive programs is similar, while the magnitude of the funds may differ along with conditions for eligibility and the lifespan of specific incentives.

Among the several states that have funded recent initiatives for technology and life sciences-based development are: Ohio, which allocated $1.6 billion; Maryland, $1.3 billion; and Massachusetts, $1 billion. All of these programs extend for 10 years.

Massachusetts’ new program is designed to create jobs, drive innovation, and support good science, commented Susan Windham-Bannister, president & CEO of the Massachusetts Life Sciences Center (MLSC). The MLSC is a quasi-public entity authorized to be the “stewards” of the state’s investment. Windham-Bannister disagrees with “the broad brush generalization” that incentive programs are basically the same. “The way Massachusetts’ specific initiatives are structured is quite different,” she claims, citing one that encourages fund matching from private investors. Also, the MLSC is “broadly welcoming” a range of life sciences companies, including pharmaceuticals, diagnostics, bioinformatics, biotechnology, and devices, which is “the strength of our cluster,” she says. The MLSC has a scientific advisory board and reports to a board of directors.

A FOCUS ON BIO
In contrast, Maryland is more focused on biomedical R&D, with nearly $15 billion of research conducted by federal agencies, academia, and some 400 private companies. “Opportunities abound for biotechnology and pharmaceutical companies to in-license, codevelop or outsource within the state,” notes Dr. Larry Mahan, head of the new Maryland Biotechnology Center.

In June 2009, the Maryland Biotechnology Center will officially open as a “one-stop” resource for the bioscience community, grouping together existing programs. It was designed by the state’s Life Sciences Advisory Board to focus on entrepreneurial development and foster relationships between industry, academic research centers, and federal institutes.

Mahan says Maryland receives more National Institutes of Health (NIH) R&D contract awards than any other state and has nearly the highest number of doctoral scientists and engineers as a percentage of total employment. Like Boston and North Carolina, it has grown to become a “classic biotech” cluster over the past 20 years.

Other states such as New Jersey and Pennsylvania are associated with “classic pharma.” Continuing its growth, New Jersey has 238 biotechnology firms in addition to 15 of the world’s 25 largest pharmaceutical companies. Its critical mass in biopharmaceuticals, which attracts others in the industry for partnering, has led it to be called the “Medicine Cabinet of the World.”

Ohio’s $1.6 billion “Third Frontier” program includes a competitive grants initiative under which 45% of funding has been awarded to biomedical and bioscience firms, noted Ohio’s Lieutenant Governor Lee Fisher, a former director of development. Ohio’s tax reform measures, giving it the lowest business taxes in the Midwest, have also been extremely helpful in attracting companies, he added.

Fisher, who was involved with San Diego-based Amylin Pharmaceuticals opening a new facility near Cincinnati, worked closely with county, city, and regional agencies so the company didn’t have to “knock on multiple doors.” However, the real “game changer,” he added, was the customized workforce development package that his group put together.

A VERY COMPETITIVE ENVIRONMENT
While every state possesses unique strengths and distinctive characteristics, competition has heated up among states to attract life sciences companies. This was evident when one of our survey participants expressed reservations about providing details about areawide programs for fear of having them imitated.

Studies show that life sciences bring to an area skilled workers, high-paying jobs, and lots of profits that boost state economies over the long term. In 2006, the average annual wage for a bioscience worker was $71,000 compared with $42,000 for all private sector workers, according to Battelle Research.

The biotechnology sector outpaced the private sector in job growth, increasing 5.7% as compared with 3.1% overall between 2001 and 2006, says Battelle. Indirect and induced employment generated millions of other jobs in the economy besides the 1.3 million in the biosciences. Even in the current recession, one regional official observed that the number of relocation leads has not declined, although companies are taking longer to make decisions.

Nonfinancial incentives also play a role, according to survey responses, including a willingness to tailor packages to individual company needs. The personal touch never hurts, with some officials using a proactive approach in reaching out to potential residents. Shire Pharmaceuticals USA is a case in point, having consolidated its operations in Wayne, PA in 2004 from two other states and expanding its workforce by 400 employees in 2007.

Shire’s relocation experience was included in Greater Philadelphia officials’ response to another LSL survey question: Identify a few companies that have moved to your state or region, and describe which specific incentives convinced them to do so. David Reese, VP of Shire’s Global Facilities, recalls how Governor Edward Rendell made a personal phone call to Shire’s Matt Emmens, who was CEO at the time. The Governor made it “crystal clear” that he wanted our company in his state, says Reese. “Other states didn’t reach out with the same type of passionate involvement.” The state also put together a nice package of incentives that made it difficult for Shire to decline, he continued.

Raindance Technologies also valued nonfinancial decision drivers. Its President & CEO, Chris McNary, pointed out that Massachusetts’ $1 billion initiative demonstrated the state’s “position of support” for the industry long term.

Raindance moved from Connecticut to Lexington, MA in mid-2008 after its directors became confident it would grow to become a “sizeable” company. Its technology, when applied in biopharmaceuticals and molecular diagnostics, could find a new way to discover drugs to break the existing paradigm, claims McNary. “We wanted to make sure the area was recognized as being a biotech and also an innovation center,” he said. Emerging companies tend to thrive near hubs of innovation (i.e. research institutes, medical centers, universities). While a West Coast biotech cluster was also considered, McNary noted that, “The distance from Connecticut to Massachusetts made it easier to move for us,” thus illustrating the practical aspect of decision making. In addition, the company is involved in a joint project with Harvard.

FINANCIAL+NONFINANCIAL INCENTIVES MAKE THE DIFFERENCE
For Octapharma USA, a unit of a growing Swiss-based company, financial and nonfinancial incentives played a role in its decision making, according to Louis DiCriscio, VP, finance & operations. The unit moved to the Hoboken, NJ new Waterfront Corporate Center in February, 2008 from Virginia, with the help of a $517,500 Business Employment Incentive Program (BEIP) grant from the state. Octapharma was attracted by a number of things, including New Jersey’s strong pharmaceutical talent pool. From its new location, it has easy access to three international airports with direct overseas flights, DiCriscio noted. It is currently partnering on a project with Hackensack Hospital in Hackensack, NJ.

Octapharma develops and markets products from human blood plasma for people with bleeding or immune deficiency disorders. Hoboken’s accessibility to New York City was important, as it has stakeholders there including a large patient organization partner and group purchasing organizations with which it contracts. As to quality of life, Hoboken and Jersey City, both on New Jersey’s waterfront, have tremendous views of New York City, good transportation, and are in a state of “tremendous revitalization” with beautiful parks for employees on piers jutting out into the Hudson River, commented DiCriscio.

Incentives are sometimes built on the strategic advantages provided by the resources of a geographic area. Danville, VA, at the heart of the old tobacco industry where agricultural farmlands are plentiful, is developing a new economic base around this asset.
It has created, with the state and county, the Institute for Advance Learning and Research (IALR) in Cyber Park, a partnership that provides academic support on-site from Virginia Tech. Since its 2004 founding, the Institute has attracted three high-tech firms and some 6,000 jobs in Pittsylvania County and the city of Danville.

Danville had just the environment that Michael Duncan, general manager of Donnachaidh LLC, sought for his biofuel start-up, he said. Duncan was attracted not only by the land needed for research on the hybrid poplar tree, the resource for his biofuel, but also the available workforce with experience around agriculture, Duncan said. The real “kicker” in the deal was the IALR and its sustainable and renewable resources arm, which will facilitate the research underway, noted Duncan. In addition, his firm received a $105,000 cash grant from the Tobacco Commission for the building project, which will help create 25 jobs and have a capital investment of $7 million.

To sum up, companies are often looking for proximity to innovation, a qualified workforce, a favorable tax environment, and availability of working capital. The decision is usually based on a combination of these factors, with financial incentives being important but not primary, believes Tom Morr, president & CEO of Select Greater Philadelphia, which covers parts of three states (Pennsylvania, Delaware, and New Jersey) and several counties. “When we talk to companies, the first question is: What’s my business opportunity? The second is: Can I find the people I need to do what I want to do? Third can be a variety of things that relate to environmental factors such as quality of life, good schools, cost of living, housing, and state taxes,” stated Morr. “Companies ask for the financial breaks because they have a fiduciary responsibility to shareholders. Few companies decide to go someplace because someone offers them money. If they did, they’re probably making their decisions for the wrong reason.”

Loudoun County Technical Center Adds Biotechnology Program

Charles S. Monroe Technology Center was established in 1977 to provide technology and vocational education to students in Loudoun County.

Last Spring, Education Reporter Julia Stewart and the Loudoun Independent Video Crew were provided with a tour of Monroe Tech, where they spoke with teachers and students from several different programs.

While some might assume that vocational education in public schools deals with older technology, nothing could be further from the truth. Monroe Tech has entered into a partnership with Virginia Tech to implement the new biotechnology program—available next year along with the new Veterinary Tech program.

Even traditional vocational classes like Automotive Science Technology takes a different approach in the modern work—often using computer diagnostic and training tools as often as a wrench.

Unlike many high school classes, many vocational education programs also enable students to obtain college credit or even obtain certification or a license in chosen field.

Programs at Monroe Technology Center include: Cosmetology, Environmental Plant Science, Computer Digital Design, Robotics and Computer Design, Automotive Science Technology, Culinary Arts, Television Production/ Digital Moviemaking, Health & Medical Sciences, Radiology Technology, Firefighter/ Emergency Medical Technicians.

Click here to take the video tour of the opportunities available at C.S. Monore Technology Center.

From the Loudon Independent