Home Grown

A little more than six years ago, Louisville civic leaders reached an economic crossroad.

They could continue growing the economy as they always had, spreading efforts across a broad range of manufacturing and service-sector jobs. Or they could focus those efforts with laser precision on two areas that played to the city's strengths.

At the recommendation of a development consultant, they chose the latter approach, selecting logistics and life sciences as their targets of opportunity.

Logistics made sense because Louisville is home to a major UPS air hub.

And while the city's medical community had never been known as a biotech powerhouse -- it mainly provided first-rate patient care -- the Louisville Medical Center had several assets that could be harnessed for growth. Among these were three respected hospital organizations and the University of Louisville Health Sciences Center.

Now, after a good deal of sweat equity and generous financial help from the state, Louisvillians are beginning to see results in the form of home-grown biotechnology companies created to commercialize discoveries made by researchers at UofL.

"If you're looking for an engine for economic development, research is a great place to start," notes Steven Spalding, CEO of the Louisville Medical Center Development Corp.

Perhaps the most successful startup so far, Aptamera Inc., has developed a cancer-screening kit slated to hit the market in July. Clinical trials for a cancer treatment could follow by the end of the year, says company founder Donald Miller, M.D., Ph.D., director of the James Graham Brown Cancer Center at UofL.

Other companies in the process of establishing themselves include ApoImmune Inc., a startup founded by UofL microbiologist and immunologist Haval Shirwan, Ph.D.; and Regenerex, a biotech firm established by UofL surgeon Suzanne Ildstad, M.D.

ApoImmune is using tobacco leaves to develop cancer-fighting proteins, while Regenerex is focusing on technology that could stop organ rejection in transplant patients.

Meanwhile, the number of patent applications for technologies developed by university researchers has been climbing substantially, from just one in 1997 to 30 in 2002, according to James Zanewicz, director of the Office of Technology Development at UofL.

Similar growth has occurred in the royalties and associated income paid to UofL by firms that license these discoveries, rising 179 percent in the same period.

None of this would have been possible without a "very fortunate convergence of polices being pursued by state government, the University of Louisville and the community at large," Spalding says.

Among these developments are:

-- The creation of LMCDC itself, whose mission is to promote economic growth on the downtown medical center campus. The non-profit organization, which has acquired three facilities to house biotech companies, is wholly owned by University Hospital, Norton Healthcare, Jewish Hospital HealthCare Services and UofL.

-- The Kentucky General Assembly's passage of House Bill 1, which reorganized higher education in the commonwealth and directed UofL to focus more attention on scientific discovery. As a result, the university launched its Challenge for Excellence, an ambitious plan to establish UofL as a major metropolitan research university by 2020.

-- Gov. Paul Patton's establishment of the Research Challenge Trust Fund, which provided UofL with $4 million in recurring funds for research initiatives and another $66.7 million in endowments -- matched with $66.7 million in private funds -- to recruit leading scientists at UofL. This second component of the Research Challenge Trust Fund, called Bucks for Brains, received a boost in 2003 when the General Assembly approved an additional $33.3 million. These funds also will be matched with private-sector money.

-- Construction of two state-of-the-art research buildings on UofL's Health Sciences Center campus.

-- Passage of the Kentucky Innovation Act, which created multiple state agencies to help fund and nurture new businesses.

-- Creation of Minerva Ventures, a $3 million UofL venture-capital fund dedicated to supporting university-based startups. To date, Minerva Ventures has invested $250,000 each in two biotech startups, Aptamera and Medeqco Medical Technologies, a company founded by anesthesiologist Dan Sessler, M.D. Medeqco, currently under reorganization, is developing a system to keep patients warm during surgery, thereby improving post-operative recovery.

All of these developments add up to a synergistic environment ripe for economic growth, and UofL is the linchpin that holds it together, Spalding says.

"The university is at the heart of this entrepreneurial effort," he says, "because it defines the focus areas, makes the necessary investments in research facilities and attracts the faculty who can drive a research park like we're trying to develop at the Louisville Medical Center."

Nancy Martin, Ph.D., echoes Spalding's sentiments.

"The university provides the faculty and fellows who do the research," says Martin, vice president for research at UofL. "Without the research, there is no new knowledge to convert into a biotech sector."

Finding a market

One department at UofL with an essential role in economic growth is the Office of Technology Development, which was established in 1999 to identify marketable discoveries, protect them with patents and move them into commerce.

This process begins when a researcher files an Invention Disclosure Form, which describes the finding or technology, its potential uses and any pertinent background information.

The Office of Technology Development, whose staff includes a licensing start-up attorney and a neuroscientist, then evaluates the disclosure to determine if the discovery can or should be patented.

"To protect something by patent, it has to be new, novel and not obvious," says Zanewicz, himself a patent attorney with a background in chemistry.

If a discovery passes the test, Zanewicz and his colleagues give the scientist a choice: Develop the idea into a startup or let the university market it to an established firm.

"If someone wants to develop a startup, we give him or her a chance to put something together," Zanewicz says. "We always prefer to see something develop here because that helps grow the local economy.

"Of course, the originator has to show us a good business plan, make progress developing the technology and arrange for a management team to come in. A start-up company is a full-time vocation, and you can't do your day job at the university and be the CEO of a start-up company at the same time."

To assist researchers with the intricacies of founding startups, a variety of resources are available, including the state-run Innovation Commercialization Center and the MetaCyte Business Lab, an incubator for biotechnology companies. MetaCyte, which is operated by LMCDC, offers extensive support services and mentoring programs for novice business people.

No matter which route a researcher decides to take, one aspect is non-negotiable: UofL retains ownership of the intellectual property rights.

However, the university's revenue sharing is among the most generous in the country. Once original patent costs are reimbursed, 50 percent of royalties go back to the scientist, 12 1/2 percent is given to the inventor's college or unit, 12 1/2 percent gets distributed to the researcher's department, and UofL keeps the remaining 25 percent to reinvest in research and education.

Such liberal polices are one more reason researchers see UofL as an attractive place to work, and Martin says the word is starting to get out.

"When we bring candidates in for faculty positions, they compare our policies with those at other universities," she says. "And we have a little leg up on getting them to choose us.

"A community that supports research and the commercialization of new ideas is an exciting place to live and work," she continues. "Prospective faculty who are interested in both creating the ideas and having a supportive environment in which to commercialize those ideas are attracted to a place like this.

"Ten years from now, I think we will have an exciting biotech sector in Louisville. I expect we'll have more than $200 million in annual research expenditures at UofL, we'll have higher-paying jobs in our community, we'll have better educational opportunities for our students and we'll be contributing to the health care mission in this country."

Dee Maynard, CEO of Minerva Ventures, is equally optimistic.

"Six years ago, Louisville wasn't even on the biotech map," Maynard says. "But when you look at everything that has happened since then, it's been a pretty exciting time. If we make as much progress in the next six years, Louisville's biotech sector is going to be dynamite."