By Sarah Terry-Cobo
Courtesy of The Journal Record
OKLAHOMA CITY – Paul DeAngelis took a $1.6 million grant from the state and turned it into a $167 million deal with a major international pharmaceutical company.
He couldn’t have developed his research on enzymes used with diabetes drugs into a marketable product without that initial capital. He’s concerned that a lack of public-private funding is stifling biotech growth in the state.
DeAngelis, chief scientist at Caisson Biotech and molecular biology professor at the University of Oklahoma, was one of the first recipients in the Economic Development Generating Excellence grant program. Gov. Brad Henry established the EDGE program in 2006 as a public-private partnership to promote growth in the biotechnology sector in the state. But in 2012, the Legislature dissolved the fund, the result of Senate Bill 1969. The remaining money was distributed to universities to fund a backlog of endowed chair positions. The privately funded endowed chairs were matched with the state funds.
The funds allowed DeAngelis to purchase manufacturing equipment. Pharmaceutical companies want grams of drugs for testing, and he could only make milligrams of the substance with the equipment he had at OU. What would have taken six months took one week with the new machines he bought. Novo Nordisk signed an initial agreement in May 2012, and in March 2014 it kicked in at least another $167 million.
Thomas Harlan, Caisson CEO, said early-stage funding for biotech discoveries is critical now more than ever. After the credit market collapsed in 2008, pharmaceutical companies were searching for new drugs that had less risk. A drug company is more likely to invest in enzymes like DeAngelis’ after they have already been proven and can be manufactured at a larger scale, Harlan said.
Scott Rollins, president and CEO of Selexys Pharmaceutical, agreed that the EDGE grant was critical to fostering growth in the biotech industry. His company received $2 million to develop drugs to fight sickle cell anemia. That helped him get a second round of funding. His company later signed a $765 milion deal with Novartis.
Dr. Stephen Prescott, president of the Oklahoma Medical Research Foundation, agreed there needs to be a way to promote investment in biotech companies. He was on the board of the EDGE program, and said the program wasn’t perfect.
One problem was there was a dual mission: to promote small companies as well as to promote biotech infrastructure. The program wasn’t managed well because the mission wasn’t clear and focused, he said. Before the fund was dissolved, the board was considering changes that would clearly define the mission, he said.
However, Rollins said, Gov. Mary Fallin’s decision to end the EDGE program was politically motivated to satisfy university donors.
“To take away the only source of that funding from the state, it hearkens back to a good-old-boy system that is not really focused on economic development and developing new industries,” Rollins said.
Prescott agreed with Rollins that the deal to end the EDGE fund was a political move.
Oklahoma is losing out to more than just the coasts. Texas, Arkansas, Missouri and Kansas all have public-private funding programs to promote biotech, Rollins said. With no venture capital firms in Oklahoma, companies often must turn to private investors or investors outside of the state.
Prescott said the EDGE fund could have been improved if it had a broader industry base to include agriculture, and more aerospace investments.
Rollins isn’t optimistic about reinstating the EDGE program. He is a member of the governor’s science and technology counsel, but said the emphasis is on improving education, not on developing new technology businesses.
“Unfortunately, I think it will take a significant change in administration to find a solution,” Rollins said. “It doesn’t seem to me the current governor and the Legislature are willing to do something like this.”
Michael McNutt, press secretary for Fallin, wrote in an email message that the EDGE fund and the endowed chair program shared the same goal: to support research and innovation, which creates jobs. But both programs were underfunded and therefore less effective, he wrote.
Rollins said he was unsatisfied with the administration’s explanation for dissolving EDGE: Professors would generate ideas and inventions, and those inventions would be turned into businesses and products.
“We can’t fund the ideas we have now,” he said.
“Oklahoma needs sources of early-stage funding beyond what we have today,” Rollins said.
Prescott said the state has successfully supported some biotech companies, but the process began when there was more access to capital.
“We have the technology, we have the entrepreneurs,” he said. “The challenge is the organized capital.”
