Boasting about 400,000 biotech workers and $3.4 billion in federal research funding, the Midwest is seeking to upend its reputation as flyover country for life-science innovators and investors on the coasts.
Years of regional and local groundwork are now beginning to pay off, say Midwest life-science promoters. Fueled by outside cash and growing entrepreneurial interest, the Chicago area’s biotech network is coalescing. And proponents and political figures are pouring it on with speeches and subsidies.
To be sure, the Midwest’s biotech promise is overshadowed by the flashy tech startups coming out of Chicago and Champaign, and the deal flow trails the quiet-but-productive business-to-business tech industry. Part of the reason is complexity.
“Biotech is a team sport,” said David Miller, president and CEO of the Illinois Biotechnology Industry Organization, or iBIO. “You need government involvement at the local, city and state level, you need teachers and researchers, and you need the private sector. You pull out any leg of that stool and it falls apart. It’s not as good.”
There was barely lab space in Chicago when the iBIO formed in 2007. And although Midwest universities were churning out discoveries, they weren’t producing spinout companies. Investors weren’t much interested, either. But proponents say the essential elements are now in place to produce a change.
Early this year, Gov. Pat Quinn committed $4 million to the creation of a biotech hub in the Merchandise Mart. Called Matter, it is expected to do for life science startups what its extroverted neighbor-to-be, 1871, has done for Chicago tech startups.
The announcement comes on the heels of accelerating interest in the commercial life sciences.
In its last annual report, the National Venture Capital Association reported $4.3 billion in 2013 venture funding in Illinois, putting it in the top five states nationally, though biotech represented a small portion of that investment, according to NVCA data and other biopharma industry analyses.
The flurry of advances in recent years are the culmination of 30 years of groundwork that began with the formation of university technology transfer offices, said Midwest Research University Network co-founder and President Allen Dines of the University of Wisconsin-Madison.
“There’s an aggregation of interest,” Dines said. “It’s somewhat of a momentum thing. We really are in a decade of entrepreneurship, and small companies are producing answers that large companies are interested in.”
Creating an ecosystem is no small task. It includes creating early workforce development classes, hands-on teacher development programs and STEM partnerships in area grade schools, said iBIO Vice President Ann Reed, who heads the organization’s “Educate” programs.
The iBIO programs have reached 700 teachers statewide and 60,000 students, and they join teacher science-education programs such as those offered locally by the Museum of Science and Industry and others. Underpinning those efforts are investments by local companies worried that Illinois’ next workforce isn’t ready for the innovation economy already developing.
As a result, iBIO reported in 2014 that it had crossed the $100 million investment mark for its companies. And from its “Propel” program, it fielded five life-sciences companies to pitch to funders at last week’s InvestMidwest Venture Capital Forum in St. Louis.
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“The most we’ve had selected in one year in the past is two, so this was a great showing by our emerging companies,” said Barbara Goodman, who heads the program.
The Illinois companies represented were Advanced Cooling Therapy, which seeks better methods to control body temperatures; Briteseed, which uses infrared imaging technology in surgical tools to help surgeons prevent accidental cuts into blood vessels; Cell Habitats, which promotes tissue repair by using biological and physical cues to prompt stem cells to restore damaged tissues; Inspirotec, a company that builds early warning systems for airborne viruses and allergens; and Sintact Medical Systems, a company started at Northwestern University and based in Bloomington, Ind., that develops surgical films that keep adjacent organs from adhering to each other after surgery.
“Companies like Groupon and GrubHub are quick, and when they hit it, they’re huge,” Miller said. “It takes years and years and years for biotech companies to make a difference. We’re trying to turn discoveries into marketable businesses.”