Florida, The Next Great Biotech Hub

You heard it here first; Florida will be the next great biotech hub. While most people would find that comment laughable, few realize that Florida really has its act together when it comes to promoting biotech in the state.

Michael Porter of Harvard Business School famously wrote that there are three commonalities to all great innovation hubs: capital, talent, and resources. Many cities and even countries have tried to create innovation hubs based upon Porter s innovation thesis, but few have succeeded. It turns out that there are many intangibles that can impact why, or why not, an innovation hub flourishes. While it is too soon to tell if the Florida biotech innovation hub will be a success, the state has worked hard to increase the probability of success.

Background
About 10 years ago Florida decided that it needed to stop relying on the housing and tourism for economic growth (a prescient observation in the wake of the 2008 stock marker meltdown), and find a way to get high-paying technology jobs to move to the state. Most people equate Florida with orange production and senior citizen retirement communities, so enticing companies to move to the state would be a tall order. To quantify just how stacked the odds were against the state, in 2005 only $6 million of seed and startup was raised by Florida companies.

In 2003, using money from a stimulus package passed by Congress after 9/11, then-Governor Jeb Bush led the effort to galvanize a biotech revolution in the state. Instead of creating a single biotech hub, Gov. Bush would use his substantial war chest to setup a statewide network of biotech clusters that in aggregate would rival the intellectual and technical capabilities of other more prominent biotech hubs.

Florida initiated an aggressive strategy to create a sustainable biotech hub by focusing on:

• Recruiting world-class research institutions to the state
• Requiring those institutions to collocate with existing universities, in order to promote a pipeline of local talent to feed into research centers and startups
• Create shared core facilities to drive down drug discovery costs
• Create sustainable capital sources to entice out of state companies to move to the state and promote the creation of startups
• Promote benefits of Florida: cost of living & lifestyle (beats Boston winters!)

Innovation Generation / Resources
While Florida already had a robust university system, the government sought to augment its basic and translational research capabilities by enticing some of the top research centers to create Florida outposts. By providing well over $1 billion in construction grants, the state has attracted 8 marquee research organizations to the state, including:

• Scripps Florida
• Burnham Institute for Medical Research
• Torrey Pines Institute for Molecular Science
• Cleveland Clinic
• Max Planck 
• Mount Sinai Medical Center
• SRI International
• MD Anderson Cancer Center

The cost of living, weather, and substantial grants available to researchers have enabled these new research centers to attract a substantial amount of top-tier talent in a very short amount of time.

One of Florida s most promising biotech clusters is in Jupiter, a well-healed community north of Palm Beach. In Jupiter, Max Planck and the Scripps Institute have created large outposts located adjacent to Florida Atlantic University. Florida provided almost $775M in current and future grants to support the construction of these two new research centers.

Scripps Florida, which opened in 2009, now employs more than 400 people, of which 120 are postdoctoral fellows. Of note, academics at Scripps Florida have already filed 62 patents. Patents alone do not drive job creation, so the state provided funds to create a state of the art incubator to take those fledgling ideas and turn them into commercial endeavors.

The state worked with Alexandria Real Estate to setup the Alexandria Innovation Center in Jupiter. Because the incubator is literally next to two research centers and a university, startup companies can leverage core facilities and academic talent.

Because the research centers are just getting up and running and have yet to create academic spinouts, the state has recruited several promising startups to move into the incubator. As those startups mature, they could provide a management talent pool for the next generation of local startups.

Talent
These new research institutes are collocated with the state s existing university infrastructure, allowing the organizations to tap local talent to fill their labs and leverage existing core facilities at the universities. Managerial talent is also finding its way to the research centers and startups companies thanks to the scores of pharma folks who were let go over the last few years.

At Osage University Partners, we work closely with the University of Florida, which has one of the most well run and progressive tech transfer offices in the country. U of F boasts some of the top biomedical, bioengineering, and agbio undergraduate and graduate programs in the country. However, due to few postdoctoral positions and startup opportunities, most of this talent typically leaves the state after graduation. The establishment of large research institutions that require large pools of postdoctoral talent to conduct their research will enable much of that talent to stay in state. Hopefully it will be those postdoctoral researchers that identify groundbreaking discoveries that can translate into startup creation.

Capital
Because Florida was traditionally never a hotbed for investment, the state realized that it would need to fill the capital gap until enough momentum was built to stimulate out of state investment. The state created the $30 million Florida Opportunity Fund, which is a Fund-of-Funds to entice venture capital investment in Florida companies. In addition to attracting venture capital, the state allocated 1.5% of the net assets of the state retirement system trust to high growth investments (direct, grants, and awards) in local startup companies. Such capital strategies send a strong signal to the investment community that Florida is serious about promoting biotech for the long haul.

You can imagine the outcry from the general public about diverting so much money for an endeavor that will not have tangible benefits for at least 10 years. But, the idea of capital investment is to invest in the future, and even if the biotech gambit doesn t pan out, no one will be able say that Florida went down without a fight.