Funding for Life Sciences

The stimulus bill is welcomed news for the public housing sector.  The funds will be allocated between several different housing initiatives including $4 billion to be used for capital and management activities for public housing agencies, $2 billion for neighborhood stabilization programs, and $1.5 billion for homeless prevention efforts.

Read more about the impact on public housing.

As the nation focuses its attention on a struggling financial sector, there is still work to be done to improve our national security.  Approximately $2.8 billion will fund a variety of programs through the Department of Homeland Security including border protection, aviation security, bridge construction and repair as well as railroad and port security assistance.

Read more about the impact on homeland security.

Before the ink could dry on the stimulus package, many political pundits were calling transportation and infrastructure one of the big winners.  The amount allocated for transportation infrastructure investment is $64.1 billion, according to the House Committee on Transportation and Infrastructure.  Most of these funds go toward highway and bridge construction projects, mass transit such as public transportation and high-speed rail projects as well as aviation programs.

Read more about the impact on transportation.

Companies who are the beneficiaries of funds from the stimulus package should take note.  New whistleblower provisions and employment-related provisions touching on immigration law are included in the bill.  In addition, there are compensation restrictions in place for executives of public companies receiving Troubled Asset Relief Program (TARP) funds.

Read more about the impact on employment.

The stimulus bill intends to provide federal assistance to states for health insurance coverage through Medicaid for children and those in danger of losing their coverage.  Other big recipients include the National Institute of Health, the Department of Health and Human Services and the health information technology exchange programs.

Read more about the impact on health and life science.
 

Blog written by Harry Gonso and Jennifer Rhodes.

In the fifth in a series of life science distinguished speakers luncheons we were honored to have Jim Pearson who is the president and CEO of NICO Corporation, a medical device company providing patented technology for minimally invasive neuro, skull base and spinal surgeries.

Pearson, who is the former president and CEO of Suros Surgical Systems, discussed the successful internally-focused model he has used to grow two thriving life sciences companies.

One of his key discussion points was that to have a successful life sciences company you need a relevant innovation which can lead to intellectual property clearances which in turn can lead to sustainability and new markets.  He later mentioned that one of the pitfalls that companies or individuals may face is not truly understanding the reality of their ideas; a realistic evaluation to determine if the idea is a product, a company or is still in the idea stage.

Pearson's presentation also focused on the key ingredients that led to success at both Suros and NICO.  Companies, and in particular life science companies, need to have a several components in place in order to achieve and sustain growth – some key factors he mentioned were communicating and measuring progress, establishing cultural norms, and making sure every team member has "a win" (ownership, cash, and personal and professional growth).  NICO is run with a deep-rooted belief in the company's top 5 principals: execution, team work, unity, rewards system and balance.  The same philosophy was employed at Suros.

Potential business traps that entrepreneurial companies can fall prey to were also outlined.  Of particular focus was not assembling a strong management and board that can appropriately guide a company through its many phases.  Some of the other key pitfalls he discussed were related to staff.  One of which was not understanding the true power (or potential) of human capital and the other was not staying in touch with what is happening in the field on a weekly basis.

It was an interesting and informative luncheon.  We look forward to watching the progress of NICO and the impact it will have on Indiana's growing life sciences industry.

Blog written by Harry Gonso and Jennifer Rhodes.

In the fifth in a series of life science distinguished speakers luncheons we were honored to have Jim Pearson who is the president and CEO of NICO Corporation, a medical device company providing patented technology for minimally invasive neuro, skull base and spinal surgeries.

Pearson, who is the former president and CEO of Suros Surgical Systems, discussed the successful internally-focused model he has used to grow two thriving life sciences companies.

One of his key discussion points was that to have a successful life sciences company you need a relevant innovation which can lead to intellectual property clearances which in turn can lead to sustainability and new markets.  He later mentioned that one of the pitfalls that companies or individuals may face is not truly understanding the reality of their ideas; a realistic evaluation to determine if the idea is a product, a company or is still in the idea stage.

Pearson's presentation also focused on the key ingredients that led to success at both Suros and NICO.  Companies, and in particular life science companies, need to have a several components in place in order to achieve and sustain growth – some key factors he mentioned were communicating and measuring progress, establishing cultural norms, and making sure every team member has "a win" (ownership, cash, and personal and professional growth).  NICO is run with a deep-rooted belief in the company's top 5 principals: execution, team work, unity, rewards system and balance.  The same philosophy was employed at Suros.

Potential business traps that entrepreneurial companies can fall prey to were also outlined.  Of particular focus was not assembling a strong management and board that can appropriately guide a company through its many phases.  Some of the other key pitfalls he discussed were related to staff.  One of which was not understanding the true power (or potential) of human capital and the other was not staying in touch with what is happening in the field on a weekly basis.

It was an interesting and informative luncheon.  We look forward to watching the progress of NICO and the impact it will have on Indiana's growing life sciences industry.

Blog written by Paul Jones.

Congress is in the process of passing economic recovery legislation that would (if enacted) expand existing, and establish new, tax incentive programs to further those goals.  Specifically, the American Recovery and Reinvestment Tax Act (the Act) contains several provisions that would provide expanded or additional sources of funds for green projects.  If enacted in its current form, the Act would, among other things:

• Establish a 30% credit for investment in facilities that manufacture advanced energy property;
• Extend Code Section 45 renewable energy production tax credits by increasing the placed in service date for three years (through 2012 for wind and 2013 for other qualified facilities);
• Allow temporary election to claim 30% investment credit under Code Section 48 in lieu of the Code Section 45 production tax credit; and
• Expand the volume for Clean Renewable Energy Bonds (CREBs); and
• Expand the volume for the recently established Qualified Energy Conservation Bonds (QECBs), which like CREBs, are tax credit bonds.

The Act contains several other provisions, including those that would expand the New Markets Tax Credit program, revise certain tax-exempt bond limitations, and provide relief for cancellation of debt income.

Read the full text of an Ice Miller alert which contains more details on the points above.

According to the summary of the American Recovery and Reinvestment Bill by the Committee on Appropriations (Obey, D-WI, Chair) action, and action now, is needed to pull the economy out of a "crisis not seen since the Great Depression." The bill contains targeted efforts to have clean, efficient American energy, summarized by the Committee as:

CREATE JOBS WITH CLEAN, EFFICIENT, AMERICAN ENERGY
To put people back to work today and reduce our dependence on foreign oil tomorrow, we will make investments aimed at doubling renewable energy production and renovate public buildings to make them more energy efficient. America’s energy shortcomings present a huge opportunity to put people to work in ways that will transform our economy.

• Reliable, Efficient Electricity Grid: $11 billion for research and development, pilot projects and federal matching funds for the Smart Grid Investment Program to modernize the electricity grid making it more efficient, secure and reliable and build new power lines to transmit clean, renewable energy from sources throughout the nation.
• Renewable Energy Loan Guarantees: $8 billion for loans for renewable energy power generation and transmission projects.
• U.S. General Services Administration (GSA) Federal Buildings: $6.7 billion for renovations and repairs to federal buildings including at least $6 billion focused on increasing energy efficiency and conservation. Projects are selected based on GSA’s ready-to-go priority list.
• Local Government Energy Efficiency Block Grants: $6.9 billion to help state and local governments make investments that make them more energy efficient and reduce carbon emissions.
• Energy Efficiency Housing Retrofits: $2.5 billion for a new program to upgrade HUD sponsored low-income housing to increase energy efficiency, including new insulation, windows and furnaces. Funds will be competitively awarded.
• Energy Efficiency and Renewable Energy Research: $2 billion for energy efficiency and renewable energy research, development, demonstration, and deployment activities to foster energy independence, reduce carbon emissions and cut utility bills. Funds are awarded on a competitive basis to universities, companies and national laboratories.
• Advanced Battery Loans and Grants: $2 billion for the Advanced Battery Loan Guarantee and Grants Program, to support U.S. manufacturers of advanced vehicle batteries and battery systems. America should lead the world in transforming the way automobiles are powered.
• Energy Efficiency Grants and Loans for Institutions: $1.5 billion for energy sustainability and efficiency grants and loans to help school districts, institutes of higher education, local governments and municipal utilities implement projects that will make them more energy efficient.
• Home Weatherization: $6.2 billion to help low-income families reduce their energy costs by weatherizing their homes and make our country more energy efficient.
• Smart Appliances: $300 million to provide consumers with rebates for buying energy efficient Energy Star products to replace old appliances, which will lower energy bills.
• GSA Federal Fleet: $600 million to replace older vehicles owned by the federal government with alternative fuel automobiles that will save on fuel costs and reduce carbon emissions.
• Electric Transportation: $200 million for a new grant program to encourage electric vehicle technologies.
• Cleaning Fossil Energy: $2.4 billion for carbon capture and sequestration technology demonstration projects. This funding will provide valuable information necessary to reduce the amount of carbon dioxide emitted into the atmosphere from industrial facilities and fossil fuel power plants.
• Department of Defense Research: $350 million for research into using renewable energy to power weapons systems and military bases.
• Alternative Buses and Trucks: $400 million to help state and local governments purchase efficient alternative fuel vehicles to reduce fuel costs and carbon emissions.
• Industrial Energy Efficiency: $500 million for energy efficient manufacturing demonstration projects.
• Diesel Emissions Reduction: $300 million for grants and loans to state and local governments for projects that reduce diesel emissions, benefiting public health and reducing global warming. This includes technologies to retrofit emission exhaust systems on school buses, replace engines and vehicles, and establish anti-idling programs. 70% of the funds go to competitive grants and 30% funds grants to states with approved programs. Last year EPA was able to fund only 27% of the applications received.

See the entire Committee on Appropriations summary. We'll all be watching Congress as they consider the bill in the next few weeks and its environmental and green provisions. Stay tuned for action!

The following blog was posted by Kristine Danz, a partner at Ice Miller LLP.

We can now officially relegate 2008 to the records books.  Wall Street took a beating unlike anything we've seen since the 1930s, we witnessed a historical presidential election and a bailout of an unfathomable magnitude.  Main Street felt the pinch as well with unemployment on the rise.  So what awaits us in 2009?

By all accounts, we're looking at a rough first quarter.  According to a survey by the National Venture Capital Association (NCVA), U.S. venture capitalists are forecasting a difficult 2009 for, "the country's economy, the capital markets, and the venture industry as the global financial crisis takes its toll on the entrepreneurial system." Other highlights, or rather lowlights include:

• Continued slowdown in the number of IPOs;
• Limited investments in seed and early stage investments;
• Difficulty in securing funding for newer companies;
• Declining returns for VCs.

And now for the good news.  Investments in clean technology, life sciences and biotechnology are expected to grow and debt markets will likely improve.

Like they say in the news business, we don't make the news, we just report it.

IN Partners, LLC announced today the initial closing of MidPoint Food&Ag Fund, L.P. and MidPoint Food & Ag Co-Investment Fund, L.P. for a total of $27.8 million in the aggregate.

IN Partners is an Indianapolis-based venture capital firm specializing in the agribusiness sector.  MidPoint is IN Partners’ inaugural fund.  MidPoint’s investment focus is in six specific areas of food and agriculture: (1) biobased products and processes; (2) human wellness; (3) food safety; (4) animal health; (5) environmental technologies; and (6) production technologies.

Read the IN Partners press release.

Dr. Eric Meslin, Director of the Indiana University Center for Bioethics, provided the keynote address during the Firm's life science distinguished speaker's series luncheon.  As an Associate Dean for Biothics at the IU School of Medicine, Dr. Meslin was able to offer a particularly worldly view to issues affecting ethics and health care.

Dr. Meslin's remarks were appropriately titled, "What in the World Does Ethics Have to do With Health Research?"  He made reference to the title several times during his remarks as he expounded on the theme and took an historical look at how ethics and health care have evolved.

Soon into his remarks, a photo from the Nuremberg trial appeared on the screen, an obvious response to the rhetorical question of, "why should we care?"  The photo featured 23 Nazi scientists who were accused, and later convicted, of some of the most heinous crimes known to man, in fact we call them crimes against humanity.  The trial resulted in the a document called the Nuremberg Code which many refer to as the first modern medical ethics, or research ethics document, which mandates that voluntary consent of the human subject is absolutely essential.

Dr. Meslin continued his remarks with more recent cases of unethical research, sometimes involving violations of human rights. Of particular interest was the Abigail Alliance case.  The issue involved a young woman who wanted to join a clinical trial but was denied the opportunity and died later in part as a result.  The case further complicated the issues involved in ethics and health care.

With more and more money being spent on research, the need for standardized documents and protocols increases.  According to one account, between 1998-2003, the global expenditures on health care research quadrupled to about $125 billion.  By 2000, 70 percent of all clinical trials were funded by the private sector. 

So, to quote Dr. Meslin, what in the world does ethics have to do with health research?  A lot.  As the good doctor states, all studies involving human subjects must, not may, must receive prior science and ethics review.  Collaborative research, especially research between economically and developed or developing countries, requires some common set of ethics guidelines or procedures.  Finally, we must learn from our past and make a pledge to never repeat any of the egregious crimes against humanity.

The following blog was posted by Jennifer Rhodes, a partner at Ice Miller LLP.

In our fourth in a series of life science distinguished speakers luncheons we were privileged to have Dr. Eric Meslin Ph.D., Director IU Center for Bioethics, Associate Dean (Bioethics), IU School of Medicine, Professor of Medicine, Medical and Molecular Genetics, and Philosophy.  The topic was “What In The World does Ethics Have To Do With Health Research.”  Dr. Meslin’s point was not just to talk about the world but the people who are working in it, on it, for it and with it.

Dr. Meslin started out by telling the group that there is much more research going on in the world involving a collaboration of researchers from different countries and cultures, but the problem then becomes, who is reviewing the research and what ethical guidelines apply.  There is also a lot more money than ever before.  Studies show that between 1998 and 2003, global expenditures on health research have quadrupled, to about $125 billion.  By 2000, 70% of all clinical trials were funded by the private sector.  It's not simply the federal government or the pharmaceutical industry, but there are also public and private players, including large philanthropic players.

And yet the shift in the epidemiology of diseases is happening in economically developing countries just like it's happening here.  People who live in developing countries are not just dying of malaria, TB or HIV.  They die of heart disease, cancer and diabetes just as people in developed countries such as the U.S. do.  He pointed out that drugs are still too expensive, despite the efforts of many in the healthcare industry that donate drugs and have humanitarian aid programs.  And still, the Global Forum on Health Research coined the phrase the “10/90 Gap” which means that of all of the dollars spent on research in the world only 10% is going to diseases that affect 90% of the world's population.

This begs the question which was Dr. Meslin’s topic of discussion, what in the world does ethics have to do with health research?  And the answer is: all studies involving human subjects must receive prior science and ethics review.  He went on to state that despite the increased investment in research and development and international philanthropy, there is still a demonstrable inequity in access to benefits of research.  Which led to his next big question, are there universal ethical principles that apply irrespective of country or culture?  Bioethics has been working on this question for quite some time.  There are 17 articles in the universal declaration on bioethics and human rights.  But what do you do when they conflict?  Which one takes precedence over the other?  And what is really meant by each of them?

Collaborative research not exclusively, but especially between economically developed and developing countries requires some common set of ethics guidelines or procedures.  Not feeling that there was a single set of ethical principles, Dr. Meslin and his international colleagues have written a memorandum of understanding that is the first of its kind to describe the common principles that will be followed in their research and guide those relationships and activities.  The guidelines address the following issues: Who may be asked for informed consent?  What procedures will be in place to prevent exploitation?  When is it acceptable to use a placebo?  Where else is it acceptable to conduct studies that can feasibly be carried out in one’s home country?  Why is research conducted on some groups and not others? And how should any benefits be distributed?

Despite the significance of the guidelines, Dr. Meslin emphasized that there was still work to be done in order to make this document live and work.  Simply stated, they had to figure out what its limitations were, and this is what they realized, not only do cultural differences have a real impact on how people think about ethical issues in different countries, but economically developing countries are not necessarily ethically developing countries. He made the point that we should not be thinking that just because a country's GDP is lower than ours, that the people who are in that country are any less concerned about ethics, are any less concerned about how to carry out ethically relevant research and ethically consistent research.  The question of ethics in healthcare research is an ongoing one and will always be.

As Associated Press business writer Michael Liedtke observed in his October 20, 2008 article Feeling Financial Squeeze, VCs Curtail Investments, “Although a drought hasn't set in yet, it's looking inevitable as the ripple effects of a worldwide financial crisis rattle venture capitalists.”

According to data released by Thomson Reuters, PricewaterhouseCoopers and the National Venture Capital Association, venture capital investments have recently experienced the largest decline since spring of 2003 following the dot com bust.

Many venture capital firms are advising the management teams of their portfolio investments to revise their short-term business plans to reduce costs by laying off staff and trimming budgetary spending in expectation of a worsening recession.

Although venture capital investments have experienced the largest drop off in the last decade, there is a silver lining in the form of a rising interest in biotechnology and alternative energy.  As stated by Terry Kosdrosky in Private Equity Has Toolkit to Ease Troubled Market, “Political leaders and the public are hungry for renewable sources of energy that will lessen the country's dependence on foreign oil and cut down on pollution.”

Venture capital and private equity funds have followed the emerging trend of new companies seeking to stake a founding interest in these industries.  For example, Liedtke cites statistics supporting a 21 percent increase in venture capital investments in biotech startups from last year, while alternative energy, was close behind with a 17 percent increase.

In addition to venture capital opportunities in the U.S. biotechnology and alternative energy industries, Kosdrosky also points to growing opportunities overseas, stating “With growth stunted in the U.S., many private equity firms are looking to put their money to work in growing markets such as China and India.”

The current financial climate has forced venture capitalists to focus their resources on existing investments rather than taking on new challenges.  What does all this mean?  Despite the downturn in the global economy, opportunities for lucrative venture capital investment still exist, albeit in new forms and perhaps in sectors not previously considered.  As blogger Seth Levine wrote in his October 22, 2008 post of VC Adventure, “Be flexible. Seek outside input. Be introspective. Stop and consider what you're learning and if it effects key assumptions behind your business idea. Tweak what you're doing.  Repeat.”

BioCrossroads recently announced the first recipient of the "Indiana Life Sciences Champion of the Year."  Appropriately, the accolade went to Mr. Leonard Betley, President and CEO of the Richard M. Fairbanks Foundation.

The award recognizes an individual who has made, "significant achievements in the development and promotion of Indiana's life sciences sector; personifies the emerging face of the Indiana life sciences industry; and promotes innovative development of the life sciences in Indiana."  Certainly Leonard fits the bill and his collaborative work in the life sciences sector is without question.

I had the privilege of working with Leonard when he was an attorney, and Managing Partner, at Ice Miller and in fact he recruited me to the Firm in 1980.  I consider Leonard a colleague and friend and couldn't be more pleased that his achievements are getting some well deserved recognition.  Leonard has had a remarkable career.  Throughout, his quiet effectiveness always lead those that he worked with, whether law partners, scientists or business people, to a successful event.  He had the uncanny knack of seeing the future and orchestrating people and events to take advantage of that vision.  Part of the folklore at Ice Miller is a retired partner's statement about him "I just wish Leonard would tell us how this is all going to work out."

In announcing the award, Gus Watanabe, of BioCrossroads wrote, "In you, we indeed found the perfect way to begin a long and distinguished tradition of honoring Indiana's true 'life science champions.'"  Well said.

Read the press release announcing the award.

The following blog was written by Priscilla Arling, Assistant Professor of Management Information Systems at Butler University.

The majority of Indiana businesses recognize the increased use of Internet technology in the office and are concerned about whether that use is for business or personal use, as evidenced by the existence of formal policies on Internet use by over 60% of responding companies.

Despite this awareness and concern, however, more than 2/3 of those same companies lack technology-based controls or monitoring of Internet use.  This may be either a deliberate choice by companies, a reflection of a hesitance to delve into employees' personal privacy even during working hours, or a sign that companies do not feel that abuse of Internet access (that is, use for personal reasons) is not severe enough to warrant spending funds to implement monitoring technology.  My opinion is that the latter is most likely the case.

The survey suggests that while companies are aware of personal use during working hours of the Internet, in general, blogging has not reached the radar of awareness of most corporate HR or CEO's.  However, companies may want to reconsider the lack of a blogging policy or at least assign someone in HR to investigate how employees are portraying the company on-line in personal blogs that are supported either on or off the company hardware.  Increasingly, companies are finding that individual's employees' portrayal of the firm does not always mesh with their official public image.

The following blog was written by Priscilla Arling, Assistant Professor of Management Information Systems at Butler University.

Executives’ continued lack of confidence in their ability to evaluate information technology staff is related to two continuing and related problems in organizations:

(1) The lack of understanding by executives of how IT adds value and contributes to strategic goals.  When a function's relation to strategic goals is well understood, the value and assessment of staff providing that function is seldom questioned.  Evidence the lack of concern of evaluation of the productivity of marketing or accounting staff.

(2) The failure of IT executives to effectively bridge the divide between IT and other business functions, and create understanding of IT value by documenting and quantifying the benefits of installed technology.

In my opinion, in many organizations, IT has become similar to basic utilities in our home, such as water or sewer.  We depend on it heavily for day to day functioning, but don't really know how it works or how it gets there.  We only think about it when something goes wrong and we don't want to fund improvements for such 'basic' needs, and often have little imagination on how improvements in those utilities could improve our lives.