Hartford Business Journal

www.HartfordBusiness.com • February 18, 2019 • Hartford Business Journal 15 Other recommendations include allocating state funds to help finance construction of several new incubator facilities, since UConn Health's Technology Incu- bation Program (TIP) building in Farmington — which doubled in size under Mal- loy's bioscience program — is fully occupied. So are several similar facilities around the state. The report also calls for new space specifically tailored to companies that outgrow their incubator space — some- thing CaroGen hopes to do in 2020. The industry refers to those types of facili- ties as "graduation" space. Many chefs, one soup Officials who worked on the new strategic plan represent numerous and sometimes varied interests, but the recommenda- tions are their best attempt at helping the entire sector, said LuAnn Ballesteros, vice president of external and govern- ment affairs at Jackson Laboratory, the Farmington nonprofit medi- cal research center that opened its 183,500-square-foot facility in 2014 with the help of a $291 million state investment. "While I was there participating and viewing everything through the lens of Jackson Lab, the most important thing for all of us to remember is this is about a statewide ecosystem," said Ballesteros. That said, one of Jackson Lab's own priorities is to increase focus on com- mercializing its scientific innovations, so anything the state could do to in- centivize public-private partnerships would be important, said BJ Bormann, the medical research nonprofit's vice president of translational science and network alliances. "I foresee that within the next 10 years, spin-outs will become much more ordinary for [Jackson Lab] and should be the rule of business going forward," Bormann said. The bioscience plan also calls for more collaborations between higher- ed and industry. Exactly what role the state would play in that effort isn't clear, but Lamont recently promised legislation aimed at making it easier to form public-private partnerships. In addition, the report contains a vague warning: "The Governor and General Assembly should refrain from seeing collaboration as a trigger for taxation." Colleen Cuffaro, East Coast principal at Canaan Partners, which has invested $175 million in Connecticut-based com- panies, said the best thing state govern- ment can do is have policies that help companies start, stay and thrive here. "Ultimately the best fuel for biosci- ence innovation at the local level is a healthy ecosystem of academics, scientists and industry," Cuffaro said. Perception, budget challenges One challenge the industry faces in convincing lawmakers to dedicate scarce resources to bioscience is its mixed record in recent years. For example, the state clawed back $28 million from Alexion Pharmaceu- ticals after the rare-disease drug- maker decided in 2017 to relocate its headquarters to Boston. That move followed major downsizing announcements by Bristol-Myers Squibb in 2015 and Pfizer in 2011. Overall, the sector has actually lost jobs over the past few years, according to BioCT, though there have been some positive recent developments, like Sema4 moving 400 jobs from New York to Stamford and two major IPOs by bioscience companies Arvinas and BioHaven. While the recent pharma downsiz- ings were largely business decisions having little to do with state govern- ment, according to the companies, lawmakers are unlikely to forget how fickle business cycles impact Con- necticut's economy. "We've had some hit-or-miss experi- ences where we've nurtured some of these [companies] and they ended up going to Boston, and I think there's a lesson to learn from that," said state Rep. Jonathan Steinberg (D-Westport), who, as co-chair of the legislature's bi- partisan, bicameral bioscience caucus, is an industry booster. Legislators are facing myriad de- mands from interest groups, so any discussion of bioscience tax incentives will face steep competition. "I think the biggest issue we have with anything related to incentives is: Can we reasonably expect to find money in the budget this year?" Steinberg said. His fellow caucus co-chair, Sen. Tony Hwang (R-Fairfield), said he intends to pursue legislation that raises the state-imposed caps on research and development tax credits. He also wants to change the state's capital base tax, which bioscience companies must pay even if they have no income (and for years, many don't). "It disincentivizes investments," Hwang said of the tax. Serial entrepreneur Scheer has Lamont's ear By Matt Pilon mpilon@hartfordbusiness.com D avid Scheer has known Gov. Ned Lamont and his wife, An- nie Lamont, for nearly 30 years. "I built my first four companies with her," Scheer said of Connecticut's first lady, a venture capitalist who worked with Scheer throughout the 1990s while at Oak Capital Partners. Their shared hit list includes OraPharma, acquired by Johnson & Johnson in 2003 for $85 million; Esperion Therapeutics, picked up by Pfizer in 2004 for $1.3 billion; and ViroPharma, bought by Shire in 2014 for $4.2 billion. Oak Capital Partners was also an early investor in New Haven drug developer Achil- lion Pharmaceuticals, which Scheer founded. Achillion has not yet com- mercialized a product. Scheer said he offered his help to Lamont during the gubernatorial campaign. He has since convened a group of 22 bioscience stakeholders to talk about policy proposals, including those in the 10-year bioscience plan. Members are also hoping to act as a bioscience wingman to Lamont's new- ly revamped economic-development team, helping to attract new bio- science compa- nies and talent to the state, Scheer said. There was "palpable" ex- citement at the working group's first meeting last month over the prospects of working with a governor who himself built a business, he added. What might taxpayers and the bioscience industry expect when it comes to proposed legislation? Will Lamont's approach be anything like Malloy's major investment in the industry, which led to refurbished research labs, the doubling in size of UConn Health's incubator space and tens of millions of dollars in equity investments for its tenants and other bioscience startups, and of course, construction of The Jackson Labora- tory for Genomic Medicine, which today houses more than 300 scien- tists and others who work inside its sparkling multi-story facility? Unlikely, Scheer said. While the group hopes to build on those invest- ments and recommend some of their own, members are cognizant of the state's challenging financial picture. "I'm sensitive, as we all are, to some of the [state's] fiscal con- straints," he said. "I personally don't think we're looking for or going to need the magnitude that was de- ployed up in Farmington in order to make a meaningful contribution to our industry." David Scheer State Rep. Jonathan Steinberg (D-Westport) State Sen. Tony Hwang (R-Fairfield) CT Bioscience Innovation Fund Launched in 2014, the CBIF aims to invest up to $200 million over a 10-year period. It spent $55 million over the past five years, the majority of it on investments in startups and other companies. A new bioscience strategy report recommends investing even more of the remaining money in companies, rather than on science that's not yet out of the lab. Equity investments in companies $36,368,218 Academic research $5,700,295 Translational partnerships* $10,840,997 * Includes PITCH and Pipeline programs, which help advance bioscience research innovations at universities towards the commercial stage. Source: Connecticut Innovations CT bioscience sector, key metrics Jobs, as of 2016: 25,717 Multiplier effect: Each new bioscience job results in an ad- ditional 1.33 jobs CT's patent ranking per 1,000 population: 4th Venture capital: 54% of all VC invested in Connecticut is in bioscience R&D investments: 80% academic R&D investments in Con- necticut are in bioscience CT's advanced degrees ranking: 3rd CT's scientists, engineers per capita ranking: 6th Source: CT bioscience 10-year strategy report, Dec. 2018 CT bioscience industry employment 2013 2014 2015 2016 2013-16 change % change Total employment 26,732 26,704 26,454 25,717 -1,015 -(3.8%) Source: BioCT/Keavash Assani analysis of BLS, QCEW and IMPLAN industry data, Aug. 2018

• Cover