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Wisconsin’s Bioscience Industry Achieves Global Recognition

Wisconsin’s bioscience industry continues to expand, often led by spinoff companies that are established to commercialize groundbreaking university research.

Mark Crawford (Q1 2014)
In scientific circles, Wisconsin is known for a lot more than beer and cheese. Wisconsin has a strong, diverse bioscience cluster, anchored by the University of Wisconsin (UW) in Madison. Wisconsin-based advances that have enriched human health on a global scale include ultraviolet radiation for enriching foods with vitamin D, innovative medical-imaging and cancer radiation systems, and using human embryonic stem cells to combat a wide range of health problems.

Wisconsin’s bioscience industry continues to expand, often led by spinoff companies that are established to commercialize groundbreaking university research. Wisconsin is especially strong in biotechnology and medical devices. According to BioForward — Wisconsin’s leading bioscience industry group — more than 640 bioscience businesses in Wisconsin employ nearly 24,000 people and generate about $7 billion in annual revenues.

Another sign of bioscience strength is how Wisconsin companies held their own during the Great Recession: from 2007 to 2010, when the U.S. biotech industry experienced a 1.4 percent job decline, Wisconsin’s industry grew jobs by 5 percent. Major employers include Covance, GE Healthcare, Promega, and Thermo Fisher Scientific. ...in 2013 the state government approved a bill to invest $25 million in a venture capital fund that is expected to leverage another $50 million in private venture capital money... Biotech in Wisconsin enjoys the generous support of associations like BioForward and the Wisconsin Technology Council, as well as business incubators that help reduce costs and foster collaboration. Funding is also on the rise — in 2013 the state government approved a bill to invest $25 million in a venture capital fund that is expected to leverage another $50 million in private venture capital money.

“Wisconsin’s angel investing metrics have grown steadily over 10 years, for reasons that range from state tax credits for investors to a statewide networking and deal-flow structure,” says Tom Still, president of the Wisconsin Technology Council. “The venture capital landscape has been less developed, but that may change with four new funds in various stages of formation. Crowdfunding may help, too, after the rules for equity investments in startups shake out.”

This increased funding support will strengthen Wisconsin’s reputation as a choice destination for companies seeking research partners and venture capitalists seeking high-yield investments.

A Spirit of Collaboration
Much of the bioscience research and development in Wisconsin is conducted at the UW-Madison, Medical College of Wisconsin, and UW-Milwaukee. Smaller, private-sector biomedical companies are attracted to University Research Park in Madison, which is home to emerging companies likes Cell Line Genetics, Exact Sciences, FluGen, and Imbed Biosciences. Forbes recently ranked University Research Park one of the "12 business incubators changing the world." There is also plenty of room for expansion — University Research Park is expected to double in size over time, even as other high-quality parks, such as UW-Milwaukee’s Innovation Park, open for business.

Wisconsin Alumni Research Foundation (WARF) has commercialized University of Wisconsin inventions for more than 80 years, as well as supported the broader research community. WARF successes include the revolutionary anticoagulant Coumadin® and patents for human embryonic stem cells. WARF manages a $2 billion endowment, accumulated from decades of licensing and investment revenues.

WARF also supports scientific research at the Morgridge Institute for Research, a state-of-the-art interdisciplinary biomedical research organization dedicated to solving major challenges to human health. The Morgridge Institute is part of the larger Wisconsin Institutes for Discovery, a public-private initiative that facilitates interdisciplinary research. In August 2013, for example, researchers from the Morgridge Institute announced a new method for targeting and repairing defective genes using human pluripotent stem cells, which are essentially “reverse engineered” from other cells to perform like embryonic cells. They can be used to generate virtually all human cell types, making them invaluable for regenerative medicine, drug screening, and biomedical research.

"With this system, there is the potential to repair any genetic defect, including those responsible for some forms of breast cancer, Parkinson's, and other diseases," says Zhonggang Hou, a member of Morgridge Institute's regenerative biology team.

Immersed in Innovation
Many innovative medical device companies are located in Wisconsin, including newer companies such as Echometrix (ultrasound equipment), Medical Engineering Innovations (ablation devices), Re (prosthetic hand), Swallow Solutions (device for strengthening swallowing muscles), Stealth Therapeutics (implantable port for delivering medication), Eso-Technologies (heart-monitoring sensors on esophageal devices) and Wicab (a tongue plate that helps blind people “see”).

Cellular Dynamics International (CDI) — created by UW-Madison stem cell pioneer James Thomson in 2004 — is one of the top biotechnology companies in the state. CDI takes cells from blood samples and reprograms them into stem cells that can be transformed into specific cell types (heart, brain, etc.). These cells are used for drug research and discovery, testing products for toxicity, and stem cell banks. Key clients include AstraZeneca, Hoffmann-La Roche, and other major pharmaceutical companies. Although venture-capital (VC) funding tends to be cautious in the Midwest, the success of innovative companies like Cellular Dynamics and Stratatech is making investors take notice of Wisconsin. Stratatech Corporation is another Wisconsin biotech leader making news. This regenerative medicine company has developed cell-based, tissue-engineered skin substitute products for therapeutic and research applications. In August 2013 it signed a $47.2 million contract with the U.S. Department of Health and Human Services’ Biomedical Advanced Research and Development Authority (BARDA). This support will help accelerate its flagship product, StrataGraft, through its remaining clinical trials, with the goal of commercialization within five years. Initial trials show promising results — of 20 burn patients treated with StrataGraft, for example, 17 had their wounds fully close within three months, avoiding painful grafts of their own skin. The BARDA contract also funds manufacturing process development and scale-up, so that Stratatech can be ready for large-scale production if needed (for example, mass-casualty events).

“Securing a highly competitive BARDA contract provides important recognition as to the innovative quality and potential therapeutic impact of our technology,” says B. Lynn Allen-Hoffmann, Stratatech’s chief executive and chief scientific officer. “Not only does this contract provide comprehensive funding to advance our lead product and expand its prospective label indication, but the manufacturing platform being developed will support our entire product portfolio of skin substitutes.”

Although venture-capital (VC) funding tends to be cautious in the Midwest, the success of innovative companies like Cellular Dynamics and Stratatech is making investors take notice of Wisconsin.

“For example, Prodesse [a Wisconsin biotech firm purchased for $72 million by San Diego-based Gen-Probe] is one of at least 19 major exits by technology-based startups in Wisconsin in the past six years, with deal size ranging from Madison-based Nerites’ $20 million sale to Kensey Nash in 2011 to Hologic’s 2008 acquisition of Madison’s Third Wave Technologies for a whopping $580 million,” says Jeff Engel, editor for the Wisconsin bureau of Xconomy, a high-tech news network.

Exits are crucial to a state’s start-up ecosystem for a number of reasons, he notes. These include “grabbing the attention of large companies, private equity firms, VCs, and entrepreneurs around the country; building up a stable of experienced serial entrepreneurs who (ideally) continue to start new companies in Wisconsin; and sprouting a crop of new angel investors who will take their returns and plow them into the next wave of start-ups.”
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