Area Development
On November 2, 2001, the country watched and listened with fascination when Robert Tools, the recipient of the first AbioCor artificial heart, let Stone Phillips of "Dateline NBC" broadcast its beat on national TV.

This was the first time the public had seen an artificial heart recipient able to stand and walk on his own. Still, the device did more than get Tools back on his feet. It focused the national spotlight on Kentucky, where the device was implanted.

Sadly, Tools died 151 days after his amazing surgery, but the next critically ill heart patient, Tom Christerson, lived for almost a year and a half after receiving the AbioCor. Today the pioneering spirit these patients and their doctors displayed is still thriving in the Bluegrass State.

A great example is the Cardiovascular Innovation Institute, a new research facility that's being created through a partnership of the University of Louisville

(U of L) and Jewish Hospital, also located in Louisville. This $50 million institute, which also receives financial support from the Kentucky Cabinet for Economic Development's Department of Commercialization and Innovation (DCI), the federal government, and private sources, will continue the Commonwealth's tradition of introducing artificial heart devices that started back in the 1980s. It will focus on developing more effective and less intrusive devices for patients with advanced heart disease. Construction has begun on a new five-story building to house the institute.

The Advanced State of Biotechnology in Kentucky
Thanks to Kentucky's pioneering and progressive tax laws and proactive incentive programs, hundreds of life-science-related companies have already located in the Bluegrass State.

Other states often claim to be friendly to business, but Kentucky backs it up. For instance, Kentucky has consistently ranked among the most competitive states when it comes to assisting businesses looking to expand existing facilities or develop new ones. You will find Kentucky and some of its leading biotech companies and R&D institutions at prestigious industry showcases, such as the May 2007 BIO International Convention in Boston.

One of the first large biotechnology companies to settle in Kentucky was Martek Biosciences. A spinoff from defense and aerospace giant Martin Marietta, Martek discovered how to extract fatty acids - essential nutrients for the human body - from marine algae. Two of Martek's fatty acid products (originally developed for America's space program) are now added to 80 percent of all baby formulas sold.

When those children are old enough to drink real milk, Alltech, a global biotech headquartered in Kentucky, will have made it better and cheaper to drink. The company uses its expertise in fermentation and enzymes to improve the quality of animal feed while lowering its costs. Today, Alltech has manufacturing facilities in 14 countries and annual revenues of more than $400 million.

The company's natural growth promoter - derived from a select strain of yeast - has helped reduce the need for antibiotics in animal feed and therefore decreased their presence in human food supplies. Soon, Alltech will open the first Center for Animal Nutrigenomics and Applied Animal Nutrition. These studies will provide exacting diagnostic tools that will rapidly help scientists define the optimal nutritional status of individual and groups of animals.

Another Kentucky biotech that concentrates on improving the health of animals is Equine Biodiagnostics, Inc., located on the 735-acre University of Kentucky (UK) Coldstream Research Campus. The company assists more than 4,000 veterinary practitioners worldwide in accurately diagnosing equine infectious diseases through its specialized molecular-testing capabilities.

Pharmaceuticals and Natural Products Research
Kentucky is playing an ever-increasing role in the development of oral and injectable medicines for humans. Since its start in 1986, the Center for Pharmaceutical Science and Technology (CPST), located on the main campus of UK in Lexington, has developed and manufactured drugs for over 200 research projects utilizing current best manufacturing practices. Many of the projects that the center has been involved in have led directly to clinical trials.

Recently, the CPST was spun off as a private company, called Coldstream Laboratories, and opened an advanced pharmaceutical manufacturing factory at UK's Coldstream Research Campus. The new $17 million Coldstream Laboratories, opening soon, will offer full-service pharmaceutical R&D support and sterile drug manufacturing for clinical trials and some niche commercial products.

The development of natural products and supplements is also being enhanced in Kentucky. September 2006 witnessed the grand opening of Kentucky BioProcessing, LLC, in Owensboro. The company, which extracts purified proteins and other value-added products from plants and organic materials, was partially funded by a $3.6 million loan from the Kentucky Agriculture Finance Corporation. Kentucky BioProcessing will pave the way to producing more natural products and create more opportunities for Kentucky farmers.

One of the organizations with which Kentucky Bioprocessing is collaborating is the Kentucky Tobacco Research and Development Center. The center conducts research on plant-based pharmaceuticals and other natural-product opportunities for Kentucky agriculture.

Providing an Environment That Helps Biotech Companies Compete in the Global Marketplace
To attract and nurture high-tech startups around the Commonwealth, Kentucky created the DCI within the Cabinet for Economic Development. DCI manages a statewide network of six regional Innovation and Commercialization Centers (ICCs) and six local Innovation Centers (ICs). These public-private partnerships help scientists and entrepreneurs turn intellectual property into market-ready products. The ICCs and ICs help entrepreneurs understand the business startup process, link them to funding sources, and help them make connections with experts from the business sector, universities, community and technical colleges, local communities, and state and federal government.

Another way that Kentucky is attracting biotech companies to the state is by growing them itself. Through the Kentucky Science and Engineering Foundation, small Kentucky-based businesses are eligible to apply for R&D Excellence Program awards under the "emerging technologies" category. Through a peer-review system, awards ranging from $20,000 to $50,000 per year are given to businesses in key research and development focus areas.

The foundation also provides seed funding to assist Kentucky's small companies in developing competitive, high-quality Phase 1 and Phase 2 proposals to federal agencies participating in the Small Business Innovation Research (SBIR) and Small Business Technology Transfer Research (STTR) programs. Companies are eligible to apply for up to $4,000 to assist in the preparation of a federal proposal.

Kentucky's support for high-tech small business is unsurpassed. For example, Kentucky is the only state in the nation to specifically match both federal Phase 1 and Phase 2 SBIR-STTR awards.

DCI is now accepting applications from Kentucky-based companies for state funds to match federal Phase 1 awards made on or after January 1, 2006. Qualifying awards will be matched by Kentucky up to $100,000. Starting July 1, 2007, Kentucky will also match qualifying Phase 2 awards received on or after January 1, 2007, up to $500,000 per year.

Of course, all the money in the world can't make a difference if a startup doesn't have a good pool of talent from which to draw. That's why in the late 1990s, Kentucky created the Research Challenge Trust Fund, or "Bucks for Brains," and began pouring hundreds of millions of dollars into its major public universities to attract top scholars. This new fund has led to a dramatic increase of endowed chairs and professorships, coupled with enormous increases in research dollars from other sources.

The Chronicle of Higher Education and other publications have noted the impressive gains made by U of L and UK in attracting federal research and developing valuable patents. UK has ranked among the top universities in the number of startup companies formed per $10 million in research spending. U of L's 277 percent growth since 1999 in National Institutes of Health funding ranks first among the nation's top research universities.

The State's Initiatives Are Working and So Are Its Citizens

Incentives are one of the many ways Kentucky goes the extra mile. Atlanta-based Jim Medbery, a senior vice president for the site-consulting firm Binswanger Corporation, says he speaks regularly with fellow consultants around the country, and the consensus is that Kentucky has a lot to offer.

"We all compare notes, and Kentucky always rates as one of the most pro-business states out there," says Medbery, who estimates he has been involved in 40 major plant locations in Kentucky. "We think Kentucky has the best incentive program of any of the states in the region," he says. "They are very aggressive with regard to corporate tax abatements and other incentive programs that are designed to offset the cost of opening and occupying a facility."

To find out more about how Kentucky can help your biotechnology business grow or assist you in getting your biotech idea off the ground, contact the Kentucky Cabinet for Economic Development. After all, there's nothing Kentuckians like to hear more than the heartbeat of a new business.

Deborah Clayton, Commissioner
Dept. of Commercialization and Innovation
Kentucky Cabinet for Economic Development
Old Capitol Annex, 300 West Broadway
Frankfort, KY 40601
Tel: 800-626-2930
Fax: 502-564-3256