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The business of biotech

The hope that the UH medical school would spark investment still remains

By Kristen Consillio

LAST UPDATED: 11:36 p.m. HST, Aug 5, 2011

HAWAII'S decade-old vision of launching a vibrant life sciences industry to diversify the state economy hasn't come to fruition, though scientists still hope it will.

At the core of this vision is the University of Hawaii John A. Burns School of Medicine, which opened its campus in Kakaako in 2005 and was touted as the magnet to attract high-technology companies that would share research and lucrative ventures.

That critical mass was never established partly because of economic problems that prevented installation of costly laboratory and research space for companies that develop biotechnology, health therapies and medical devices.

"It's (the life sciences industry) still floundering; we don't have a set direction," said J. David Curb, the med school's director of translational research and former CEO of the Pacific Health Research Institute, a Honolulu-based biomedical research organization. "Currently, we just don't have the organization we need to make it happen. I think a lot of people are really not sold (on the idea) that we need this. It doesn't grow by itself."

Even so, there were at least a dozen high-tech firms created in the last decade that are working toward commercializing research. Some biotech collaborations have extensive partnerships with the medical school; others have looser arrangements.

"There are some things that are happening; it's not a total bust," said Anton Krucky, CEO of Tissue Genesis Inc., a regenerative medicine and cell therapy research firm founded in 2001 adjacent to the medical school.

The company recently began Food and Drug Administration clinical trials — a major step toward commercialization — for its stem cell therapy.

"We wanted to be by the medical school so they could claim they attracted a biotech company like Tissue Genesis even before their doors opened."


Some of the biotech companies in Hawaii working with the University of Hawaii medical school:

» Skai Technologies has developed an artificial cornea, nanotechnology to monitor the authenticity of pharmaceutical pills and tablets, and materials to clean radiation and other toxic chemical exposures.

» Tissue Genesis has developed vascular grafts lined with the patient's own vascular (endothelial) cells.

» Hawaii Biotech focuses on the research and development of vaccines for established and emerging infectious diseases. The company has developed proprietary expertise in the production of recombinant proteins applicable to the development of safe and effective vaccines (e.g., for the West Nile and dengue fever viruses).

» Cardax Pharmaceuticals is developing proprietary small-molecule therapies for largely unmet medical needs where oxidative stress and inflammation play important causative roles, including cardiovascular disease, hepatitis, macular degeneration and many cancers.

» Cyanotech is a world leader in micro-algae technology and produces BioAstin Natural Astaxanthin and Hawaiian Spirulina Pacifica, all-natural, functional nutrients that promote health and well-being.

» The Queen's Medical Center has two joint ventures related to biotechnology development. The first venture with the medical school addresses advanced technology for neuro-imaging. The joint venture has led to development of a methodology for correcting motion-induced artifact in magnetic resonance imaging scans. The second venture is with Hamamatsu Photonics in Japan. The joint venture has led to the development of a PET scan methodology for screening for early prostate cancer.

Source: UH John A. Burns School of Medicine


A lack of venture capital has been among the biggest challenges in creation of more biotech companies in Hawaii since it takes significant long-term investment and time to develop new products and services, he said.

"The investment economy is the lifeblood of entrepreneurial companies," Krucky said. "However, for biotech companies to flourish over a long period of time, interaction with an institution of higher learning is a key component."

The medical school has had difficulties fulfilling former Dean Edwin Cadman's dream of attracting sufficient world-class scientists to bring in major grants and contracts for research that, in turn, attract tech startups and businesses and create a thriving life sciences industry.

Some of that has happened, though not at the level or speed initially thought. The medical school has hired at least a dozen so-called gold-standard researchers out of a goal of 20. State budgetary restrictions have made it difficult to bring in more.

"With cutbacks in the state, we're not in the position to recruit additional faculty who would bring in more grants," said Jerris Hedges, dean of the medical school.

Progress has been slowed by a poor economy, limited investment by the state and a more competitive environment for a shrinking pie of federal grants, Hedges said. In addition, progress was significantly stalled when Cadman left the school in 2005 due to declining health.

"These things do not happen in a vacuum, and they do not happen overnight," Hedges said. "These activities evolve over decades and are catalyzed by collaboration and state investment in the academic infrastructure that generates the concepts and vehicle for business development."

The medical school, with an annual budget of $100 million, has made strides in building its research program and generated $48 million in grants and contracts in the past 12 months. However, it is far from its target of bringing in $81 million per year in grants and contracts, one of the promises Cadman made of the new medical campus.

On the private side of the vision, some biotechnology companies have made headway in developing technologies that could put Hawaii on the map for successful research and development of commercial products.

"We're on the cusp of a number of major developments for companies that are here in Hawaii that are a direct result of that vision," said David Watumull, chief executive officer and president of Cardax Pharmaceuticals Inc., a spinoff of Hawaii Biotech Inc.

"With more time I think we will see growth in this industry in Hawaii that could surprise people. The types of financial results that occur in this industry could be large enough to have statewide impact."

Groundbreaking for the UH Cancer Center late last year is fueling momentum and renewed hope that the Kakaako campus can become a catalyst for a more robust diversified economy.

Landowner Kamehameha Schools continues to evaluate the feasibility of a proposed $200 million Asia-Pacific Innovation Center adjacent to the medical school, initially envisioned to provide substantial research space, including wet labs that would be available to bioscience-related enterprises.

"Kamehameha Schools remains supportive of a life sciences ‘cluster' in Kakaako makai, and we are encouraged by the construction of the University of Hawaii Cancer Research Center," said Paul Quintiliani, director of Kamehameha's commercial real estate division.

"The cost of building laboratory and supporting office space is considerably higher than typical office projects, and so our biggest challenge has been finding viable tenants with funding to support the project."

IN A first step in redeveloping Kakaako, Kamehameha is moving forward on a master-planned urban neighborhood with the first phase of apartments scheduled to open by the end of 2012. Kamehameha's vision for the project is to support scientists and other workers at a life sciences campus.

"We have some great science, we have some great people and we're short on capital," said Barry Weinman, a major contributor to the UH med school and founder of Allegis Capital, a Silicon Valley venture capital fund that manages $700 million. "We've made a small number of steps, but we have not accomplished the goal. However, the goal is still living. It's just been delayed."

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