A few weeks ago, The Wall Street Journal featured a front-page story entitled "Silicon Valley 3.0" — a report on the Silicon Valley’s latest incarnation as a hotbed of life science and clean-energy technology companies. The upshot: Despite the lingering impact of the "great recession" elsewhere in the country, the Valley is booming.
What about Hawaii’s own version of "The Valley"?
Let’s look at Hawaii’s larger local economic scenario first. As everyone here knows, Hawaii’s economy is still pretty much limping along.
What’s keeping us going? The military, at least for the foreseeable future, is helping us to stay afloat, but that won’t last forever. Congress is in a deficit-cutting mood, and there’s no question that defense spending will shrink along with the rest of the entitlement programs.
That leaves Hawaii with tourism, which is on the mend — but, as we know, is always vulnerable to events outside of our control.
That brings us to the good news.
Hawaii’s nascent life-sciences sector, while minuscule in scale compared to "The Valley," is chugging along. There are also some national business trends that bode very well for it to continue to blossom.
What is helping the Aloha State is that large pharmaceutical firms are acquiring startup biotech companies and cutting licensing deals at an earlier stage than ever before. For example, a Merck & Co. subsidiary paid somewhere north of $4 million to acquire Hawaii Biotech’s vaccine technology, including its dengue fever vaccine research unit. No, it wasn’t a mega deal, but it demonstrates that Hawaii scientists can develop technology that has value outside the state.
This dynamic could also work in favor of other local companies.
For example, Kuehnle AgroSystems, Inc., led by Heidi Kuehnle, a former University of Hawaii professor, could be a prime target for acquisition by a larger company. The firm produces bulk live algae for aquaculture markets and customized algae seed stock to produce specialty bioproducts for flavorings and nutraceuticals in Manoa Valley.
However, the biggest potential for the company is the biofuels market, which worldwide could be a $280 billion industry by 2022. The firm has test contracts with Phycal, General Atomics, the Office of Naval Research and others.
With Big Pharma ever on the prowl for deals, our own company, Cardax Pharmaceuticals is also in a very good position to be acquired or to license its technology. The company is developing oral anti-inflammatory drugs that could combat many of the chronic diseases now known to be driven by inflammation, including high triglycerides, rheumatoid arthritis, cardiovascular disease, liver disease, metabolic syndrome, diabetes, macular degeneration and prostate disease.
With the Big Pharma firms losing their patents on many of their top-selling drugs, and few replacements on the horizon, we’re in a very good position to provide some of the new drugs they need.
Other Hawaii life-science companies are also attracting mainland venture capitalist or large company interest.
Kakaako-based Tissue Genesys (TGI), run by former IBM exec Anton Krucky, recently received FDA approval for its vascular grafting process — a technology developed here in Honolulu. The new therapy can repair damaged vessels caused by vascular disease, diabetes, smoking or injury, with a scaffolding process that uses a patient’s own stem cells. TGI has also licensed its stem-cell harvesting medical device with Minnetonka, Minn.-based American Medical Systems.
Cellular Bioengineering, Inc., founded by Stanford-educated Hank Wuh, has a wide array of products ranging from artificial cornea for transplants to alleviate corneal blindness, to nanotechnology products that combat drug counterfeiting — a rampant global issue. CBI, based in McCully, found itself in the news recently when company reps flew to Hungary to assist with the disaster relief efforts in one of the worst toxic spills in recent memory. CBI was on hand with DeconGel, a locally developed decontamination solution that could prove crucial in cleaning up the mess.
These are only a sample of thehomegrown life-sciences companies that will someday change the face of our local economy. Collaborating with larger companies, smaller life-science companies here could develop into enterprises with revenues that could rival or exceed the largest companies in Hawaii.
By growing this technology, we’ll create the 21st century jobs that will benefit everyone in the state.
David G. Watumull, former chief executive officer of Hawaii Biotech Inc., is CEO of Cardax Pharmaceu-ticals, a Manoa Valley-based startup.