Biofuture: a growing number of promising life sciences companies across the state.

• Author: Hromadka, Erik
• Position: LIFE SCIENCES

WHILE THE SUCCESS OF Indiana's life sciences industry is often considered in terms of such world-leading companies as Eli Lilly, Roche Diagnostics, Biomet, Zimmer and the Cook Group, there are also many smaller companies across the state seeding the sector's future.

Many of those companies trace their roots to the state's universities, where new life sciences technologies are being developed at such places as Indiana University's medical school and its Emerging Technologies Center as well as Purdue University's Discovery Park and Purdue Research Park, home to the state's highest concentration of high tech and life sciences companies.

The state of Indiana has also taken steps to assist such growth in life sciences companies with the 21st Century Research and Technology Fund that provides grants pairing industry and academic efforts. Other incentives include a venture-capital investment tax credit, a research expense tax credit and a state sales tax exemption on research and development equipment that will increase to 100 percent in July.

All those efforts are starting to show results, as evidenced by the following sampling of small, growing life sciences companies from across the state.

Laboratories. Schwartz Biomedical in Fort Wayne is a laboratory that specializes in tissue engineering. Its BioDuct line of products are being developed to address the need for healing and regeneration of tissues of the knee with bioabsorbable materials that are implanted arthroscopically.

"Rather than just work on materials that replace tissue, we work on technologies that regenerate tissues," explains Herb Schwartz, president and CEO. He expects a bright future in Indiana for companies like his that are developing new technologies. "Being a startup life sciences company in Indiana is being at the right place at the right time," he says.

Schwartz says 21st Century grant funding is a valuable tool for life sciences companies because in addition to providing a welcome infusion of capital, the process also provides validation of a company's business model through its peer-review process.

Although Schwartz launched his company with a wealth of technical knowledge, starting a business was a learning process. He says the Northeast Indiana Innovation Center was vital in that regard by providing not only a physical location for operations, but also a source of professional advice and business coaching. "They initially were taking the responsibilities of my management team," Schwartz notes, crediting the center with helping him to make good decisions as he established business operations.

"Seek out advice in areas that you are not well-versed in and surround yourself with advisors in areas where you are weak," he advises startup life sciences companies.

Enzyme Research Laboratories in South Bend manufactures and distributes a variety of enzymes and cofactors used in research on blood coagulation. As a more established company, its products are now used by research communities worldwide.

Founder Mike Morris understands the challenges of building a successful life sciences company and is glad to see the state making an effort to build the industry. When he moved to Indiana from Massachusetts 25 years ago to start the company, there wasn't much of a focus on helping small companies. Nevertheless, he created a business removing proteins from blood and providing them to companies that study bleeding and clotting. Ten years ago he founded a second company called r2diagnostics.com that provides related testing kits.

"We changed the way companies deal with bleeding and clotting disorders," he says, observing the past 25 years have been a very exciting time of new developments in biological and technology advances.

While he says it's important to help new life sciences companies launch, Morris would also like to see more effort to help such companies grow from just a few employees to medium-size companies that provide dozens of jobs in their communities. Although financing for companies with proven technologies requires larger investments, Morris says helping private companies grow allows them to stay in Indiana and create jobs.

"The distance between research and a product is huge," he explains, noting years of development can be difficult and very expensive for small, growing companies. Morris says helping existing companies to grow can make a big difference in their communities. "Spread the risk around a little bit," he suggests.

Phycotransgenics with offices in Bloomington and laboratory space in Indianapolis is working on the development of transgenic green algae, creating vaccines from the single-cell organisms that can be used to improve fish in aquaculture operations.

The company is staking out its niche in life sciences on internationally recognized expertise with this organism and its repertoire of genes and elements for nuclear, chloroplast and mitochondrial gene expression.

"I think the state is doing a very good job in making this a priority," says CEO Richard Wagner, noting that small companies with solid science can make a big difference in the state.

Wagner relocated the company's lab from Ohio to take advantage of the IU Emerging Technology Center in downtown Indianapolis, a business incubator and accelerator for life sciences, biotechnology and bioinformatics companies.

"The facility is well thought out and well-equipped for a small life science company starting out," he says. "I think a number of these facilities around the state would be helpful."

Medical devices. Nanovis is a new company founded in October that has moved beyond its university birthplace.

An affiliate of Purdue Research Park, Nanovis utilized nanotechnology research from biomedical engineers at Purdue University to establish operations in Columbia City near Fort Wayne.

"Nanovis is one of more than 40 companies based on Purdue research that has gone on to market its technology, but it's the first to relocate to the Fort Wayne area," says Steven R. Gerrish, director of development for the Purdue Research Foundation. "We're expecting more technology translocations to occur."

The move was part of a coordinated effort between the university's departments to expand its research into business across Indiana. "This was a prime example of a successful team effort between West Lafayette and Indiana University Purdue University-Fort Wayne," says Scan Ryan, director of university engagement at IPFW. "We're encouraged by the confidence of the investors and hope to continue to boost economic growth here in northeast Indiana by spotlighting more Purdue inventions."

Chief operating officer Matt Hedrick says the company is using nanotechnology from Purdue to improve the interaction between medical implants and human tissues to reduce rejection or infection. The company plans to create products that can assist procedures from knee and hip implants to improved stents and treatments for osteoarthritis.

Hedrick, who previously worked with a startup company in Maryland, says Indiana is doing a good job in creating an environment to launch such life sciences ventures.

"I think a lot of the pieces are in place," Hedrick says, crediting the state's agencies, organizations and universities with supporting new life sciences ventures. "I think the capital is forming as well," he adds.

Biopharma. Semafore Pharmaceuticals in Indianapolis is another example of a life sciences launch that is showing great potential. The company's drug discovery and development is focused on small molecule modulators of the PI3 Kinase (PI3K) and PTEN cell signaling pathway and is targeting cancer therapies.

Founded in 2000, the company's name is derived from the nautical "semaphore" flag signaling system and uses those flags in its logo to spell out H-O-P-E. The company hopes to take major steps in the coming year in its fight against cancer.

CEO John Sima says 2007 should be a very important year for the company as it begins human clinical trials of its new products. "It's pretty exciting for us after working on this for the past five years," he says.

Sima says although the 10-employee company was able to take advantage of local talent in building its science team, getting funding for its research was a more difficult challenge. He says state programs and investment tax credits were very helpful and three rounds of outside financing have raised $12 million from angel investors.

In addition, the clinical trials are being helped by grants received from two organizations. The Multiple Myeloma Research Foundation provided nearly $1 million for a Phase I clinical trial of the inhibitor in multiple myeloma, an incurable cancer of the blood plasma cell, and the Cancer Treatment Research Foundation has provided $535,000 to fund a trial of the same inhibitor in solid cancers.

Sima would like to see Indiana companies attract more venture-capital dollars and he believes the best way for that to happen is to build successful companies in the state.

"The more success stories you have, the more people want to come and play," he says. "We hope to be one of those companies and we are well-positioned to do so."

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