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Something Ventured

by Adam Bruns

Dig into the national data and you’ll find Kansas playing a more and more prominent role in sparking innovation.

The Q3 2022 Venture Monitor report from PitchBook and the National Venture Capital Association showed no fewer than nine deals that took place in the bistate Kansas City area, including three in Kansas: surgical device firm Artio Medical’s $28 million late-stage funding in Prairie Village; Olathe-based biotech firm Ronawk’s $2 million early-stage funding; and an $11 million investment in software firm Idle Smart, based in Overland Park.

Artio Medical last spring received FDA approval of its first device, a product called the Solus Gold Embolization Device, designed to reduce or block blood flow in blood vessels. The company’s growth, however, is flowing nicely. In December 2021 the City Council of Olathe approved a development agreement granting land to the company for commercial manufacturing operations where Artio plans to build two commercial manufacturing buildings on an 18-acre parcel. The agreement also grants Artio the right to to acquire adjacent land for a third building, potentially bringing the total project to over 150,000 sq. ft. and creating more than 200 new jobs.

The company two years ago changed its name from Metactive Medical to Artio, a Latin word meaning “to place with a tight fit.” By every indication, Prairie Village, Johnson County and Kansas as a whole are the right fit for the company.

KS22_Incubators-one

Phase III of KU Innovation Park opened in summer 2022, providing ample space for resident companies to continue expanding while new startups continue to multiply.

Photo courtesy of KU Innovation Park

“This is an exciting time for Artio as we prepare for the commercialization of our first products and scale our commercial manufacturing capability,” said Wendy Sawyer, senior vice president of operations and quality for Artio Medical. “The combination of a skilled work force, a community with an exceptional and affordable quality of life, the availability of adjacent land to accommodate future growth, and an attractive incentive package made Olathe the right choice.”

Rock Chalk

In just the bio space alone, according to BioNexusKC, facilities ready to foster innovation and build partnerships include Biomedical Devices of Kansas (BMDK), a contract medical device company in Tonganoxie (northeast of the university town of Lawrence on the KC outskirts) that offers a business accelerator for human or animal health medical device companies. The operation provides design services, proof of concept, prototypes and production for from concept to commercialization.

In Lawrence proper you’ll find KU Innovation Park (formerly the Bioscience & Technology Business Center), which began as a 51,400-sq.-ft. facility with wet lab and office space and offers “professional business services to emerging bioscience and technology companies, spinouts from KU, KU research collaborations and established companies benefiting from close proximity to university assets.” A separate 20,000-sq.-ft. facility, known as the BTBC-KUMC Facility, is located at the University of Kansas Medical Center in Kansas City, Kansas.

Officials in summer 2022 held the grand opening for Phase III of KU Innovation Park, a 68,000-sq.-ft. wet lab and office building supported by $7.8 million from the U.S. Economic Development Administration. “There isn’t a whole lot of wet lab space in the region. It’s expensive to develop, and if a company wanted to grow, they typically had to leave the region,” said Adam Courtney, KU Innovation Park’s CFO. “Our facility fills that gap, and we continue to see high demand for the space.”

The 63 current and graduate companies affiliated with KU Innovation Park have created 590 jobs and $36 million in payroll. Leaders expect the new building to house 12 companies and anticipated the space would be completely booked before 2023 rolled around, primarily because companies in the park’s earlier phases are ready to grow more. A separate $1.5 million EDA Build to Scale investment will support a new accelerator suite program and space to house additional startup companies on site.

“These facilities will help to diversify our economy by growing more tech, research, science and business jobs,” Courtney said in a November 2022 release. “They will also make it more resilient.”

The ultimate goal? Ten buildings and 800,000 sq. ft. of space, which would host as many as 4,000 jobs.

Other Places, Innovative Spaces

Plug and Play Topeka runs an animal health program that launched its first cohort of startups in 2020 based in part on interest from corporate partners including Hill’s Pet Nutrition, Cargill and utility Evergy. The organization in August 2022 named 12 more startups in its fourth cohort. Spanning five countries, their innovations range across food safety, sustainable packaging, AI, alternative proteins, pet health and wellness and livestock monitoring. “We are lucky to have such engaged corporate partners that aren’t afraid of change and willing to think innovatively to help disrupt and shape this industry,” Lindsay Lebahn, program manager for Plug and Play Topeka, says. “We currently have 12 pilots/projects between our corporate partners and startups they have met through Plug and Play including two partnerships, Hill’s and Bond Pet Food as well as Cargill and Sten Co.”

Asked how Silicon Valley-based Plug and Play chose Topeka, she says, “Topeka was very bold! GoTopeka, the economic development arm of The Greater Topeka Partnership, actually came out to Plug and Play Headquarters and pitched the idea to open a vertical in Topeka around Animal Health. They presented the entire vision right off the bat. It was the first time an economic development group had ever approached us.”

That proactivity is part of what she would convey to corporate decision-makers.

“I still think we are a hidden gem,” she says. “Our region is very welcoming and collaborative, which are two huge pieces of the puzzle. We are surrounded by top universities and government advocacy being the state capital and have robust incentives programs that hopefully make it hard to fail.”

Other sites cultivating Kansas innovation include the Edge Collaboration District in Manhattan, where Kansas State University Office and Research Parks has overseen development of multi-tenant and dedicated office and lab buildings adjacent to the KSU campus and the National Bio & Agro-Defense Facility (NBAF) “with several shovel-ready sites available.”

Among the companies in the district are Garmin International, Merck Animal Health, ag-tech innovator Topcon Agriculture, U.S. Stone Industries and an office of the U.S. Department of Agriculture. K-State Office Park says five phases — including a proposed Ag Innovation Hub — will add 310,000 sq. ft. of flexible research and office space to the community when completed.

The Kansas State University Research Foundation does business as K-State Innovation Partners, which has tallied 175 economic partnerships to advance client companies, invested in or helped launch 18 companies and was involved in 35 technology licensing agreements in FY 2020.

Sherilyn McRell, operations manager for the KSU Foundation, tells me the goal of the Edge Collaboration District “is to provide state-of-the-art co-location opportunities for partners who enhance academics and research on campus, contribute industry expertise, promote regional and international collaborations, access student talent and align with the university’s land-grant mission.” 

Features

Something Ventured

Investment in US biotech and medical device firms in 2014 reached its highest level in seven years, with $8.6 billion invested into 789 deals, says the MoneyTree Report released in mid-February by PricewaterhouseCoopers (PwC) LLP and the National Venture Capital Association (NVCA), based on data provided by Thomson Reuters.

It was a 29-percent increase in dollars but a 3-percent drop in deals compared to 2013, says the report, entitled “Biotech funding surges.” Biotech investment dollars rose 29 percent compared to 2013 to $6 billion, while the number of deals decreased 4 percent to 470 deals, making it the second largest investment sector for the year in terms of dollars invested, behind the media and entertainment sector. “The Medical Devices industry finished 2014 up 27 percent in dollars to $2.7 billion,” says the report, “and the number of deals remained relatively flat in 2014, compared to 2013.”

“The life sciences sector saw five megadeals last year, a testament to the highly innovative biotech and medical device technologies and the resulting confidence of venture capitalists in the business models of these start-ups,” said Greg Vlahos, Life Sciences partner at PwC, noting the $446 million raised by Moderna Therapeutics in Cambridge, Mass., and the $200-million round by Intarcia Therapeutics, which is headquartered in Boston and has manufacturing in the Bay Area municipality of Hayward, Calif. “Given the strong level of investments in this sector and others in recent quarters, we expect continued high investment levels in life sciences in the first half of 2015.”

In 2014, total venture capital dollars invested in the US across all industries was $48.3 billion in 4,356 deals, including $14.8 billion in the fourth quarter — the highest annual and quarterly investment totals since 2000. “With a 33-percent increase in funding for early-stage life sciences companies in 2014, start-ups are likely to continue to do well in the year ahead,” said Vlahos.

During the full year 2014, 115 venture-backed companies went public in the US, including 27 venture-backed IPOs in the fourth quarter, valued at $4.4 billion. Sixteen of the 27 IPOs were in the life sciences sector. Biotech led the sector IPO offerings, with 59 offerings during the full year 2014. “This marks the strongest annual period for US-listed venture-backed offerings in the sector since records began in 1994,” said the report.

“With the technology sector grabbing all the headlines, it’s worth noting that for the second year in a row biotech companies accounted for more than half of all venture-backed IPOs,” said Bobby Franklin, president and CEO of the NVCA.

Thank You, Corporate giants

Analysis by EY in its 2014 “Unlocking Borders” report found strong biotech performance among the publicly traded companies in the four established centers of the US, Europe, Canada and Australia, which saw 2013 revenues increase by 10 percent relative to 2012. But R&D spending contracted in Europe by 4 percent in 2013, “indicative of a much more constrained financing environment and an industry that experienced lower overall revenue growth,” said EY. By comparison, US R&D spending rose by 20 percent in 2013.
And while analysts are busy tracking SME successes and failures and M&A activity, it’s big firms who continue to carry the payload.

“Virtually all of the global industry’s 2013 revenue growth came from the 17 US-based commercial leaders, which posted strong increases in revenue and profits on the back of important new drug launches,” said the EY report. The biggest drivers of growth? Biogen Idec, Celgene, Gilead Sciences and Amgen. Among those four companies, Site Selection’s New Plant Database since January 2013 has tracked a $200-million investment by Amgen in Singapore and a $47-million, 50-job expansion by Gilead in Edmonton, Alta.

— Adam Bruns

Capitals of Capital

As the Intarcia and Moderna deals hint, Boston and the Bay Area (including Silicon Valley/San Jose) continue to reign supreme as life sciences locations.

Tracked by number of life sciences deals in 2014, San Jose led all comers, says PwC, with 134, outdistancing Boston (112), San Francisco/Berkeley (56), San Diego (49), New York (42) and Philadelphia (29), home to leading incubator University City Science Center. The good news for the rest of the country? A large region labeled “Great Lakes” scored 67 deals, and the “other US” category (outside the main 24 markets PwC tracks) tallied 91 deals.

Tracked by dollars, however, nobody beats Boston, which squeaked by San Jose in total life sciences venture capital attracted, $2.08 billion to $2.05 billion. San Francisco/Berkeley ($701.8 million) ranked third, followed by San Diego ($542.5 million) and New York ($527.2 million).

“In 2014, Boston received the highest biotechnology investment among all markets since MoneyTree was launched in 1995,” said Vlahos. Others lurking at the top (see chart) include Chicago, New York City, and North Carolina’s Research Triangle.

A pioneer in developing messenger RNA Therapeutics (mRNA Therapeutics™), Moderna last June announced a 50,000-sq.-ft. (4,645-sq.-m.) headquarters, lab and manufacturing expansion to a building in one of the most sought-after life sciences addresses in the world: Kendall Square in Cambridge, Mass. Moderna’s former headquarters in Cambridge will be dedicated to R&D and GMP manufacturing. The new site will house Moderna Venture Incubator laboratories, non-GMP production facilities, and the relocated HQ offices.

“Moderna’s rapid growth has led to our expansion in Cambridge — a city with the right resources and talent to fuel our continued success,” said Stéphane Bancel, founding president and CEO of Moderna, last summer. Less than three years after launch, the Moderna team had grown to about 145 people in Cambridge by December 2014, and the company anticipates hiring about 100 new staff this year.

Collaboration is driving that growth. In addition to its proprietary research programs, Moderna has strategic research agreements with AstraZeneca, Alexion Pharmaceuticals and DARPA (the Defense Advanced Research Projects Agency). In addition to 16 ongoing research programs as of last June, AstraZeneca is adding another 15 programs to its eight programs already underway. Alexion intended to add more programs following the two it initiated upon signing an agreement with Moderna in January 2014.

Since 2011, Moderna has received more than $1.4 million in tax incentives from the Massachusetts Life Sciences Center based upon commitments to create more than 70 new jobs in the Commonwealth.

“Moderna is firing on all cylinders, making important discoveries on the core science behind mRNA drugs, advancing research programs and filing key patents to drive future growth,” said Bancel. “We are grateful to the Commonwealth of Massachusetts and the City of Cambridge for their support. Moderna is committed to investing in Cambridge — an important global hub for biotechnology research, development and commercialization.”