BIOTECH BATTLES
Funding cuts threaten the future of the New Orleans BioInnovation Center.
At the core of a thriving business, you’ll find an idea. It’s the glimmer that attracts a hardworking team, confident investors and, ultimately, a horde of consumers.
But an idea alone won’t roll out the red carpet for an innovator-turned-entrepreneur. In the field of biotechnology, especially, an intriguing concept is just the first step to entering the marketplace. Further development requires time, capital and a keen business sense.
Enter the New Orleans BioInnovation Center (NOBIC). Located on 1441 Canal Street in the city’s growing biomedical corridor, the nonprofit center provides a small business incubator for enterprising scientists in New Orleans in search of legal advice, funding opportunities, workspace and an emerging, engaged local community.
The center opened in its current location in June 2011, encompassing four stories and 66,000 square feet of space of laboratories and offices. The close proximity to Tulane and LSU’s health science centers has made NOBIC an obvious destination for infant technologies growing out of the universities.
The New Orleans BioInnovation Center stimulates a broad range of companies and their products, from venture capital funds and mobile healthcare platforms to nanotechnology and dietary supplements.
“But we’re in a precarious position,” says President Aaron Miscenich. “[Gov. Bobby Jindal] zeroed our budget as part of his 2015-16 funding.”
According to Miscenich, a third of NOBIC’s budget came from state assistance. Other sources of revenue include federal grants, market rent for the facility, and private sponsors such as J.P. Morgan Chase & Co. (In November 2014, the bank awarded NOBIC a $200,000 grant as part of a nationwide small business growth initiative.) “We can’t survive with this,” says Miscenich of the cuts.
Citing an overall reduction of $1.2 billion in his Fiscal Year 2016 Executive Budget, Governor Jindal states in the introduction to the budget proposal: “To get to this point, we worked closely with department heads and officials to identify opportunities that would further reduce the size and scope of government. Our approach required each agency to take a critical look at every expense in the budget to prioritize what is essential and target what is not.”
LEFT: A colorful entryway adorned in glass panels welcomes visitors to the center.
RIGHT: NOBIC President, Aaron Miscenich
Photo courtesy of Eskew+Dumez+Ripple
The cost cutting doesn’t end with the center’s overall budget. July 1, 2015 marked the beginning of the new fiscal year with the sunset of several state tax credits, including the Research and Development (R&D) Tax Credit and the Angel Investor Tax Credit (for individual investments in early-stage startups), both reduced and made nonrefundable by the new state budget—signed into order by Governor Jindal on June 19—which aimed to offset Louisiana’s $1.6 billion deficit while limiting unpopular cuts in higher education.
But where does that leave the evidently inessential New Orleans biotech community?
IN THE BEGINNING
Plans for NOBIC began as early as 2002, when Gov. Mike Foster’s Louisiana Vision 2020 action plan identified the life sciences as a targeted growth industry for the state. “At the time, they allocated $30 million for the construction of three wet lab incubators [specially designed to handle drugs and chemicals] in Baton Rouge, Shreveport and New Orleans,” says Miscenich.
The New Orleans incubator operated out of an existing facility on Canal Street until 2004, when construction began for a new center to be built in place of the 1950s-era Wirth Building. Hurricane Katrina arrived shortly after the demolition of the Wirth Building and delayed construction until 2008.
“At that point we decided to take a step back,” says Miscenich. All three incubators received additional funds for construction from the state, with New Orleans securing a full $47 million to create a new facility from the ground up.
“The city’s done a good job since the storm developing different economies,” says Miscenich. “And all the strategic plans recognize the life sciences as a place for development.”
Inaugurated in September 2011, the New Orleans BioInnovation Center works closely with Tulane Health Sciences Center, LSU Health Sciences Center, and Xavier University, as well as the University of New Orleans, to provide wet laboratories and commercialization assistance for local startups.
“We’ll get a call from [the schools’] Office of Technology Transfer,” says Miscenich. “They’ll bring us in and help us understand the validity of the intellectual property. We look at the competitive area with them, and then they’ll decide to move forward. We help them with a full business plan, introducing them to different capital sources. We help them form partnerships with local law firms for legal advice, license agreements, shareholder agreements, and so on.”
Photo courtesy of Eskew+Dumez+Ripple
On June 15, NOBIC received the Tibbetts Award from the White House, one of three organizations in the country recognized for advocating for Small Business Innovation Research (SBIR) grants, which award R&D funding to young companies.
The center assists startups in applying for SBIR grants and other federal assistance, as well as securing any state tax credits that bolster small businesses during their development.
In addition, NOBIC operates the New Orleans BioFund, a loan program providing capital for startups that have struggled to secure more traditional investments.
“We’ve developed a community between all of these different pieces,” says Miscenich. “That’s the whole point of an incubator.”
WHERE DO WE GO FROM HERE?
“We’re going to outgrow our space in the next year,” says Miscenich. “After the storm, we knew we couldn’t bring mature companies. We had to seed and start up. But now we’re at the point where we can attract mature companies.”
The pipeline of ideas and technologies from the nearby universities remains stronger than ever. “But can we retain these companies?” asks Miscenich.
NOBIC is working with the city to create another space for the growing field. “What we’re doing now also is helping to bring in resources to help add value to research,” says Miscenich. “If we can bring lab operations [and clinical research] to New Orleans, that’s more reason for these companies to stay. I’d like to keep as many dollars spent in New Orleans as possible.”
At Delgado Community College, an associate’s degree program prepares students for lab technician jobs in just two years. “The jobs we’ve created have an average [salary] of $60,000,” says Miscenich. “With just a two-year degree, you get a great job with upward mobility.”
Delgado’s program has even extended to the high school level. “They started last summer, getting familiar with the lab environment,” says Miscenich. “Now these kids see career paths in the life sciences.”
NOBIC Tenant: Better Day Health — Revolutionizing medical documentation
In July 2011, just a month after the BioInnovation Center opened its doors, Better Day Health took up residence as one of the first tenants.
“We were originally located elsewhere,” says Dr. Peter Ragusa, founder of the web-based healthcare platform. “But we moved to New Orleans—partly because of the BioInnovation Center and the spaces being provided, plus the entrepreneurial community at the facility. But also because Louisiana is home.”
Ragusa’s experiences in medical school, when electronic record keeping methods were mandated in healthcare practices, inspired the software at the heart of Better Day Health. “I’ve long loved technology,” says Ragusa. “But I found that it would take me an hour to document a 15-minute encounter. The computer was a physical and emotional barrier between the patient and physician.”
Ragusa reached out to his brother, Rand, whose entrepreneurial experience (including a founding role in both Tribe magazine and Alpine Investments) helped Better Day Health come into focus.
Using voice recognition, mobile devices, and multiple modules for clinical documentation, the proprietary software significantly reduces the number of clicks a doctor must make when inputting patient data, effectively streamlining care and improving the patient experience.
The system, an add-on to a clinic’s existing health records programs, activates when the healthcare provider walks into the exam room. “Our system listens to the conversation—there’s no recording, we want to be extremely clear about that,” says Ragusa. “It’s more like a phone call; there’s no permanent record. But in the meantime, our system has pulled out key words and phrases.
“When the provider walks out of the room, it stops listening and proposes the most likely diagnoses for that patient’s presentation. Once [the provider] selects a given diagnosis, it intelligently triggers our system to provide a limited, specific range of options.” Factors for that specificity extend from presented symptoms and the coded level of the patient’s visit to treatment plans.
“What used to take hundreds of clicks, we’ve gotten down to three or four to make your diagnosis,” says Ragusa. “This puts technology in the background, where we feel it belongs.”
Better Day Health hosts its business operations at the center, while the software receives hands-on testing by doctors in clinics. “[NOBIC] isn’t a lab space for us,” says Ragusa, “but it’s right across the street from the Tulane Medical Center, LSU Health Sciences Center, and the new VA Center. All of which are huge for us as a fledgling healthcare company.”
The entrepreneurial brothers both see a momentum in New Orleans, extending beyond biotechnology into the business community as a whole. “I’d call it the renaissance of New Orleans,” says Ragusa. “You can see with the construction and all the energy and enthusiasm. It’s a wonderful place. It’s always been a wonderful place, and I think it just gets better every year.”
NOBIC Tenant: InnoGenomics
Another of NOBIC’s first tenants, InnoGenomics, already had significant roots in the New Orleans biotechnology community, as well as small business incubators, at its conception.
In 1991, Innogenomics CEO and President Sudhur Sinha, Ph.D., founded ReliaGene Technologies in the Jefferson Parish Economic Development Commission (JEDCO) incubator. The accredited DNA testing laboratory, operating out of Harahan, was renowned for forensic, paternity, and molecular DNA testing. In 2003, ReliaGene used fingernail scratches, as well as technology developed by the lab for testing male DNA, to link serial killer Derrick Todd Lee to one of his victims, Geralyn DeSoto.
After Hurricane Katrina, the state contracted with Sinha to identify casualties from the storm with DNA testing. “I had a lot of problems getting results,” says Sinha. “Because of the saltwater, the DNA got degraded. I had to go back to older technology to look at the bones.”
Dr. Sinha continued to think about this problem. How can we get results from badly degraded samples?
His solution — a technology patented in 2010 that focuses on the analysis of Retrotransposable Elements, repeating DNA sequences that comprise 40 percent of the human genome but have been difficult to use as biomarkers before now — has applications from forensic testing and genealogy to molecular diagnostics.
Currently, the company is developing a way to both detect and monitor cancer through a simple blood test.
Innogenomics CEO and President, Sudhur Singa, Ph.D.
Photo Greg Miles
Sinha sold ReliaGene in 2007; as InnoGenomics, he and his team — including Vice President Jonathan Tabak — have worked with NOBIC in securing SBIR funding, National Science Foundation grants, and the refundable R&D state tax credits as the revolutionary technology edges toward the marketplace.
But the sunset of the refundable R&D credit, upon which Innogenomics relied for 40 percent of its operating budget, has Sinha and Tabak unnerved.
“[The credit] was enabling the company to get to [the marketplace],” says Tabak. “We would be starting to generate revenue and last long enough to develop our cancer diagnostic technology. But without the R&D tax credit, I don’t know if we’ll get there.”
“The expense is not much for the state, but it is huge for us,” adds Sinha. “We have received almost $400,000 in tax credits from the state, then another $250,000 from the National Science Foundation as a match. Now we’re not only losing state money, but we’re losing the federal match.”
Incubation periods for biotechnology companies can extend up to several years as ideas are cultivated into products and developers await regulatory approval. InnoGenomics and its fellow tenants have thrived in partnership with the New Orleans BioInnovation Center. But, according to Sinha and Tabak, the loss of state assistance sends a sharp message.
“The timing is very baffling,” says Tabak. “Companies like us have struggled and fought up to this point. I hope it’s a temporary setback, because biomedical is such a good catalyst here. Things are really happening, and the state needs to support it.”
With Louisiana’s gubernatorial seat up for grabs come 2016, frontrunners Senator David Vitter and Lieutenant Governor Jay Dardenne have both released statements regarding Governor Jindal’s new budget. While neither candidate addressed the R&D tax credit specifically, both have stressed the negative impact of rescinding tax credit refundability in such a manner.
“I would apply an objective cost-benefit analysis to all state tax credits, exemptions, and deductions,” said Vitter, in a statement responding to the repeal of the inventory tax credit’s refundability, a similar adjustment to that of the R&D tax credit. “I’d propose getting rid of those that don’t pass that test and keeping those that do.”
CURRENT NOBIC TENANTS
AAAneurysm Outreach aims to raise awareness of abdominal aortic aneurysms with early-detection screenings and support networks for at-risk families and individuals. findtheaaanswers.org.
Beginning Families Louisiana’s only program for human egg donation and gestational carriers.
Better Day Health uses voice recognition, web-based technologies, and mobile devices to streamline patient care and improve the overall doctor-patient experience. betterdayhealth.com.
Bioceptive specializesin women’s healthcare, innovating products for intrauterine procedures. bioceptive.com.
Carondelet Labs manufactures fluorescent dyes for widespread use throughout the scientific community. carondeletlabs.com.
GenoFAB streamlines the design, characterization and creation of DNA molecules with a software suite marketed to the life sciences field. genofab.com.
GetHealthy a mobile platform for health and wellness that connects insurers and employers to employees and policyholders in order to educate them on an individual level and personalize each policy. gethealthy.com.
InnoGenomics focuses on genetic testing solutions for forensic scientists. innogenomics.com.
LaCell produces quality stromal/stem cells for the scientific community, advocating the use of such cells in regenerative therapies.
lacell.wpengine.com.
Louisiana Funds a venture capital fund focused largely on healthcare in Louisiana. louisianafund.com.
LouisianaBio supports the growth of the biotechnology industry in the state as a member-driven trade organization.
Medical Executive Partners customizes business solutions and strategies for hospitals, medical centers and clinical research facilities. medicalexecutivepartners.com.
Meredian aims to reduce dependence on petroleum-based polymers by manufacturing biopolymers from renewable, biodegradable, non-petroleum resources.
MiniVax produces specialized therapeutics and vaccines, including an antibody-based therapeutic against pneumocystis pneumonia.
MobileQubes markets high-capacity battery packs, called “Qubes,” rented out via a network of self-automated kiosks.
NanoFex formulates sustainable microparticles that break down groundwater contaminants.
National Independent Review Organization provides web-based, independent medical reviews from board-certified physicians.
ReactWell a clean tech company that works with chemical, oil and gas, energy and petrochemical companies.
Renaissance Rx helps physicians develop customized treatment plans using a patient’s health history, environment and genetic makeup.
ResourceWorks Inc. offers training and consultation to nonprofit organizations and their leaders.
Servato provides industrial solutions for remote DC power management.
Simmons and White a professional management company that partners with promising young companies.
Solid Ground Innovations offers consulting and management services “a la carte” to other businesses.
The South Coast Angel Fund, LLC a venture capital fund focused on early-stage companies in Louisiana and across the Gulf Coast.
Theodent markets a revolutionary toothpaste that strengthens enamel using a naturally occurring extract found in chocolate.
TMS Bioscience provides specialized laboratory testing for transplant patients to monitor immunosuppression.
Transcendent Legal an innovative law practice combining technology with legal services using a state-of-the-art web platform.
Zenas Technologies a contract research firm specializing in data on the cardiovascular and central nervous systems.
