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Madison, Wisconsin: The Midwest's Low-Key Hotspot

In the middle of dairy country, nestled by four glacial lakes, Madison, Wisconsin is quietly emerging as a biotechnology and life science powerhouse.

Ted Agres(tagres@the-scientist.com)
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In the middle of dairy country, nestled by four glacial lakes, Madison, Wisconsin is quietly emerging as a biotechnology and life science powerhouse. The state's capital, Madison is a study in contrasts. Here the Midwest conservative work ethic coexists with the city's liberal-progressive politics, and scientists at the University of Wisconsin (UW)-Madison enjoy world-class research facilities and an affordable cost of living that colleagues in many other biotech "hotspots" can only dream of.

Indeed, Madison is consistently ranked among the best places to live in the United States by Money magazine and other publications. Last year, Forbes magazine named Madison the number-one city for business and careers based on its strength in education and economy, low rate of unemployment, and affordable living. "It's a wonderful place to live," says James Keck, professor of biomolecular chemistry at UW-Madison's medical school. "It's a smaller city surrounded by beautiful countryside, yet it has...

HOOKED ON MADISON

Four years ago, Keck's postdoc in molecular and cell biology at the University of California-Berkeley was winding down, and he began looking for a faculty position at a major research university. Keck ended up choosing UW-Madison based on the strength of its science and the quality of its community. "We were looking for a nice-sized city where it would be great to raise kids," Keck says.

Now he's hooked on Madison. "I'm getting great students, and scientifically I'm not limited by anything but myself," Keck says. "The public schools are among the best in the country and compared to California, the housing prices are a dream-come-true." Still, Madison isn't paradise. "It's nice having seasons, unlike Berkeley," Keck says, "but there are times when I wish it were warmer."

Wisconsin Welcomes New Biotechs

Tom Primiano, president of Clonex Development, a small Chicago-based biotech company that develops therapeutic proteins, knew he wanted to move his lab to Madison. "Our future will be tied to stem cells, and this is the place to be for stem cells," he says.

Wisconsin was more than happy to help. In February the state gave Primiano $135,000 in venture funds and technology-assistance grants to purchase new equipment and hire technical support staff. Clonex moved into new lab space in Madison's University Research Park last month.

Wisconsin offers a range of assistance to life science startup companies. Programs include 25% tax credits to angel and venture capital investors who finance qualified new technology companies, especially biotechs. Other assistance includes bridge grants, matching grants, and development loans. The Madison City Council has also passed an ordinance streamlining construction of facilities for biotech research.

"Wisconsin seems to have an interest in fostering biotechs," Primiano says. "Illinois was behind in helping small companies get what we need."

In November 2004, Gov. Jim Doyle announced a $750 million, 10-year biotechnology development plan for Wisconsin. Central to this is the Wisconsin Institute for Discovery, a 450,000 sq ft, $375 million interdisciplinary facility that will occupy two full city blocks on the UW campus. The facility will replace older, dilapidated buildings and will have shared research space for biology, bioinformatics, computer science, engineering, nanotechnology, and stem cells. The state legislature is scheduled to vote on Doyle's budget plan this month.

Okay, so what if the temperature drops to 5°F in January and shoveling snow becomes the city's unofficial winter exercise? There's also ice skating, sledding, and cross-country skiing. And indoors there's plenty of warm entertainment and cultural activities: from the performing arts at the city's new $200-million Overture Center, to night clubs and restaurants along State Street, the mile-long thoroughfare linking the university campus with the State Capitol square on the isthmus separating lakes Mendota and Monona.

"The biggest downside is that there are no palm trees in Madison," says Tom Still, president of the Wisconsin Technology Council (WTC), a nonprofit institute that the state government established in 2001 to advise officials on science and technology issues. "Some people are not partial to winter. But spring and autumn here are superb."

THE UNIVERSITY RESEARCH ENGINE

As in many other biotech hotspots, the engine that generates growth in Madison's life sciences is its university. Founded in 1848, UW-Madison is one of the nation's largest universities, with nearly 41,600 graduate and undergraduate students. Receiving more than $600 million in combined federal and private research funding, UW-Madison consistently ranks among the top three public universities in total research spending.

Madison's 900-acre campus is on the shores of Lake Mendota. "Having everything on one campus contributes to cross-disciplinary work," says Carl Gulbrandsen, managing director of the Wisconsin Alumni Research Foundation (WARF), the university's venerable technology transfer and patenting office. "It's very easy to work across departments and across disciplines."

The School of Medicine has 550 medical students, more than 700 graduate students, and nearly 1,200 full-time faculty members. Particular research strengths are in oncology, cardiovascular and respiratory sciences, neuroscience, and aging. Regenerative medicine is fast becoming a particular focus across campus since developmental biologist James Thomson first isolated human embryonic stem cells (hESC) there in 1998. (See related story p. 49.)

UNABASHEDLY ENTREPRENEURIAL

UW-Madison may be the only major US research university that allows its researchers, faculty, as well as students, to retain ownership of discoveries (unless federal funds are involved). "It's important in faculty recruitment," says Gulbrandsen. "It gives the faculty more control and makes them happier."

Selected Madison-Area Companies

Bone Care International (Acquired by Genzyme in 2005)Employees: 140Science positions open: 1–2

Clonex Development Inc.Employees: 1Science positions open: 3–4

Covance LaboratoriesEmployees: 1,200Science positions open: 4

Deltanoid PharmaceuticalsEmployees: 15Science positions open: 0

Invitrogen Employees: 115Science positions open: 8–10

Mirus Bio Corp.Employees: 50Science positions open: 2–3

Neoclone Biotechnology InternationalEmployees: 11Science positions open: 0

Nimblegen Systems Inc.Employees: 65Science positions open: 0

Platypus TechnologiesEmployees: 20Science positions open: 0

Promega Corp.Employees: 500 in Madison, 800 worldwideScience positions open: 8–10

QRG BioscienceEmployees: 2Science positions open: 2

Quintessence BiosciencesEmployees: 10Science positions open: 0

Third Wave Technologies Inc.Employees: 175Science positions open: 3–4

University of Wisconsin-Madison Medical SchoolEmployees: ~1,200 faculty, postdocs, traineesScience positions open: 62

If the university is the research engine, then WARF is the transmission that translates discoveries into products. The nation's first university tech transfer office, WARF was established in 1925 at the prompting of UW-Madison biochemistry professor Harry Steenbock to commercialize his vitamin D irradiation technology. Rather than accepting $1 million from the Quaker Oats Company for exclusive rights to his technology, Steenbock allowed WARF to license his patent widely, generating even more funds for university research.

Over the past 80 years, WARF has amassed more than $1 billion in licensing revenues and returned $750 million to university research, including $46.6 million last year alone. Today, WARF has thousands of patents in its portfolio and more than 3,600 technologies ready for licensing. Recognized as a model tech transfer office, WARF last year was awarded the Presidential National Medal of Technology for innovation.

But licensing is only the beginning. UW-Madison actively encourages faculty to start up companies from their discoveries. The university's Office of Corporate Relations sponsors an entrepreneur's center that offers CEO mentoring programs, assistance in writing business plans, and finding capital. WARF even has a small $10 million venture capital fund for occasional investments in promising companies. WARF currently has equity positions in 34 university-related startups and evaluates proposals for 12 to 15 more each year, Gulbrandsen says.

SPINNING OFF DISCOVERIES

Many of these companies, such as Third Wave Technologies, Deltanoid Pharmaceuticals, Neoclone Biotechnology International, NimbleGen Systems, and Quintessence Biosciences, are emerging as leaders in Madison's biotech community. Mike Sussman, head of UW-Madison's Biotechnology Center, was one of three scientific cofounders behind NimbleGen Systems, a company that manufactures customized, high-density microarrays for genotyping and toxicity screening based on technologies developed at UW-Madison. "We just made a better light bulb," Sussman says.

<p>Madision Matches Up</p>

Hector DeLuca, chair of the university's biochemistry department, is also one of the city's serial entrepreneurs. DeLuca has some 250 patents with WARF and has been involved in starting and running four Madison biotechs, including publicly held Bone Care International, which was acquired in May by Genzyme for $600 million. In 2001 DeLuca and a colleague established Deltanoid to develop vitamin D analogs for osteoporosis, renal osteodystrophy, and psoriasis. "Madison is ripe for development," DeLuca says. What's lacking, he and many others say, is venture capital. "But that will come as young companies start showing what they have. That will start attracting investment capital."

Many of these startup companies operate in the University Research Park (URP), a 255-acre facility three miles west of the campus and currently home to 107 companies employing nearly 4,000 people. The park also has a 113,000 square foot incubator facility, the MGE Innovation Center, that houses 35 newly hatched companies. "This is the signature entree for the park," says URP director Mark Bugher. "When a company inks a deal with WARF, this is where they come to begin growing."

Plans are underway next year to double the capacity with University Research Park II, a 260-acre facility on Madison's far west side. The new facility will have room for 53 sites, including at least one more incubator, allowing another 200 or so companies to put down roots.

WANTED: BIG PHARMA AND BIG BIO

But all this university activity doesn't solve a different, long-standing need in Madison. For unlike most other life science locales, Madison doesn't have a major pharmaceutical or large biotech company to help anchor the research enterprise by creating a critical mass of jobs and attracting outside attention and investment. "It sure would be nice to have a Big Pharma or a big, fat biotech success story here," says Deven McGlenn, CEO of NeoClone Biotechnology, a WARF spinoff that produces monoclonal antibodies.

Wisconsin's Love-Hate Relationship With Stem Cells

Scientists at University of Wisconsin-Madison and many state officials fear that Wisconsin is losing ground to California, New Jersey, and other states in the race to attract companies and institutes involved in human embryonic stem cell (hESC) research.

After all, it was James Thomson, a developmental biologist at UW-Madison, who first isolated hESCs in 1998 – a discovery that set the stage for subsequent advances, and controversy, in this emerging field. UW-Madison's WiCell Research Institute and Thomson's lab continue to make progress in the field, and Thomson's five cell lines continue to be the "gold standard" for federally funded hESC research.

Nevertheless, California has enacted its $3 billion hESC research initiative and is attempting to lure companies and scientists to the coast. In Wisconsin hESC progress has been slower. While Madison wants to move ahead with hESC research, Wisconsin's state legislature has been less supportive.

In April, the state assembly voted to deny tax credits to any company in the state doing research on any hESCs not authorized for federal research, including any newly created cell lines. Gov. Jim Doyle says he would veto any bill restricting hESC research.

Wisconsin companies using stem cell technologies have been cautious. "No one wants to attract attention here because of the politics," says Deven McGlenn, CEO of NeoClone Biotechnology. "This is not an area they want to publicize right now."

Still, things are starting to heat up. Part of the proposed $375 million Institute of Discovery at UW-Madison would support stem cell research. Already some 50 scientists across the campus are involved in various aspects of embryonic and adult stem cell research.

In April, Thomson and two colleagues started their first stem cell-related company, Cellular Dynamics International (CDI). The venture-backed company will provide stem cell- and kidney cell-derived screening services for drug development companies. "I've always been very proud of how strongly associated Wisconsin has become with the stem cell field," Thomson says in a statement. "But we face stiff competition from other states ... which are making very large public investments."

One of the larger life science companies in Madison is Covance Laboratories, a Princeton, NJ-based drug development and contract research organization. Most of the company's 1,200 employees have science backgrounds, says Susan LaBelle, vice president for global marketing. Covance plans to hire "hundreds" of scientists as the company expands its facilities in Madison, she adds. "As a recruitment source, UW is a very important resource for us."

Promega, a major producer of reagents, employs about 500 scientists and professionals in the city. "It's very easy for us to hire senior executives from people who lived in the community or worked at the university," says Bill Linton, Promega chair and CEO. "It's not hard to convince them of the area."

Companies such as Covance and Promega are beneficial for Madison's smaller pharmaceutical and therapeutics companies, since the larger companies can outsource drug discovery, development, and clinical trials. UW-Madison's chemistry department has a small, FDA-approved bio-manufacturing facility, and the pharmacy school can do metabolic studies and formulation work for industry under contract.

ALSO WANTED: BIG BUCKS

While Dane County ranks in the top 100 counties nationwide for venture capital funding, Madison has only a handful of VC firms willing to invest in local startups. It may be that the major VCs, located on either coast, don't like the hassle of changing planes in Chicago to get to Madison. The truth is that Madison's venture capital shortage is endemic to the entire Midwest region, which received $198 million, or less than 4% of total US venture investments in the fourth quarter of 2004.1

"We have all the ingredients needed to succeed in the 'new economy,"' says Jim Leonhart, executive vice president of the Wisconsin Biotechnology and Medical Device Association. "We have technology, an abundance of talent, and diversity reflecting the world. We only lack more attention from the moneyed people, and we are working hard to attract them now."

To do so, the state is trying to foster VC growth by providing additional public venture funds, and industry groups are helping entrepreneurs network with individual "angel" investors. But some believe the answer lies in the private sector. "If we had a critical mass of good companies, a lot of us believe the VCs would come here," says Joe Kremer, director of the Wisconsin Angel Network.

ENVIABLE QUALITY OF LIFE

Cold winters aside, Madison's quality of life is the envy of other biotech locales. While science salaries are slightly lower in the Midwest, the difference is more than made up through an affordable cost of living that is about on par with the US national average.

The average commuting time of 17 minutes is also on par with the national average. The city's public transportation – is highly regarded and environmentally conscious Madison boasts 96 miles of bikeways. The city also has four lakes offering boating, water sports, and 13 public beaches.

With about 60,000 students, faculty, and staff, UW-Madison's population represents nearly 30% of the city's 210,000 people, making Madison a true university town. "We have a large population that never ages," says Promega's Linton. Some say Madison's reputation for being politically to the left of Ralph Nader is overblown. "Conservative and progressive politics are competitive, but it's a healthy debate," says WTC's Still. "There's no question there are deep passions, but the political tradition has been a strength to the city."

Politics aside, when it comes to academia and industry, Madison is all business. The city is destined for a significantly larger place at the biotech and life science table, Linton believes. "It's not a question of if Madison can become a major player," he says. "The question is, just how big will Madison become?"

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