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LSDF may metamorphose into life science, cancer research administrator

Recrimination and agitation over the Republican-led legislative defunding of the Life Science Discovery Fund Authority (LSDF) has given way to cautious enthusiasm about the possibility its staff and board may be tapped to administer and oversee funding activity for the state's new Cancer Research and Endowment Fund (CREA).

It's not yet certain that LSDF, created a decade ago out of the state's share of Tobacco Settlement millions to promote growth of the life science industry in this state, will take over administration of what would be a Center of Excellence for Life Science and Cancer Research. But bringing that about could amount to creating some vision out of what has been legislative confusion.

The Legislature's 2015 final budget compromise funded the cancer-research entity in a head-scratching manner while killing future funding for LSDF. But the lawmakers did not put the organization itself out of business because LSDF must function well into the next biennium to oversee fulfillment of the 46 grants already awarded from the fund. It just can't make any more life-science grants.

The quixotic aspect of the Legislature's creation of CREA was that the lawmakers gave specific detail to its board makeup and duties and required that it contract with "a program administrator" to oversee grant solicitation and distribution and fund management.
 
But lawmakers didn't designate who would manage the $10 million annual state-fund grant that would have to be matched from the private sector before it could be spent, so there has been speculation since then that LSDF would be a logical entity to oversee CREA.
 
Rep. Jeff Morris 

The proposal to turn cancer-fund administration over to LSDF has been up in the air since it was approved by the state House and passed out of committee in the Senate, but stalled in the Senate Ways & Means committee when the regular session ended.

Democratic Rep. Jeff Morris, a member of the LSDF board and sponsor of the proposal, said he hopes the legislation paving the way for a new role for LSDF will be part of final budget negotiations. He explained that Sen. Andy Hill, chair of the Ways & Means Committee and the key Republican in the negotiations, "asked if we would object to a 6 percent administrative-cost cap and I indicated we would not."

John DesRosier 
eanwhile, as a future role for LSDF remains unclear, its board of trustees, staff members and a number of recipients of its grants will gather March 25 to celebrate the contributions of John DesRosier, who served first as director of programs when LSDF was established in 2005, and through most of the Authority's existence as executive director. DesRosier, who has retired, had spent almost a quarter century in research and technology commercialization before joining LSDF as it was forming.

Among those who will be on hand to thank Des Rosier is Lee Huntsman, the first executive director, who was appointed by then-Gov. Christine Gregoire after LSDF was established in 2005 by Gregoire and the Legislature.

I asked Gregoire for a comment on the decade of LSDF's existence and on DesRosier's role and she said: "LSDF has accomplished more than I could have hoped. I believe it has helped save lives and I believe it will continue doing so and there is no greater accomplishment. We were fortunate to have John DesRosier as the leader to make it happen."

Commenting on DesRosier's role guiding LSDF, Morris said "John was one of the best strategic hires I've seen by our state in my years of public service. He made our grant-selection process world class and many other states have looked to our process to improve their own performance"

Part of what the cancer-fund legislation envisions is a board that better reflects an understanding of cancer, but by coincidence that comes somewhat with the current board, whose chair is Carol Dahl, executive director of the Portland-based Lemelson Fund. 

Dahl's research while a faculty member at the University of Pittsburgh was cancer focused and she also spent nearly six years at the National Cancer Institute and built the Office of Technology and Industrial Relations and multiple programs there during that period. 

Asked about her view of DesRosier's role, she said he"has truly been an amazing advocate for the life sciences in Washington and an outstanding steward of the state's investment in LSDF."

"The substantial impact of the LSDF funding resulting in over $60 million in health-care saving, more than a half billion in follow-on funding, and hundreds of lives saved ,is a credit to John's leadership and the dedication of the entire staff that has supported  LSDF since its inception," Dahl said.

One of the largest grants from LSDF was $5 million to Omeros Corp., which related to a $20 million partnership with Vulcan to advance the company's leading-edge G protein-coupled receptor program. GPCRs, which mediate key physiological processes in the body, are one of the most valuable families of drug targets.

Omeros chairman and CEO, Dr. Gregory Demopulos, described LSDF as "an important catalyst for innovation in Washington State's life sciences. And through investments like the one for Omeros has left a legacy of creating jobs and improving health and will have a sustained impact on the people of the state."

DesRosier described LSDF as having been a "critical resource" in helping early stage companies survive so they could gain traction for new sources of funding, including attracting traditional investors.
 
One such beneficiary of LSDF grants is M3 Biotechnology, a young Seattle biotech company focused on commercializing a drug that would reverse neurodegenerative diseases like Alzheimer's and Parkinson's by re-growing brain cells.
 
"LSDF funding allowed us to cross the start-up 'valley of death' until we could gain funding traction," said Leen Kawas, the 30-year-old CEO and president of M3 who recently announced completion of an over-subscribed A-Round that brought in nearly $10 million.

Because I was assisting Kawas with marketing and introductions while she was awaiting key grants from LSDF, I bit my lip for being unable to write about LSDF or its challenges with the legislature until her grants had been approved and there was no longer a conflict of interest.

I asked DesRosier if there was anything he wished LSDF had accomplished before the lawmakers struck it from future funding.

"I wish we had been able to create a more diversified revenue stream and not be dependent solely on state funding," he said.

Dr. Bruce Montgomery, perhaps the Northwest's most prominent biotech entrepreneur as well as the longest-term member of the LSDF board, may have best summed up the feeling of lost opportunity that the end of LSDF's life-science mission embodied for many.

"The best quote I can offer is the line from Joni Mitchell's 'Big Yellow Taxi': 'don't it always seem to go that you don't know what you got 'til it's gone,'" Montgomery replied to my request for a quote.
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Life Science Discovery Fund prepares for what could be its most important grant

 

The life Sciences Discovery Fund, in a finale made possible by a $2 million error by a legislative leadership intent on ending state funding for the organization whose years of grants have enhanced Washington's life-science competitiveness, is preparing for what could be its most important grant-making decision.
 
The board of LSDF, which was created a decade ago from the state's $1 billion share of tobacco-settlement money to promote the growth of the life-science industry, will soon be reviewing four finalists for what are characterized as "ecosystem" grants. The $2 million will go to one or more organizations that can stimulate momentum toward commercializing life-science innovations.
 
And while details of the four applications will remain under wraps until the LSDF board reviews them late this month and on February 8 announces one or more awards, one application that would pair the commercialization activities of the state's two research universities should attract considerable interest when those details emerge. That teamed application from UW and WSU is intriguingly titled the "Concept-to-Commerce Coalition."
 
The word "legacy" is one that has begun to be used by those who lament the decision by lawmakers to defund LSDF and who believe that what Executive Director John DesRosier dubbed "ecosystem 2016" grants could serve to create a follow-on to LSDF's decade-long role of funding life-science innovation.

 
  
But DesRosier, who has guided LSDF since it came into existence in 2005, insists "we're not using the term 'wind down' since we want to keep our options open," although he is retiring in April.

And the fact the organization must remain in existence over the next two years to manage the 46 grants already awarded from the fund means LSDF can't just go away. And that leaves some supporters buoyed by the possibility that a new role could emerge for LSDF, possibly with an administrative role managing another type of health-related activity.

"LSDF is in a transition as a model that we know has to change in response to current circumstances, said board member Roger Woodworth, chief strategy officer for Spokane-based Avista Corp.

"It has been a wonderful asset for the state that has been remarkable in terms of attracting, administering and validating a variety of exceptional ideas," Woodworth added. "It is in transition but that doesn't mean we throw it away or shut it down."

The unanticipated opportunity for the "ecosystem 2016" grants came about when the lawmakers, primarily the Republican majority that was never invested in the value of LSDF, specified that while the funds LSDF needed to manage the existing grants would remain in its account, its remaining operating funds would shift back to the general fund.
 
Except that when the lawmakers spelled out the operating-funds total of $11 million, there was unexplainably almost $2 million left in the LSDF account, unallocated and not ordered sent to the general fund. So it remained under LSDF control.

DesRosier notes that the "ecosystem" grant competition will be different from individual grants LSDF has made to for-profit or non-profit life-science entities that have received pieces of the $106 million in grants made since 2007.

"This grant-making won't be about trying to perpetuate ourselves but rather be a key step to support the life-science ecosystem with funding support for one or more organizations that either already exist or would come to existence to stimulate momentum in commercialization," DesRosier said.

"The opportunity for the life-science sector in Washington is a huge one and that's why, when this fund was first created a decade ago, it was a smart way to begin to capture the enormous intellectual capital that existed in this state," says Carol Dahl, LSDF board chair.

 

Dahl, who is executive director of the Lemelson Foundation that supports what are called "impact inventions," points to the fact that almost 70 percent of the $1.5 billion in federal funds that flow into Washington each year is for life science.

 

But Dahl is among the many observers who seek ways to address the dilemma that while this state has developed one of the nation's most impressive life sciences non-profit sectors, it trails many other regions in the development of a for-profit sector. The Seattle area's biotech cluster, for example, is dramatically exceeded by the industry size in The Bay Area/Silicon Valley and San Diego, as well as places like Boston and North Carolina's Research Triangle.

As one national ranking of biotech clusters characterized it, the industry in the Seattle area is "being anchored more to academic and independent research institutions than local companies."

In other words, this state is experiencing a gap between early stage ideas and things that investors can be convinced to embrace.

"I believe in the future of the state's life science community, but there needs to be a change in people's willingness to invest in it," she said. "They need to develop a confidence about being part of the commercialization of what those federal dollars are producing in what has become one of the nation's most impressive life sciences non-profit sectors."

In fact, it was because of LSDF grants that a number of the emerging life science companies that are growing, creating jobs and carving out key roles in their industry were able to bridge what's famously known as "the valley of death" between concept and the time when investors can be lured to be involved.

Enhancing commercialization is what each of the four of the ecosystem grant applicants seeks to foster, including the team-grant proposal put together by UW and WSU.

Anson Fatland, the associate vice president for economic development and external affairs for Washington State University, explained how teaming with his UW counterpart came about after both universities had submitted initial proposals back in September when the plan for the life science eco-system grants was first unveiled by LSDF.

Fatland noted that once he and Patrick Shelby, who directs the New Ventures group at the UW Center for Commercialization, were both invited to submit full proposals, "we decided to sit down and talk about what we were trying to do."

"We realized we had a truly unique opportunity for innovation activities across the state, allowing the industry to really talk about a legacy grant," Fatland said.

The other applicants are Accelerator Corp., which is seeking money for a commercialization funding program; the Washington Biotech and Biomedical Association, and what's called the Southsound Research Coalition, which also involves UW along with Madigan Army Medical Center and Multicare Healthcare Systems.
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How new state cancer-research fund came about in the 2015 Legislature

 

The tale of how Sen. Andy Hill, a near-miraculous survivor of lung cancer and the powerful Republican overseer of writing the Senate's budget, helped guide funding to create a new state cancer-research fund might have been the story of a legislator's personal cause and vision brought to reality.

Instead, what has begun to emerge is a tale of more typical legislative ineptitude, because most observers aren't really sure what the Hill-guided budget inclusion of a Cancer Research Endowment Fund brought about or why it was carried out with the intrigue and confrontational politics that occurred.

One certainty is that Hill was a key architect of a Republican conviction that funding needed to end for the decade-old Life Science Discovery Fund, which provided grants to an array of emerging life science and biopharma companies and some viewed as a logical administrator of a new cancer-research fund.

So in the end the Legislature's 2015 final budget compromise killed funding for LSDF but did not put the organization itself out of business.

Meanwhile, the legislation creating the new cancer fund, referred to as CARE, was approved with a $5 million matching grant this year and a $10 million matching grant next fiscal year and thereafter to fund cancer research in this state. Maybe.

But before any of the grants can be made, there must first be "proof of non-state match," meaning there is no certainty that any of those state dollars will actually be spent without the emergence of entities seeking to match the grants.

For reasons many outside of the political arena couldn't quite understand, Republicans, with Hill as a leader of the viewpoint, didn't like the concept of funding startups while Democrats were strong supporters of LSDF and the potential jobs grant-recipient companies might create.

But Hill apparently, on more than one occasion, suggested that the administrative structure and staff of LSDF, including its well-regarded Executive Director John DesRosier, could become the overseeing entity for the new cancer-research fund. So perhaps Hill will explore that possibility.

Someone might have explained to Hill, a former Microsoft manager, that cancer research is a life science discovery activity and that rather than forcing the elimination of LSDF's funding in a bitter and controversial battle with Democrats who supported LSDF, he could have forced cancer research to be its new focus.

In fact, a proposed initiative, backed by organizations like the Fred Hutchinson Cancer Research Center, that failed to gain enough signatures to make the ballot last year would have created a large pool of dollars, funded by tobacco-tax increases, a fund that would have been administrated by LSDF as an added responsibility.

And Rep. Ross Hunter, the Democrat who chairs the House Ways and Means Committee and also a cancer survivor, had led an effort in the 2015 session on behalf of a bill with a similar goal of establishing a cancer-research fund with dollars from an increase in the tobacco tax, but the bill never got through the committee challenges.

Hill's 2009 conquest of stage 3 lung cancer, including a pronouncement at one point that it was terminal before his treatment with a new targeted therapy left him cancer free in a matter of weeks, is a remarkable story that would have made his support for a meaningful step to fund cancer research laudable and a cause for broad support.

Hill made it clear that one of the reasons he ran for office in the fall of 2010 was to "advocate for continued scientific research and development of life saving and life altering therapies."

In the end the relatively small amount that the CARE fund provides isn't in the same ball game that commitments like the $200 million lawmakers in neighboring Oregon approved to support a $1 billion public-private effort to bring the nation's top cancer researchers to Oregon.

And Oregon is only one of the states that have made such major commitments to cancer research.

One of my friends long involved in watching legislative machinations offered an analysis of what occurred: "You kill LSDF which uses OPM (other people's money, i.e., the tobacco settlement), and then appropriate precious few taxpayer dollars and create a new entity to do close to the same thing LSDF does, or did. 

"Why not have kept LSDF and directed that $5 million or $10 million of its existing funds be focused on cancer research specifically?" 

The kind of money the Legislature approved is a relative pin prick being thrown at cancer research at random, to be run by an entity that doesn't even exist yet, but will require some overhead to become operational.

What the Legislature created may have been the only potential state expenditure that could have gotten through a group of lawmakers whose Republican members were adamant about not spending anything that would mean new taxes, and that would presumably include funding cancer research.

Thus what Hill was able to get support for winds up as a pale shadow of the potential $1 billion that Initiative 1356, which failed to gain the signatures needed to make the 2014 ballot, would have raised for cancer research through a dramatic increase in the tax on cigarettes and other tobacco products, as well as marijuana.

If what really is only a gesture toward cancer research by the state at this point proves successful by any measure, it's possible that future legislative sessions may find the courage to step up to greater commitment in legislative support for the world-class cancer research and care that has developed in this state.
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Life Science Discovery Fund, defunded by Legislature, will exit with last hurrah

 

The Life Science Discovery Fund (LSDF), created a decade ago from the state's share of tobacco-settlement millions to promote the growth and competitiveness of the life science industry in Washington but defunded by the 2015 Legislature, has found a way to go out in style after all.

In what amounts to an unusual but fitting last hurrah, LSDF announced today that it is launching a six-month competition for what might be described as a "legacy" or "ecosystem" grant of almost $2 million to one or more organizations that can stimulate momentum within the life sciences commercialization sector.

The LSDF was established by then-Gov. Christine Gregoire and the legislature with the vision of using Washington's multi-million-dollar share of the Tobacco funds from the 1998 settlement to promote life sciences competitiveness, improve health and healthcare and help shape that industry's future.

But perhaps proving that vision can't be passed on, the 2015 Legislature defunded LSDF, with Democrats in the House and the Statehouse eventually acquiescing to the demand of Senate Republicans that funding for LSDF end.

In writing about that final legislative action, I said that LSDF went out "not with a bang but a whimper," given that strong support for the organization from Gov. Jay Inslee and House Democrats evaporated in the final days of legislative give and take on what would be included in the budget.

Wrong about going out with a whimper! LSDF will be going out with a bang after all, but not one the Legislature intended, or knew was possible.

In defunding LSDF. the Legislature specified that the $11 million in the organization's treasury balance be shifted to the state general fund.  

Except that in Addition to the $11 million that was to be LSDF's operating funds for the next year, and the nearly $12 million in the LSDF treasury to manage the stable of 46 grants already awarded by the fund, there was almost $2 million left in the treasury. Unallocated and not ordered sent to the general fund.

So the LSDF board last week approved the idea of turning that nearly $2 million remainder into what Executive Director John DesRosier refers to as " a life science ecosystem grant" and LSDF took the first step today by announcing the request for proposals with a pre-proposal deadline of September 21.

Full proposals will be due by January 6 with awards (possibly more than one) to be announced February 8 as an appropriate denouement for LSDF, which since it first began making grants in 2007 has awarded nearly $106 million to non-profit and for-profit life science businesses.

DesRosier said the grant o grants could be awarded to either a non-profit or for-profit entity that might already exist or come into existence "to stimulate momentum within the life science commercialization sector."

DesRosier views LSDF's eight years of funding activity, largely to startups for whom the grants often served to allow entrepreneurs to bridge the early funding challenges referred to as "the valley of death" for startups, as "creating a momentum for the life science industry's emerging companies.

And for all the lamenting from those focused on how this state stacks up against competing states and the message they fear that LSDF's demise sends to entrepreneurs in other states, it needs to be remembered that LSDF's legacy is in the life science startups it funded and that are now growing and creating jobs.

"So now the question is how do we keep this momentum going," he asked. "We think one way is to create programs that support entrepreneurs in their endeavors, not with individual grants but in a less prescriptive way."

It's clear that the LSDF board wants to be flexible in determining what type of organization or groups might best contribute to the life sciences ecosystem they seek to foster. "We want to keep as much flexibility as possible, depending on the scope of the proposals we receive," DesRosier said.

LSDF will be downsizing its staff by the time the board awards the grant, or grants. But DesRosier avoids referring to the end of the organization, saying "we're not using words like dissolving."

It's worth remembering that the legislature only denied LSDF future funding, it didn't strike the organization from existence.

"We're actually downsizing the staff by the end of February and we may or may not be in or current physicial space (LADF has been housed in the headquarters of the Washington Biotech & Biomedical Association)," he said. "But whether or not the organization continues to exists still up in the air, as well as the question of whether we will continue to oversee the existing grants."

"We're still quite flexible if something interesting comes up between now and then," said DesRosier.

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