Research institute tries to succeed where Michigan failed

While Indiana’s governor, legislature and life sciences executives are united behind the proposed Indiana Biosciences Research Institute, the state of Michigan has a cautionary tale to tell about such an effort.

In 1981, Indiana’s neighbor to the north launched the Michigan Biotechnology Institute, an idea spearheaded by the governor, funded with millions of dollars from the legislature, lauded by corporate executives and generously funded by such large philanthropies as the W.K. Kellogg Foundation and the Dow Foundation.

The idea was to capitalize on the nascent biotechnology industry to produce new human health and agtech products and companies as a way to counteract the losses Michigan was then sustaining in its auto industry workforce.

But the Michigan Biotechnology Institute never fulfilled its promise, according to Jack Pincus, a life sciences consultant in Indianapolis who was vice president of business development for the institute from 1986 to 1992.

“It’s eerily similar. The thinking, the idea behind it,” said Pincus, who was vice president of technology transfer at Indiana University from 2003 to 2008. “I’m listening to all these phrases and thinking, ‘Where have I heard that before?’”

The Michigan institute did spin out a few companies and technologies, but none that had much success.

Hundreds of jobs were promised at the start, and the institute reached peak employment of 120 in 1992, Pincus said. But it soon cut back to about 30 employees.

After receiving $13 million in state support and $10 million from the Kellogg Foundation, the Michigan institute was supposed to become self-sustaining by 1993 via research funding from government grants and industrial contracts.

But that didn’t happen. In 1994, the institute brought in a consultant from Boston to turn things around, according to an article in Corporate Detroit magazine. More spin-outs occurred, but again, none were very successful.

The institute struggled along until it was finally acquired by the Michigan State University Foundation—which had lent money to the institute—in 2005. Today it is run as a contract-research outfit. Its website pitches “de-risking” and customized “scale-up” services for outside companies—not the launching of new companies and new technologies, as leaders in Indiana want this state’s research institute to do.

“They never reached any of their goals that were in their plan,” Pincus said, although he did note that the Michigan instituted recently won a $4.3 million contract from the U.S. Department of Energy to further its development of biofuels technology.

Recruiting scientists was one of the biggest challenges for the Michigan Biotechnology Institute, Pincus said. It took nearly four years for the institute to lure a director, Greg Zeikus.

And while its original goal was to recruit five “world-class senior scientists,” Pincus said, it only ever attracted three—and they weren’t all world class.

“And it wasn’t for lack of trying,” Pincus said. “The first thing they found was that people just weren’t very interested in coming to something that was risky. It was unknown, and the idea was vague.”

The organizers of the Indiana Biosciences Research Institute have likened it to the Broad Institute in Massachusetts, but Pincus noted that that institute has attracted world-class scientists because of its attachment to the Massachusetts Institute of Technology.

David Johnson, CEO of BioCrossroads, an Indianapolis-based life sciences development group that has helped organize the Indiana Biosciences Research Institute, noted that the scienists recruited to the Indiana Biosciences Research Institute will most likely have an appointment at Indiana University, Purdue University or the University of Notre Dame. They will also be allowed to publish their work and patent their inventions.

But Johnson also acknowledged that recruiting top-flight scientists will be the institute’s key hurdle.

“We’re going to need to have our A team go out and try to attract these kinds of people,” he said, saying everyone from Gov. Mike Pence on down will need to be involved in those efforts, because the institutions that now employ such scientists won’t let them go without a fight.

The Indiana institute hopes to use $25 million appropriated in April by the state Legislature, as well as $25 million in early corporate and philanthropic support, to recruit a director and one additional senior scientist to the institute.

Then the Indiana institute hopes to raise an endowment of $310 million from further corporate and philanthropic donations, to create a steady revenue stream and to hire more senior scientists.

Johnson envisions eight to 10 senior scientists, each of which would have teams of eight to 10 junior scientists.

Johnson contends that, in an era of declining government support and increased outsourcing of R&D work by life sciences companies, industry funding is a viable strategy for the Indiana Biosciences Research Institute.

Pincus, however, is skeptical that those fundraising goals can be met. The Michigan institute found that the early support of executives was not matched by interest lower down in their organizations, where most industry-academic research collaborations are actually formed.

Life sciences corporations tend to fund academic researchers that are already highly experienced and well-funded—usually by government grants—in the highly specific fields the corporations are interested in.

At the Michigan institute, corporate support—either in the form of donations or in contracts—never materialized in the numbers expected—and needed.

“If they can do it this time, I think that would be terrific," Pincus said. “But I’m skeptical.”