Maryland ponders its wealth of ideas

Maryland is poised to explode with new ideas as the economy improves, making it the next Silicon Valley of technology and biotechnology.

That's the idea promoted by John Wasilisin, the acting president and executive director of Maryland's Technology Development Corporation (TEDCO).

"While there might be a recession in funding, there really is no recession in ideas and technology," he says. "When we come out of the financial situation we're in, I think you're going to see a bit of a burst of activity."

The state is prepping the way by loosening the criteria for many of its grant and loan funding programs for tenants of the state's 20 locally run business incubators. One plan is to allow companies not affiliated with universities or federal research institutions access to funds formerly restricted to sponsored ventures.

Where the biotechs are

Maryland is home to a wealth of federal science and biotechnology-based facilities, including the National Institutes of Health, Bethesda Naval Medical Center, Fort Detrick and the Food and Drug Administration.

In addition, the state boasts public and private research powerhouses including the University of Maryland, Baltimore and Johns Hopkins University as well as a wealth of teaching and research hospitals scattered throughout the Baltimore region. Many of these institutions of higher learning have their own technology transfer programs to coach researchers in bringing their ideas to market while making sure the institution gets a cut.

Johns Hopkins had its second consecutive record year in tech transfer agreements realizing a 15 percent share of revenues for the first time and increasing the number of agreements approved by 25 percent,e according to the fiscal 2008 Tech Transfer report just released.

Johns Hopkins Tech Transfer by the numbers:

12 new companies granted licenses in FY 2008
$24 millidon total cash value of new licenses
7 of those companies based in Maryland
22 potential start-ups in the pipeline
$76 million in private and venture funding for start-ups
$24 million returned to Hopkins thraough licensing

Source: Johns Hopkins University Technology Transfer annual report


Lemonade from lemons

According to Wasilisin, the recession may have a silver lining � many people who have felt the pinch may turn to entrepreneurship. "They're wanting to be in charge of their own business."

That growth in startups would be a hedge against the next bear market, he says.

"There are a number of areas where we support industry, where we have not been able to do what we have done in the past," says Lt. Gov. Anthony Brown. "Biotech is an industry that we know will lead to a lot of opportunities for Marylanders in terms of jobs, business opportunities and products they develop for the greater good."

Some, however, say it's not just the economy. Maryland investors offer several suggestions for helping the state improve its return on investments. Improving access to talent hidden away in research powerhouses like Hopkins and the many government labs, improving the state's record of raising successful CEOs and more direct investment are on their wish list.

"Maryland is one of the few states in the country that has a wealth of resources in its backyard that it's never been able to harness," says Neil Campbell, CEO of Germantown-based Mosaigen and general partner with investment firm Endeavor Capital. "We have a bunch of small little companies that are more lifestyle � they're driven by the technical people."

A treasure trove

Maryland has all the ingredients, he says: The highest per capita rate of PhDs; strong federal biotech investment; and the top research universities in the country. But these researchers "don't have the light at the end of the tunnel in terms of commercially successful examples to follow. Very few of them become CEOs."

Instead, their "commercial" ventures bring in just enough money to do the research that they want, Campbell says. "A lot of these companies have two or three people in there and it's nothing more than an extended post-doc."

The state and local jurisdictions could do some really simple things, he says. State leaders "need to take the money they raised in the past and apply it to an investment vehicle" -- funds that invest in technology and new companies.

"Increase tax credits for investors," Campbell says. "Increase the fund for tax credits. Then match investment through investment funds that match local investors."

In return, the state would lure successful entrepreneurs, gain new jobs and improve its tax base. Maryland needs a record of success to sell, says Roger Erickson, Chair of the 270 Tech Council, an industry association of tech companies in Montgomery County.

Investing in new technology and biotechnology is risky, he says. It's not like building a factory that's going to start making widgets as soon as it opens and sell those widgets for a profit.

"It's a very high-risk investment," Erickson says. "We've gone through a period, back when Celera and Genomics were founded, when $5 or $6 billion in venture capital went into the community," Erickson says. "But the return on those dollars was less-than stellar."

Investing in the future

Maryland needs to do more to invest directly in these industries and attract successful entrepreneurs and CEOs he says.

"Until there's a complete change around in the thinking of state and county officials, Maryland is going to remain research-oriented, not so much corporate-oriented," he says.

Wasilisin says the argument for direct investment is not a new one.

"There has been talk of taking maybe one percent of the pension fund and dedicating it to technology and research," he says. "Anything that can channel money to this, I think would be very helpful.

Making it happen would take strong political will.

The state retirement pension fund has been seriously hit by the recession, to the tune of nearly $3 billion, according to the latest report, from fiscal 2008.

The number of state employees alone grew from 28,631 in 2007 to 30,723 last year, while the value of the system's assets shrank from 39.4 billion in June 2007 to $36.6 billion in June 2008.

As far as importing CEOs, Wasilisin would prefer Maryland grow its own.

"There are a lot of people in our area with ideas and technology and we really want to take advantage of that."

Maryland is also focusing on providing more funding for agricultural science and technology companies in rural parts of Western Maryland and the Eastern Shore.

"Sometimes by the nature of technology, they need to be close to their major partners" in urban centers, Wasilisin says. Companies developing alternative energy, biofuels, farm-based agricultural technology and Chesapeake Bay water quality improvements, are better served in the state's farming regions.

Brown declined to comment on investing the retirement system in biotech, but says he is open to new strategies. "I think all of us are learning � in the private and public sector � life as we know it as we come out of this recession is not going to look the same."

Photo captions:
John Wasilisin, the TEDCO Deputy Executive Director - Arianne Teeple (portrait)
Manufacturing technicians perform routine in-process sampling at the Osiris Therapeutics GMP manufacturing facility in Columbia, Md. Credit: Osiris Therapeutics, Inc.