Kentucky voters may support politicians who talk about shrinking government to nearly nothing, like US Sen. Rand Paul (R-Ky.) But the Bluegrass State also offers emerging biotech firms cash benefits that oldtime healthcare centers like Pennsylvania can't match, according to professors who have left Penn and Jefferson behind for Lexington.
"Kentucky has a couple of really unique programs" that finance companies in the "Valley of Death" period between start-up and main-line venture capital, says Eric Ostertag. The University of Pennsylvania-trained molecular biologist moved his company, Transposagen, which develops MutaRat gene-testing animals, to Lexington in 2008.
"The one that really caught my attention: they are the first state in the nation to match the Small Business Innovation Research Grants" given by the federally-funded National Institutes of Health, Department of Defense, and National Science Foundation to early-stage companies that collaborate with universities. While several states match initial government grants up to $200,000 and a year, "Kentucky is the first state to match the second phase, two years and up to $2 million," Ostertag told me.
That wasn't the only attraction: "I was also looking for a place that would be cheaper for doing business, for cost of living, and for hiring employees," he said. He picked Lexington because it's home to the University of Kentucky, its research labs, and available workers from technigicians thorugh recent PhD.s "We also have pretty good incubator space" after leaving the University City Science Center in Philadelphia, he added. Among those who joined Ostertag in Kentucky was Jack Crawford, then a Penn grad student, now a Transposagen director.
The company's most recent hire is Carlisle P. Landel PhD., director of the Transgenic and Gene Targeting Facility at Thomas Jefferson University's Kimmel Cancer Center. Scientists like Landel have been leaving schools like Jefferson as "NIH funding is getting harder to get," Ostertag told me.
With 15 now on staff and local Kentucky investors joining the NIH and the state as funders, Transposagen has grown into " a genetic modification company," he added. "We can modify rats, or any type of rodents. We an do cell-line therapeutics, we are developing them for pain. And we are working on a line that's an alternative to (human) stem-cell embryos."
So what's he miss about Philadelphia? "The restaurants," Ostertag laughed.