Regional News

Connecticut Sees Future in Genes

When Jackson Laboratory of Bar Harbor, Maine, scuttled plans to establish a research facility in Florida, several other states came banging at the door of the genetics research company.

Connecticut won out. Last month, the state's General Assembly passed a $291 million bond package to help Jackson build a $1.1 billion center at the University of Connecticut Health Center.

Under a collaborative effort that also involves Yale University, Jackson plans to build a 173,500-square-foot genetics research center on 17 acres of state-owned land in Farmington, a suburb west of Hartford, the capital. There, it expects to work on medical treatments tailored to patients' genetic makeups.

The funding was the most controversial part of a $1 billion jobs bill that included $626 million of debt for business loans, small-business assistance, and tax credits for new hires.

It provides Jackson's genomics medicine unit with 10-year support for construction, equipment and operations. Jackson will provide $809 million through federal research grants, philanthropy and service income, according to a statement from Gov. Dannel Malloy.

The company, founded in 1929, says it will employ 300 people in the first 10 years and 600 employees within 20 years. Its staff, including personnel in Sacramento, now totals about 1,400.

Proponents of the Jackson deal cited the job additions in a high-growth, trendy industry. Opponents, while praising Jackson as a company, said Connecticut spent too much on what amounts to a risky venture-capital deal. They cite the price tag as $345 million, with bond interest accounting for 44% of it.

Malloy and Department of Economic and Community Development Commissioner Catherine Smith touted the Jackson deal as the first big catch under the state's Bioscience Connecticut initiative, launched in May.

"We have laid down our marker," the governor said.

But critics say Connecticut gave away too much in an effort to lure jobs in a struggling economy.

"It looks like a bad venture-capital deal with a limited upside, without any certainty as to what the payoff will be, because we're not sharing in the revenue or the intellectual property benefits or the patent values or anything like that," state Sen. L. Scott Frantz, R-Greenwich, said in an interview.

Senate Republicans called the expense far beyond the normal metric of dollars spent to jobs created. Frantz estimated the cost at about $15,000 to $20,000 per job created.

"This deal is a long way out of the normal universe," he said.

Frantz, whose party is in the minority in both chambers of the General Assembly, said his Democratic colleagues borrow too much.

"We're the most heavily indebted people in the country on a per-capita basis," he said. "This governor has been borrowing left and right. I realize that there are jobs to be considered and that Jackson is a revered company, but we can't spend in a manner that affects our credit rating and has the bond community worried."

Mike Hyde, Jackson's president of advancement and external relations, likened his company's presence to the opening of a state university branch. "The payback is in perpetuity, not just the first six operating quarters," he said.

Over two years, Jackson negotiated with Florida for startup money in Collier and Sarasota counties, then pulled out in June. Hyde said the company had hoped to join a bioscience rush in the Sunshine State.

Eight biomedical institutes had sprouted up under initiatives undertaken by Gov. Rick Scott's predecessors, Jeb Bush and Charlie Crist, both of whom had seen biotech as an alternative to the fading aerospace industry.

"We went to Florida to prepare to be the ninth," Hyde said. The recession, however, hit the state hard.

"We got to Florida about a year too late. Their economy had already tanked," Hyde added. "But we gained a fair amount of attention with our efforts in Florida."

When Jackson announced its pullout in June, representatives from five states called. According to Hyde, Connecticut, Texas and Utah were the most serious suitors.

"Connecticut presented itself in a very aggressive way," he said. "They were ready to do business and made a strong push through the governor, the DECD people, and the many colleges in the area."

Likewise, Malloy, Smith and other Connecticut officials saw the Jackson deal as an ideal fit.

"Connecticut has a number of things going for it," said Hyde, who cited an educated workforce, a cadre of entrepreneurial businesses, access to venture capital and proximity to New York and Boston. "All of these things are significant to us."

Also providing ammunition for the state were studies by PricewaterhouseCoopers and the Milken Institute.

PricewaterhouseCoopers estimated that the market for personalized medicine in the United States could expand about 11% annually through 2015, from about $232 billion to as much as $452 billion.

"While the market for diagnostic tests and therapies that leverage this new science is growing, the biggest opportunities exist outside of the traditional health care sector," PwC wrote in an October 2009 report.

The Milken Institute, in a January report, ranked Connecticut ninth overall in its technology and science index, which provides a nationwide benchmark for states to assess their capabilities in those sectors.

The institute used such metrics as risk-capital investment and technology concentration. "Connecticut recorded great gains in measures of access to venture capital," the report said.

But Frantz, referring to the intense competition among states, questions just how much biotech business Connecticut can generate.

"It's great to be thinking big and bold, but every other state would have to love these businesses, too," he said. "There are 27 states with research facilities in place. There's no guarantee we'll get the amount of capital the governor and his people have in mind."

The loss of the Jackson deal sparked finger-pointing in Florida.

"Too many legislators, local officials and private-sector foundations were left wondering who in state government was doing what and when," the Sarasota Herald-Tribune editorialized.



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