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Title: Developmental Strategy for a Bioinformatics Initiative


1
Developmental Strategy for a Bioinformatics
Initiative
  • September 20, 2000
  • Columbus, Ohio

Ernst Young LLP
Strategic Consulting for the Life Sciences
2
Introduction
A blue-ribbon panel of the NIH recently
recommended supporting the formation of 20
bioinformatics centers with up to 20 MM for each
center across the country. To obtain access to
this funding through the establishment of a local
Ohio center, the Edison BioTechnology Center
(EBTC) is leading an assessment and business
development project on behalf of the newly formed
Ohio Information Technology Alliance, an
organization funded by the Ohio Department of
Development (ODOD). EBTC would like to determine
whether the Ohio IT Alliance ought to establish a
bioinformatics center and if so, the best means
by which the Center may promote its educational ,
research, and technology development
commercialization objectives in the field of
bioinformatics. Commissioned by, and working
closely with the EBTC, Ernst Young LLP has
conducted a study that provides the fundamental
content for a strategic business plan. This
study included an overview of the Bioinformatics
field an analysis of strengths and weaknesses in
the Bioinformatics industry within the state of
Ohio a summary of focused interviews with
academic and industrial leaders in Ohio a
roadmap to build-up a sustainable and
differentiated Bioinformatics capability in Ohio
through a statewide Bioinformatics initiative
and a five-year financial model forecasting the
revenue, Costs and EBIT of the bioinformatics
initiative, linked to a suit of Monte Carlo
simulations run at several different input
(demand) levels. These financial models were
based upon a set of surveys coordinated by the
EBTC that were sent to interview participants
their responses served as the backbone of the
local market research.
3
What is Bioinformatics?

4
Bioinformatics Integrates Data from Many Sources
  • Drug design
  • Computer-aided drug design and molecular
  • modeling
  • High-throughput screening
  • Structure-based drug design
  • Small-molecule-compound libraries
  • Virtual chemical libraries
  • Drug development
  • Clinical trial data, efficacy data
  • Pharmacokinetics
  • Pharmacogenomics
  • Gene discovery
  • High-throughput genetic sequencing
  • Genetic algorithm searches
  • Genetic linkage studies
  • Genetic maps
  • Polymorphisms (SNPs)
  • Gene function
  • Gene chips and microarrays
  • Gene expression profiles
  • Functional genomics

Bioinformatics
Source CEN News, Ernst Young analysis
5
Bioinformatics is a Multidisciplinary Field and
Requires Cross-functional Expertise
  • DATA MANAGEMENT
  • Annotation
  • Data mining
  • Visualization of input data
  • Representation of patterns and
    inter-relationships
  • DATA GENERATION
  • Content Generation
  • Tissue banks
  • Genotyping
  • Sequencing
  • Preliminary profiling
  • Sequence pattern detection
  • HARDWARE BACKBONE
  • Integration of sequencers and
    analytical instrumentation
  • Computer power
  • Data transfer
  • Data storage
  • Security and privacy

Bioinformatics
  • DATA LEVERAGE
  • Detecting translation codes
  • Functionally mapping genotypes with phenotypes
  • Ordering and structural mapping genes
  • Modeling and Simulation of Gene Regulation
  • Modeling and Simulation of Protein Interactions
  • In Silico Drug Development

Source Ernst Young analysis
6
Representative Bioinformatics Companies (1/4)
DATA GENERATION BIOTECH/GENOMICS COMPANIES
Year Founded
Number of Employee
Capital Raised (MM) Private Public
Total
Business Description
Company Name
Athersys
1994
50
60.1
NA
60.1
Engaged in the development of therapeutic
products for the treatment of significant and
life threatening diseases. The companys research
and development programs are focused on its two
proprietary platform technologies RAGE (Random
Activation of Gene Expression) and SMC (Synthetic
Microchromosome) vector system
Celera
1998
359
330.0
983.3
1,313.3
Completed a draft version of the Human Genome on
June, 2000, with intent to supply high
value-added genomic and proteomic data to the
life sciences collaborators. Celera has the
world's most powerful high-throughput DNA
sequencing capability.
CuraGen
1993
288
191.3
195.5
386.8
Conducts project-driven genomic RD for
proprietary use and in collaboration with life
sciences partners. CuraGen offers collaborators a
variety of well-integrated databases,
bioinformatics tolls and services. Major
collaboration includes Glaxo Wellcoma.
Exelixis
1995
168
57.7
126.0
183.7
Key player in the field of functional genomics
and comparative genomics, performing target
validation for the pharmaceutical industry with
technology that can also be applied to any
industry that relies on organisms, including
agriculture and agrochemicals.
GeneLogic
1994
176
30.2
298.1
328.3
Offers "GenExpress" gene expression database
pruducts, and other services to the life sciences
industry.
Genome Therapeutics
1961
200
2.1
82.2
84.3
Expertise in identifying and characterizing human
genes associated with major diseases and
elucidate bacterial genes responsible for many
serious infectious diseases. Genome Therapeutics
has a long history of scientific excellence and
has built a reputation as a top genome sequencing
facility, pioneering many of the tools and
techniques used in the genomics field today. Key
alliances include Astra and Schering-Plough.
Human Genome Sciences
1992
415
NA
898
898
Expertise in identifying and characterizing human
genes associated with major diseases and
elucidate bacterial genes responsible for many
serious infectious diseases. Genome Therapeutics
has a long history of scientific excellence and
has built a reputation as a top genome sequencing
facility, pioneering many of the tools and
techniques used in the genomics field today. Key
alliances include Astra and Schering-Plough.
Source Oscar Gruss, Edgar's, Company website,
Biospace.
7
Representative Bioinformatics Companies (1/4)
DATA GENERATION BIOTECH/GENOMICS COMPANIES
Year Founded
Number of Employee
Capital Raised (MM) Private Public
Total
Business Description
Company Name
Incyte
1991
900
NA
757.2
757.2
Provider of genomic information-based products
and services. These products and services include
database products, genomic data management
software tools, microarray-based gene expression
services, genomic reagents and related services.
Incyte focuses on providing an integrated
platform of information technologies designed to
assist pharmaceutical and biotechnology companies
and academic researchers in the understanding of
disease and the discovery and development of new
drugs. Incyte's current products and services
include an integrated platform of genomic
databases, data management software tools,
microarray-based gene expression databases and
services, and related reagents and services
Millennium Pharmaceuticals
1993
750
NA
471.5
471.5
MLNM is engaged in the commercial application of
genetics, genomics and bioinformatics to discover
and develop a broad range of novel therapeutic
and diagnostic products. The Company seeks to
discover disease-related genes, produce validated
drug targets and drug leads, and develop new,
proprietary drugs to treat major human illnesses.
Myriad Genetics
1991
300
19
100
119
A genomics company focused on the development of
therapeutic and diagnostic products based on the
discovery of major common human disease genes and
their biological pathways. The Company utilizes
analyses of extensive family histories and
genetic material to identify inherited gene
mutations which increase the risk to individuals
of developing these diseases
The Company innovates and integrates technologies
in computational and molecular biology.
Integrated platform includes the design and
analysis of proprietary DNA microarrays, a
powerful, flexible informatics system, and
advanced molecular biology techniques to support
gene expression profiling programs
Rosetta Inpharmatics
1997
150
107.8
116
223.8
Source Oscar Gruss, Edgar's, Company website,
Biospace.
8
Representative Bioinformatics Companies (2/4)
DATA MANAGEMENT GENOMICS / INFORMATICS FOCUSED
COMPANIES
Ohio based
Year Founded
Number of Employee
Capital Raised (MM) Private Public
Total
Business Description
Company Name
Leveraging expertise in computer
hardware/software designed to accelerate
bioinformatics algorithms. Business model moving
toward an internet portal concept, plus
proprietary and collaborative gene discovery.
Compugen
1993
120
75.4
Private
75.4
An integrated genomics portal that provides a
secure and comprehensive technology platform to
simplify and accelerate life science discovery.
Its research agents provide easy, point-and-click
bioinformatics capabilities and access to a
wealth of data sources, including its own
annotated human genomic data.
DoubleTwist.com
1993
NA
66
86.2
152.2
A spin-off from the Australian National Genomic
Information Services, eBioinformatics provides a
variety of web-based bioinformatics tools and
databases.
eBioinformatics
1998
NA
11.9
Private
11.9
Provides enterprise-wide bioinformatics systems
and services. Partnerships include AstraZeneca,
Glaxo Wellcome, Park Davis and PE biosystems.
Genomica
1995
NA
36.1
123.1
159.2
Desktop and enterprise-wide bioinformatics
products. Customer base includes 60
pharmaceutical companies, 250 biotechnology
companies and 500 universities.
Informax
1990
172
NA
75
75
Desktop based gene expression, sequencing and
structural visualization software provider.
Targeted customers include pharmaceutical and
biotechnology companies, and universities.
LabBook
1999
15
10
Private
NA
Provides enterprise-wide bioinformatics systems
and services. 100 million proprietary RD
collabarition with Bayer AG, largest
bioinformatics deal to date.
Lion Bioscience
1997
210
100
178.6
278.6
Provides entreprise-wide bioinformatics systems
and services. Partnerships include Pfizer,
Abbott, Wyeth Ayerst and IBM.
Private
Netgenics
1996
47.1
47.1
NA
Tools for gene expression analysis and
visualization with additional capability in data
mining applications.
5
Private
Silicon Genetics
1998
NA
NA
Source Oscar Gruss, Edgar's, Company website,
Biospace.
9
Representative Bioinformatics Companies (2/4)
DATA MANAGEMENT GENOMICS / INFORMATICS FOCUSED
COMPANIES
Ohio based
Year Founded
Number of Employee
Capital Raised (MM) Private Public
Total
Business Description
Company Name
Leading provider of decision analytics software
solutions -- speeding the discovery, development,
manufacture, and marketing of products across the
extended enterprise. Product offerings increase
the productivity and decision making of
individuals, and connect decision-making
communities across all stages of the product life
cycle.
SpotFire
1996
NA
25
Private
25
Bioinformatics tools and databases with a special
focus on protein structural information, critical
to rational drug design.
Structural Bioinformatics
1996
34
46.8
Private
46.8
Specialized computer hardware/software designed
to accelerate bioinformatics algorithms.
Confirgurable hardware architecture offers
competitive advantadge in some cases.
Relationship with key academic and industrial
research groups, including Stanford University,
Roche, Bristol-Myers and Novartis.
Timelogic
1981
NA
NA
Private
NA
Viaken Systems is the premier full service ASP
(Application Service Provider) for the life
sciences, offering solutions for biotechnology,
pharmaceutical, and agricultural companies.
Viaken hosts third-party research informatics
application solutions and e-commerce services in
the areas of genome informatics, chem
informatics, and pharmaco informatics at its tier
one data center and delivers these services via
the Internet. The companys unique ASP platform
enables companies of all sizes to utilize the
same state-of-the-art research information
technology (IT) as implemented by top-tier
organizations.
Viakon
1999
NA
3.7
Private
3.7
The company develops and markets decision support
tools for use by life scientists engaged in drug
discovery. The products use proprietary
algorithms to correlate structures with computed
and experimental data and to help scientists find
relationships hidden in the vast quantities of
data being generated. Additionally, LeadScope
Inc.can provide organizations with scientific
expertise and knowledge of informatics tools to
assist with the analysis of proprietary data from
several phases of research including
combinatorial chemistry and high throughput
screening.
LeadScope
1997
NA
9.4
Private
9.4
Source Oscar Gruss, Edgar's, Company website,
Biospace.
10
Representative Bioinformatics Companies (3/4)
DATA MANAGEMENT HARDWARE / INSTRUMENTATION
COMPANIES
Business Description
Company Name
Agilent Technologies
Strategic collaboration with Rosetta Inpharmatics
to make and sell gene expression analysis
systems, including hardware and software.
Major strategic alliance with Celera to provide
integrated bioinformatics hardware, software,
networking and services solutions.
Compaq
IBM is conducting research into high value-added
data mining and protein structure determination
methods. IBM offers a variety of enterprise-wide
IT solutions for the life sciences market, and
recently initiated a collaboration with NetGenics.
IBM
Offers visual computing and high-performance
computer systems. SGI systems support a wide
variety of bioinformatics software applications.
Silicon Graphics
Sun systems support a wide variety of
bioinformatics software applications.
Sun Microsystems
Instrumentation for high-throughput gene
sequencing
PE Corporation
Source Oscar Gruss, Edgar's, Company website,
Biospace.
11
Representative Bioinformatics Companies (4/4)
DATA LEVERAGE CONSUMER GENETIC INFORMATION
BASED COMPANIES
Year Founded
Number of Employee
Capital Raised Private Public Total
Business Description
Company Name
Consumer genotype profiling. Offers customer the
ability to identify de novo new variance in the
genome, has developed SNP data base as foundation
for SNP assay development. High-throughput
genotyping process.
DNA Sciences
1998
45
NA
Private
NA
deCODE genetics is a population-based genomics
company based in Iceland, that conducts research
in the genetics of common diseases. deCODE
genetics' mission is to use human genetics and
genomics to acquire new knowledge about health
and disease, and work with pharmaceutical
companies and healthcare providers to develop new
methods to identify, treat and prevent diseases.
deCode
1998
300
128
128
356
The company will use the heart study's vast
collection of genetic, clinical, and behavioral
data from the 10,000 participants, all families
from Framingham, to create a huge electronic
database. Pharmaceutical and biotechnology
companies are expected to pay annual fees to
access the treasure trove of medical information.
Framingham Genomic Medicine
2000
NA
21
Private
21
Commercializes population genomics and
informatics to improve the development, marketing
and prescribing of drugs
Genaissance Pharmaceuticals
1999
113
21
78.0
78.0
Source Oscar Gruss, Edgar's, Company website,
Biospace.
12
Why Invest in Bioinformatics?Precedents for
Potential Returns for Public and Private
Investment

13
With the Completion of Human Genome Project, the
Public Domain Is Overloaded with Data
GenBank SEQUENCE GROWTH
Draft completion of Human Genome Project
GenBank BASEPAIR GROWTH
3.12 Billion Base Pairs
6/2000
Source GenBank
14
The Biotechnology Sector has Raised 11 Billion
in Equity Financing in the First Quarter of 2000,
and is Well Positioned to Leverage this
Information Revolution
BIOTECHNOLOGY EQUITY FINANCING IN Q1, 2000
Millions
1,815
10,896
3,545
659
3,754
1,124
IPOs
Follow-ons
Venture Capital Financing
Public Company Private Financing
Convertible Financing
Total
Source Biospace
15
Biotechnology Sector Has Raised 11 Billion in Q1
2000, More Than 3-Fold better than the Best
Quarter of the Last Financing Boom in 1996. 37
of this Recent Financing was Bioinformatics
Related
AVERAGE QUARTERLY FINANCING
12,000
10,896
10,000
3x
8,000
Bioinformatics
Related
37
6,000
Cash Inflow (M)
63
3,500
4,000
Other Biotech
2,007
1,354
2,000
1,222
0
96
97
98
99
Qt1, 00
Year
Source Ernst Young 13th 14th Annual Reports,
Biospace.
16
The Aggregate Market Valuation Of the Genomics
Bioinformatics Sector Increased 6-Fold From 1999
To 2000 This sector contributes significantly to
the 2 Trillion market value of the global
pharmaceutical and biotechnology industries
MARKET VALUATION OF GENOMIC/BIOINFORMATICS
COMPANIES
200
??
180
  • In ten years, gt 90 of new drugs entering
    development are poised for design through the use
    of genomic data
  • The market valuation of genomic and informatics
    related companies is poised to exceed the current
    60 billion level
  • Genomic and bioinformatics may contribute
    significantly to an increasing proportion of the
    global Pharma / Biotech industry.

160
140
?
120
Aggregate Market Cap (B)
100
80
60 B
60
6X
40
20
10 B
0
99
00
2010
Year
Source CSFB
17
Opportunities and Strengths for Bioinformatics
in Ohio

18
  • Ohio has the potential to build a substantial
    presence in bioinformatics
  • Academic presence
  • OSU has completed the functional annotation of
    human chromosome 22
  • The James Cancer Center tissue bank can provide a
    unique set of genetic content
  • The Cleveland Clinic is a leader in
    cardiovascular genetic research
  • The University of Cincinnati Childrens Hospital
    Medical Center and OSU are among the first
    academic institutions that have formed a
    partnership with bioinformatics leader Celera
  • The supercomputer center within Ohio is among the
    best in the country
  • Industrial presence
  • Existing life science companies can provide the
    leadership and experience to support the growth
    of the bioinformatics industry in Ohio, including
  • Battelle
  • Cardinal Health
  • Chemical Abstracts
  • Digineer
  • Gliatech
  • Proctor Gamble

19
Composition of the Industrial landscape for the
Life Sciences in Ohio
Number of Companies
Bioinformatics
Biotechnology
Academic Institution
3
15
8
Medical Devices
Medical / Clinical
23
17
Industrial Supplier
7
11
Reagent Supplier
40
11
Contract RD
Professional Services
11
6
Contract Manufacturing
Industrial Services
Note Certain companies and institutions were
counted in multiple categories Source EBTC Web
Site, Ernst Young Analyses
20
Composition of the Industrial landscape for the
Life Sciences in Ohio
  • Emerging Infrastructure to Support the Growth of
    a Bioinformatics Initiative includes
  • Edison Program Incubators
  • Akron Cincinnati Columbus Cleveland
  • Dayton Mansfield Toledo Youngstown
  • Edison Centers of Excellence
  • Ohio Information Technology Alliance
  • Edison Biotechnology Center
  • Research Parks
  • BioPark, Cleveland Science and Technology Center
    at the Ohio State University
  • Seed capital funds at various stages in
    development
  • Technology Action Fund
  • Columbus
  • Appleseed Fund, Cleveland
  • BioVentures, Cincinnati

21
Strengths and Implications for the Development of
a Bioinformatics Initiative
Strengths
Implications
  • Supercomputer center is
  • one of (top) in the country
  • Rich data repositories available from Chemical
    Abstracts
  • Tissue sources available
  • from clinical tissue banks
  • Cost of living is low, while standard of living
    is high
  • Substantial potential for the processing of
    complex data
  • Potential for high-value add annotation on a
    systematic basis
  • Targeted research can be carried out on
    tissue-specific disease states
  • Potential for significant employee recruitment
    and retention

Statements that were repeated the most in
multiple independent interviews
Source Company and institutional Interviews
22
Weaknesses and Challenges for Bioinformatics in
Ohio
23
  • Academic Challenges
  • Biology faculty need computational support to
    carry our bioinformatics research
  • Individual labs require software development
    capabilities to permit research progress
  • Universities require better coordination of
    shared resources to benefit all (avoid Silos)
  • Faculty interested in Bioinformatics do not know
    of the research interests and skill sets of peers
    at other Universities and institutions
  • There is a duplication of effort for solving
    commonly encountered problems
  • script writing for hardware instrumentation
  • pattern detection algorithms
  • Faculty drop or delay projects because of an
    inability to easily tap into bioinformatics
    resources
  • Many universities do not provide the
    opportunities for students to study
    bioinformatics even though the student demand is
    great
  • Large Universities cannot fulfill the needs of
    all students
  • Small Universities cannot rapidly develop courses
    on their own

Development of a bioinformatics industry in Ohio
faces several challenges
24
Development of a bioinformatics industry in Ohio
faces several challenges
  • Industrial Challenges
  • The present industry structure is not suitable to
    support the rapid, scaleable
  • growth of the bioinformatics industry
  • The current group of life science-related
    companies in Ohio are fragmented and their
    resources are scarce, and thus they lack
    critical mass
  • The lack of a local talent pool limits the
    growth of every company
  • Out-of-state executive recruitment firms may lack
    the motivation to prioritize Ohio searches and
    cannot realistically convey the local environment
    to potential recruits
  • Executive and other searches may have a long
    turn-around time
  • Local private funding sources often prefer to
    invest out-of-state
  • This is due in part to the lack of local senior
    management, and large local networks
  • Public-private partnerships are not focused on
    the bioinformatics industry
  • The EBTC and other organizations are already
    resource-constrained, so additional expansion is
    difficult

25
Weaknesses and Implications for the Development
of a Bioinformatics Initiative
Weaknesses
Implications
  • Relatively few funding sources for seed and
    early stage capital (Venture Capital, Angel
    Investors)
  • Lack of formal bioinformatics training in
    academic institutions
  • Limited pool of cross-trained and experienced
    scientific staff and entrepreneurial management
  • Ohio does not have a culture of inter-company
    collaborations such as strategic alliances, and
    is often insular in business dealings
  • Entrepreneurship can be impeded before innovative
    ideas reach a mature proof of concept stage
  • Insufficient pool of potential employees with
    appropriate skills, made more difficult by a lack
    of local bioinformatics education
  • Emerging companies may become constrained due to
    limitations on human resources
  • Development of synergies amongst different
    companies and technology platforms are limited

Statements that were repeated the most in
multiple independent interviews
Source Company and institutional Interviews
26
Approaches for FosteringBioinformatics in Ohio
27
Approaches to Fostering the Development of
Bioinformatics in Ohio
  • Build Infrastructure for the Future, such as
  • Education for training potential employees
  • Public and Private funding sources for start-ups
  • Research support for generation of IP
  • Attraction of entrepreneurial senior management
  • Local expertise in professional services to
    support entrepreneurial companies
  • Leap-Frog Past the Competition
  • Understand the current-state of the art
  • Focus on targeting technologies beyond this
    horizon

28
Approaches to Fostering the Development of
Bioinformatics in Ohio
  • Build Infrastructure for the Future
  • Ohio must build a sustainable infrastructure to
    support the growth of its bioinformatics
    companies
  • Enabler Ohio must support the development of
    future bioinformatics talent at all Universities
  • Solution Introductory and advanced
    bioinformatics courses should close the gap among
    Universities of different sizes and cover all
    regions of Ohio.
  • Team-taught courses that rotate from campus to
    campus.
  • Computer science for biologists Biology for
    computer scientists.
  • Ohio must help the industrial and academic
    communities to conduct efficient and timely
    research and development which forms the backbone
    of future companies
  • Enabler Shared services which provide
    cost-effective, expert knowledge support to all
    Universities and Companies throughout Ohio
  • Solution Efficient, centralized data hosting and
    management services to safely store rapidly
    growing amounts of genomics and bioinformatics
    data
  • Solution Responsive consulting service branch
    coordinated by the Bioinformatics Initiative
    tasked with solving difficult technology
    challenges in short time periods

29
Approaches to Fostering the Development of
Bioinformatics in Ohio
  • Build Infrastructure for the Future
  • Ohio must build critical mass in local talent
    pool to support the growth of its bioinformatics
    companies
  • Enabler Attracting talent to companies in Ohio
    helps to promote the success of these companies
    and
  • helps to brand Ohio as a bioinformatics center
  • Solution Establish a local, focused recruitment
    network through a dedicated Recruiter
  • Ohio must build a local base of funding to allow
    early-stage start-up companies to locally mature
  • Enabler Ohio must support the development of
    emerging bioinformatics companies
  • Solution Use any cash generated from the
    Bioinformatics Initiative to provide seed-stage
    funding for local entrepreneurs in a hybrid
    public-private partnership.
  • Ohio must expand its base of academic research
    and teaching to embrace and nurture
    bioinformatics
  • Enabler Ohio should support the development
    of bioinformatics research and teaching at all

30
Approaches to Fostering the Development of
Bioinformatics in Ohio
  • Leap-Frog Past the Competition
  • The business strategy and research goals of
    entrepreneurial companies must be leap-frog
    beyond the current state-of-the-art to avoid
    playing a doomed game of catch-up
  • Focus on next-generation technology platforms
  • Functional annotation integrated with complex
    physiological data
  • Functional annotation of the genomes of
    agricultural crops and other plants, for which
    Ohio already has a leadership position in
    agricultural research
  • Pattern detection and computational analyses of
    polygenic diseases (i.e. diseases for which
    several genes together cause illness - cancer,
    diabetes, cardiovascular disease,)
  • Pharmacogenomics - the tuning of drug dosages and
    combinations to individual physiology
  • Drug discovery based on the phenotyping of
    functional genomic content
  • Diagnostic devices based upon genetic and genomic
    information
  • Data-mining of patient records from longitudinal
    studies of chronic disease (i.e. cancer)

31
How to Build a Bioinformatics Infrastructure in
Ohio?
32
Overview of Proposed Approach Five Parallel
Bioinformatics Initiatives
Academic
Rotating Courses
Professional
Academic
Consulting Services
Industrial
Enhance Bioinformatics-based Economic
Development for the State of Ohio
Retained Search
Private-Public
Academic
Data Hosting
Industrial
Entrepreneurship
Private-Public
33
Overview of the Rotational Courses Program
How
What
Impact
  • Stimulate inter-departmental, inter-institutional
    and academic-industry collaborations
  • Increased capability in attracting federal grants
  • Create statewide uniform Bioinformatics
    curriculum standard
  • Produce high quality Bioinformatics research
    talent and skilled workforce
  • Establish academic reputation in Bioinformatics
    and attract world class Bioinformatics faculty
    and entrepreneurs
  • Improved course quality
  • Start with 10-faculty team
  • 8 academic
  • 2 industrial
  • 4 or more locations within the state of Ohio,
    such as
  • Columbus
  • Cleveland
  • Cincinnati
  • TBD
  • 1 course per location
  • 30 - 40 students per course
  • Concurrent short training courses for
    professionals already in the work force
  • Make it a significant honor for faculty to
    participate
  • Bioinformatics is an interdisciplinary field
    which requires expertise both in Biology and in
    Computer Science.
  • Current curriculum in Biology has little or no
    computer training, and Computer Science students
    have little Biology.
  • A Biology course for Computer Science students
    and a Computer Science course focused in
    programming for Biology students will provide the
    required knowledge for these two groups of
    students to do joint Bioinformatics research

34
Catching the Synergy of Rotational Course Programs
Rotational courses can foster cross-departmental
and cross-institutional collaborations, expand
research, and attract new faculty.
Inter-University Rotating Courses


  • Cross-Departmental,
  • Cross-Campus Research
  • Human Genome Annotation
  • Agrigenomic Annotation

Attraction of Bioinformatics Faculty
Highly Trained Bioinformatics Talent


Expanding Research Activities

35
Overview of the Retained Search Program
How
What
Impact
  • Allow a quick and comprehensive search for
    Bioinformatics talent which will be critical to
    the launch of the Bioinformatics initiative.
  • Tap into a nationwide talent pool and allow an
    inflow of fresh bioinformatics talent at a
    national level.
  • Talented people coupled with new ideas and
    infrastructure will create new start-ups, and
    stimulate economic growth in Ohio.
  • Talented people will conduct cutting edge
    research and create start-up opportunities, which
    will attract more Bioinformatics talent from
    outside Ohio.
  • Bioinformatics is a relatively new field, and a
    great proportion of the talent needed to help
    start-up Bioinformatics activities requires
    out-of-state import.
  • There will be no less than a two-year gap before
    Ohio can produce enough locally-trained talent.
  • Many leading Bioinformatic academic and
    industrial research groups are outside the state
  • Professional searching is the most effective way
    to tap into a national and global talent pool.
  • Start with 1 - 2 dedicated executive recruiters
    who have, or can rapidly develop, a nationwide
    and global network.
  • Conduct a national search to identify and recruit
    a director for the Bioinformatics initiative.
  • Recruit post-doctoral students, programmers, and
    technical personnel to support the start-up of a
    research and consulting based bioinformatics
    initiative.
  • Help to recruit trained Bioinformatics talent for
    Ohio based Bioinformatics companies from
    out-of-state.
  • Executive recruiters are compensated based on the
    number and level of talent they recruited.

36
Catching the Synergy of Retained Search Programs
Retained searches carried out by a dedicated Ohio
resource with the knowledge of both the Ohio
environment and the bioinformatics industry will
accelerate the filling of local human resource
needs, supporting business growth
Conduct Retained Searches



Expanded Business Growth
Close Gap in Human Resources
Re-investment from Revenues


Expanding Business Activities
37
Overview of the Consulting Services Program
How
What
Impact
  • Help to start Bioinformatics research for those
    who couldnt do so because of a lack of domain
    expertise in programming.
  • Enhance the statewide Bioinformatics capability
    to a nationally competitive level
  • Generate revenue for the Bioinformatics
    initiative.
  • Drive future economic growth in Ohio with
  • new start-ups
  • new spin-offs
  • joint ventures
  • Reduce research and development costs for
    academics and companies through group purchasing
    power.
  • Bioinformatics is a relatively new field that
    needs knowledge and technical knowhow in both
    Biology and Computer Science
  • Most Biologists need help in programming and IT
    system integration to leverage the Bioinformatics
    revolution.
  • The primary needs in consulting services will be
    in the area of commercial software selection,
    customized script writing, and hardware-software
    integration.
  • Computer Science departments studying
    Bioinformatics problems will need high level
    Bioinformaticians to define solve these
    problems.
  • Start with a group of 6 - 10 people including a
    world class Bioinformatician (the director) and
    support programmers.
  • Survey and codify existing commercial software,
    and make recommendations to clients for their
    software selection.
  • Write scripts and interface software for clients
    to ensure seamless integration.
  • Collaborate with hard ware and soft ware vendors,
    stay current with the latest developments in the
    Bioinformatics service field.
  • Generate group purchasing power (e.g. for
    software and hardware) over time.

38
Catching the Synergy of Consulting Activities
Consulting services will help to solve imminent
critical problems fast and help to launch new
research and development. Clients could be
located in both Ohio and in other areas (avoid an
insular focus).
Engage in Bioinformatics Consulting Projects


Increased Need for Consulting
  • Solve Critical
  • Technical Challenges
  • Hardware Interfaces
  • Data Management
  • Detection Algorithms


Revenues, Royalties, Equity lead
to Reinvestment
Expanded Business Opportunities

Increased Bioinformatics Productivity

39
Approach to Financial Modeling
  • Participants in the original interviews carried
    out for this project were asked to
  • answer to a set of survey questions by email
    related to the financial modeling
  • In particular, respondents were asked to
    estimate their potential use of
  • rotational courses (students interested in
    courses, courses per location)
  • consulting services (hours to be purchased,
    acceptable billing rates)
  • data hosting (data storage needs, data transfer
    needs)
  • The answers to these questions were tabulated
    and averaged and the averages
  • used as line item inputs into the financial
    models which are described in the appendix
  • The financial models showed cash-flow positive
    results from Year One.
  • While this cash flow may be unusual for start-up
    businesses in Ohio, these values
  • follow directly from participants specific
    responses. Further, the framework for the
  • financial modeling is itself conservative and
    based on industry precedents.

40
Summary of Financial Modeling (data in 000)
Year 1 Year 2 Year 3 Year 4 Year 5
Rotational Courses 399.2 466.2 569.1 701.8 873.4
Executive Search 202.5 341.6 491.6 653.0 826.5 Con
sulting services 2,089 2,891 3,923 4,916 6,631 Ho
sting 1,719 2,026 2,267 2,558 2,842
Revenue
-
Rotational Courses 80.00 88.00 96.80 106.5 117.1 E
xecutive Search 169.0 175.8 365.6 380.2 395.4 Cons
ulting services 676.0 831.5 1,026 1,250 1,475 Host
ing 1,364 792.3 1,135 1,583 2,177
Costs
Rotational Courses 317.5 381.8 475.0 587.8 747.2
Executive Search 33.5 165.9 126.0 272.8 431.1 Co
nsulting services 1,379 2,052 2,834 3,864 5,327 H
osting 443.7 1,231 1,140 974.1 680.3 Total 2,1
74 3,830 4,575 5,699 7,186
EBIT
These output values represent the 50th
percentile within a population of values derived
from 1000 Monte Carlo simulations. For the Monte
Carol simulations, certain input values were
established through Ohio respondents answers to
a set of survey questions related to the
financial modeling (see appendix).
41
Steps to Building a Bioinformatics
Infrastructure in Ohio
42
Potential Pit-Falls to Fostering the Development
of Bioinformatics in Ohio
  • Focusing Soley on Short-Term Gain
  • Bioinformatics is an inherently complex area and
    requires substantial support from multiple
    scientific fields
  • Time is required to build critical mass, focus on
    long-term growth
  • Focusing on Current Competitors
  • Companies in other regions (i.e. Celera in MD,
    Incyte in CA) have enormous head-starts and
    several hundred million dollars of funding
    supported by ample infrastructure and talented
    staff.
  • Companies in Ohio cannot compete with Celera and
    Incyte in a head-to-head contest Do not try to
    emulate these companies without a distinct and
    sustainable competitive advantage
  • Seeking Out Artificial Deals
  • Partnerships cannot be forced between private
    companies without clear value to all parties
    people need to get to know each other and
    appreciate their mutual value to one another
  • Academic and Industrial labs have different
    priorities and work at different time scales
  • Constraining Strategy to Historical Trends

43
Considerations for a Strategic Roadmap for the
Bioinformatics Initiative
  • Given scarce resources and a limited time to
    establish credibility, need a
  • targeted and highly focused approach to any
    bioinformatics initiative
  • Given the need to build a brand based on core
    strengths, need to identify
  • areas where Ohio could make a distinctive and
    potentially unique contribution
  • Clear, defensible roadmap with no false starts
    and stops, leading to a one-
  • way migration towards the building of a
    statewide bioinformatics initiative
  • Accepted and defined metrics for success to
    monitor progress and detect
  • nascent blockages
  • Need a common view of collaborative and shared
    service issues, based on
  • both open discussions, both internal and
    external
  • A big project with high visibility success
    might pull people together and
  • improve both the internal and external
    perception of the State of Ohio regarding
  • bioinformatics

44
Strategic Roadmap for the Bioinformatics
Initiative
Consulting staff will be drawn as appropriate
from the group of post-doctoral associates.
45
Overview of Proposed Organizational
Structure Year One
ODOD
Director of Bioinformatics Initiative
Advisory Board
Electable
Business Development Associate (1)
Administrative Staff (1)
Post-Doctoral Associates (2)
Out-sourced Legal and Consulting
OSC
Software Developers (2)
Joint appointment with OSC
46
Overview of Proposed Organizational
Structure Year Two
ODOD
Director of Bioinformatics Initiative
Advisory Board
Electable
Business Development Associate (2)
Administrative Staff (1)
Post-Doctoral Associates (3)
Out-sourced Legal and Consulting
OSC
Software Developers (2)
Joint appointment with OSC
47
Overview of Proposed Organizational
Structure Year Three
ODOD
Director of Bioinformatics Initiative
Advisory Board
Electable
Business Development Associate (2)
Administrative Staff (1)
Post-Doctoral Associates (4)
Out-sourced Legal and Consulting
OSC
Software Developers (3)
Joint appointment with OSC
48
Overview of Proposed Organizational
Structure Year Four
ODOD
Director of Bioinformatics Initiative
Advisory Board
Electable
Business Development Associate (3)
Administrative Staff (2)
Post-Doctoral Associates (5)
Out-sourced Legal and Consulting
OSC
Software Developers (3)
Joint appointment with OSC
49
Overview of Proposed Organizational
Structure Year Five
ODOD
Director of Bioinformatics Initiative
Advisory Board
Electable
Business Development Associate (3)
Administrative Staff (2)
Post-Doctoral Associates (6)
Out-sourced Legal and Consulting
OSC
Software Developers (4)
Joint appointment with OSC
50
Defining Success for a Bioinformatics Initiative
in Ohio
51
Aggregate Definitions of Success for a
Bioinformatics Initiative
  • Keep smart highly trained people in the state
    of Ohio, supporting emerging companies
  • Serve as a magnet to draw people into the
    state of Ohio, resulting in high-paying,
  • high-tax generating revenues
  • Serve as an aggregation function for general
    business development
  • Coordinate and integrate independent
    discoveries
  • Raise the profile of Ohio as a bioinformatics
    area and as a nexus for high technology
  • Create a critical mass to attract federal
    funds to establish a genome center
  • Convince venture capital firms and other
    investors to invest in Ohio-based start-ups
  • Establish scientific credibility for long-term
    success through research grants and
  • high profile publications
  • Ensure that there is broad participation from
    universities, companies, and research

Statements that were repeated the most in
multiple independent interviews
Source Company and institutional Interviews
52
Catching the Synergy of the Bioinformatics
Initiatives
Net Revenue Streams from Bioinformatics
Initiatives




Increased Participation in Bioinformatics
Initiatives
  • Internal Seed-Stage
  • Capital for Venture
  • Investments
  • Equity Participation
  • Royalty Agreements

Product Royalties

Equity
Re-investment from Revenues




Expanded Entrepreneurial Activities
Venture Capital


Equity
  • External Venture
  • Investments
  • 15 Private Venture Funds

53
Implications of Success for the Public-Private
Partnerships
  • Public investment can lead to private returns
  • Incubators and Technology Support Centers - can
    catalyze entrepreneurship
  • Tax Savings Programs - can attract new business
    to Ohio
  • Educational System Enhancements - provide
    graduates with critical talent to companies
  • Private investment can lead to public returns
  • Job Creation - Higher employment levels
    stimulate further economic growth
  • Tax Base - Increases in tax revenues can fund
    further economic development programs
  • Further Attraction of Investors - Success breeds
    success, increasing investor interest

54
Implications of Success for Success in Federal
Grant Applications
  • The bioinformatics initiative can build the
    infrastructure to attract Federal funding
  • Hiring a World-Class Director provides a
    cutting-edge research focus for grant
    applications
  • Building Inter-University and Inter-Departmental
    Collaborations strengthens the collective
  • scientific skill set required for successful
    funding in bioinformatics
  • Research Program Enhancements - provide
    assurance to granting agencies that their
  • funds will be well-used
  • Ohio should target building the infrastructure
    that promotes effective use of federal funds
  • Understand the issues and concerns of federal
    agencies disbursing federal funds
  • Quality of Scientific Research
  • Principal Investigators
  • Post-Doctoral Fellows
  • Graduate Students
  • Quality of Resources Supporting Research
  • Access to Critical Scientific Instrumentation
  • Access to Computational Resources
  • Demonstrate that these concerns have been
    addressed at a state-wide level

55
Implications of Success for the Stakeholders of
the Bioinformatics Initiative
LabBook
Battelle
Digineer
Corporations
NetGenics
LeadScope
ChemAbstracts
Importing Capital
Education
Universities
ODOD
Success
Economic Development
Research
Attracting Companies
Work-Force Development
Federal Institutions
Ohio Board of Regents
Educational Mission
NIH Sponsored Research
Bioinformatics Coursework
Ohio Supercomputer Center
NSF Sponsored Research
56
Appendices
57
Bioinformatics Business Models
  • Representative Cases

58
Representative Bioinformatics Business
ModelIncyte Pharmaceuticals
  • Informational Products LifeSeq - Human Gene
    Sequence (FL, Genome, SNP)
    Expression Databases, Data-Mining
    /Bioinformatics
  • Software (3D), Gene Mapping (Atlas)
  • ZooSeq - Animal Gene Sequence Expression
    Databases
  • PhytoSeq - Plant Gene Sequence Expression
    Databases
  • PathoSeq (PD)- Microbial Gene Sequence
    Databases
  • LifeProt - Proteomic Sequence Databases
  • Biological Products Bulk Clones - Gene Albums
  • Boutique Clones - Clone Transfer Services
  • Microarrays - GEM, Human UniGem, GEM Tools
    Analysis Applications
  • Consulting Services Life Tools - Data
    Management System, Project Manager,
    Analysis, EST Dataflow, Genomic Dataflow)
  • Customized Services from Genome
    Systems - sequencing, robotics,
    DNA preparation, knockouts,

  • Fluorescence In Situ Hybridization (FISH).

Subscription Fees - Recurring Basis - Upgrade
Strategy

Licensing Fees - Collaborative Research -
Downstream Royalties
Product Sales - Broad Inventory Needs -
Relatively Low Volume
Time and Materials - Highly Trained Staff -
Relatively Low Leverage
Source Incyte website, BioWorld.
59
Bioinformatics Companies Use Different Business
Model To Sell Both Tools And Solutions To End
Users
BUSINESS MODEL FOR BIOINFORMATICS COMPANIES
  • Celera charges 5 - 15 million per year to
    companies who want access to its database
  • Gene Logic offers a subscription to its
    large-scale GeneExpress database on a multiple
    year basis and charges between 3 and 5 million
    annually
  • Geneva Bioinformatics offers Internet access of
    SIBs Swiss-Prot protein database and charges
    either a few thousands dollars per user or up to
    90,000 per year for unlimited usage

Subscription Fees
  • Small packages, such as Silicon Genetics
    GeneSpring software are sold for 20,000 per copy
  • Large software packages are sold for hundred of
    thousands dollars per user seat
  • Customized software is sold for millions of
    dollars

Software Licensing Fees
  • eBioinformatics offers a pay-as-you-use model
    through the Internet. Individual user is charged
    by eBio units at 50 cents per unit, and an active
    user can use 1,000 units per year
  • Double Twist operates an Internet-based research
    portal and offers three level of access. Bronze
    provides limited access for free, silver and gold
    level access provides additional tools and a
    proprietary database. Low-demand users spend 500
    for certain analyses, and heavy users might pay a
    few thousands dollar per seat per analysis.

Internet based ASPs
Source Ernst Young analysis CEN News,
Company Websites
60
Questionnaires
61
- -Academic Questionnaire - - Dear
Participant,Thank you for your participation in
our ongoing strategic study to determine the best
course of action regarding the potential creation
of a bioinformatics initiative. Based on our
interviews with you, we have sketched out several
possible approaches that may contribute to your
research and development efforts. So that we may
continue to incorporate your views and insights
into our planning process, we would appreciate it
if you could take a few moments to complete and
return by email this brief questionnaire. Your
involvement at this stage is critical and we
appreciate your time!Idea 1 Develop a set of
rotating courses to be staffed by faculty from
multiple universities and whose location changes
from campus to campus within the state of Ohio.
Two courses are proposed one which introduces
computer science to biologists, and one which
introduces biology to computer scientists. To
that end (1) How many students do you feel
could be recruited to participate in a
semester-long introductory course in
bioinformatics at your campus? Low Estimate -
___________High Estimate - ___________(2) How
many of these classes do you feel could be
conducted per year on a state-wide basis? Low
Estimate - ___________High Estimate -
___________Idea 2 Develop a shared service
bioinformatics consulting group to provide
technical programming and software development
support for your research programs. This service
would be available to all institutions in the
State of Ohio. To that endHow many hours of
bioinformatics / computer consulting would you be
willing to pay for on an annual basis? - In
your lab Low Estimate - ___________High
Estimate - ___________- In your
University Low Estimate - ___________High
Estimate - ___________
62
- -Academic Questionnaire - - What price would
you be able to afford for premier consulting
services on-site and customized to your needs?
(Note Professional service firms traditionally
charge between 125 and 600 per hour) 75 /
hour? Yes or No 100 / hour? Yes or No 125 /
hour? Yes or No Other Rate? Yes or No Rate
(/hour) _______Idea 3 We are considering
the utility of establishing a data storage and
management service for you. As bioinformatics
data increases in volume, this might assist in
the coordination of data to serve your research
needs. To that endHow many gigabytes of data
per year would you consider storing on a safe,
secure host server?- In your lab Low Estimate
- ___________High Estimate - ___________- In
your University Low Estimate - ___________High
Estimate - ___________How much bandwidth
(Gigabytes / day) would you estimate you would
require on a daily basis to manage this amount of
data? This would include transferring data to and
from the host server. - In your lab Low
Estimate - ___________High Estimate -
___________- In your University Low Estimate
- ___________High Estimate - ___________Thank
you for your participation! We appreciate your
interest in this initiative and we will keep you
updated!
63
- - Industry Questionnaire - - Dear
Participant, Thank you for your participation in
our ongoing strategic study to determine the best
course of action regarding the potential creation
of a bioinformatics initiative. Based on our
interviews with you, we have sketched out several
possible approaches that may contribute to your
research and business development efforts. So
that we may continue to incorporate your views
and insights into our planning process, we would
appreciate it if you could take a few moments to
complete and return by email this brief
questionnaire. Your involvement at this stage is
critical and we appreciate your time! Idea 1
Develop a set of rotating courses to be staffed
by faculty from multiple universities and whose
location changes from campus to campus within the
state of Ohio. Two courses are proposed one
which introduces computer science to biologists,
and one which introduces biology to computer
scientists. To that end Would you support the
development of this course through having your
scientific staff give a guest lecture? Yes or
No Idea 2 Develop a shared service
bioinformatics consulting group to provide
technical programming and software development
support for your business. This service would be
available to all businesses and academic
institutions in the State of Ohio. To that
end How many hours of bioinformatics / computer
consulting would you be willing to pay for on an
annual basis? Low Estimate - ___________High
Estimate - ___________ What price would you be
able to afford for premier consulting services
on-site and customized to your needs? (Note
Professional service firms traditionally charge
between 125 and 600 per hour) 75 /
hour? Yes or No 100 / hour? Yes or No 125 /
hour? Yes or No Other Rate? Yes or No Rate
(/hour) _______
64
- - Industry Questionnaire - - Idea 3 We are
considering the utility of establishing a data
storage and management service for you. As
bioinformatics data increases in volume, this
might assist in the coordination of data to serve
your research needs. To that end How many
gigabytes of data per year would you consider
storing on a safe, secure host server? - In your
lab Low Estimate - ___________High Estimate -
___________ - In your University Low Estimate
- ___________High Estimate - ___________ How
much bandwidth (Gigabytes / day) would you
estimate you would require on a daily basis to
manage this amount of data? This would include
transferring data to and from the host server.
- In your lab Low Estimate - ___________High
Estimate - ___________ - In your
University Low Estimate - ___________High
Estimate - ___________ Thank you for your
participation! We appreciate your interest in
this initiative and we will keep you updated!
65
Financial Models
66
Note Aggregated results from the preceding
questionnaires were used to set the lower,
average, and upper boundaries for
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