UT Southwestern’s Peloton Therapeutics was just acquired by Merck for up to $2.1 billion, if certain milestones and performance KPIs are met. Research and development can lead to big economy, not to mention potential cures. TrialSite News covered the potential pay out for Children’s Hospital of Philadelphia (CHOP) if the Roche and Spark Therapeutics acquisition goes through. CHOP stands to make 20X on its initial investment. Most of these proceeds should go back into generating more innovation that hopefully leads to more treatments and cures.
Texas: The Oncology R&D Hub of America
There is no denying that Texas is a business friendly state. A note here that the people are even friendlier. Although this author was raised in San Francisco, CA and admittedly harbors some (unfortunately) stereotypical Californian-angst about Texas generally and Dallas in particular—but that is irrelevant.
An Attractive Place for Material Advancement
Although many of my California brethren in tech and life sciences flee to “progressive” Austin for an upper middle-class existence, it can’t be denied that Dallas has arrived. It is the 9th largest US city and 4th largest GDP, and is strategically situated for travel to anywhere in the U.S. or abroad. It is a place where the middle class can still afford a home, where diversity and multiculturalism grow, (without the proclamations one might experience on the coast), and where globalism meets and interchanges with that brand of Texas regionalism in interesting and surprising ways. Not to mention, it is also home to fabulous museums, arboretum and other cultural assets, and is a surprisingly sophisticated global palate. However, most importantly for those in pursuit of materially better economy, it is the number one place for business in the United States.
The Recent Awards
The Cancer Prevention and Research Institute (CPRIT) (the group that infused Peloton Therapeutics with $11 million that ultimately helped lead to the Merck purchase) is allocating funds to UT Southwestern in an attempt to lure leading researchers from Illinois, North Carolina and Massachusetts. CPRIT also doles money for first-time, tenure track positions. The awards include:
- $6 million to recruit Dr. Suzanne Conzen from the University of Chicago
- $4 million to attract Qing Zhang from the University of North Carolina’s Lineberger Comprehensive Cancer Center
- $1 million to create faculty position for Samuel McBrayer with Dana-Farber Cancer Institute, Harvard Medical School
- $1 million to create faculty position for Chengcheng Jin, Koch Institute for Integrative Cancer Research
The Dallas Morning News reports that awards are designated as CPRIT scholars. Texas has 175 such scholars with 53 working at UT Southwestern. These awards are coming from CPRIT’s most recent $31 million funding.
Rugged Individualism & Collective Financing Equals Exponential Returns
With the creation of CPRIT and other focused activities, Texas is the second largest public funder of cancer research next to the federal government. Voters in 2007 approved the $3 billion state grant program that created CPRIT—funded by bonds floated via Wall Street. Since 2010, the Dallas Morning News reports that 1,380 awards totaling $2.3 billion have been given—to support R&D and prevention. This coming November, voters again will determine if an additional $3 billion will be passed. In this way, Texas harnessed its rugged individualism and free-market leaning ideological stances toward a collective, securitization of State assets for exponential return.
Dallas’ UT Southwestern represents the nexus of the program funding—$440 million in the last decade. Others have benefited including the University of Texas, Dallas ($12.5 million); The University of North Texas Fort Worth ($9.3 million) and The University of Texas Arlington ($4.4 million).
In Houston, the nation’s 4th largest city (and incredibly diversified economy), the University of Texas, MD Anderson Cancer Center and Baylor College of Medicine have received $421.6 million and $284.5 million respectively.
An economic analysis by TEConomy Partners found that clinical trials generated $4.61 billion in economic activity in Texas just in 2017—the third highest nationally. Cancer research represents the largest percentage of this spend according to the Dallas Morning News.
It should be very apparent that research centers (sites) represent big business in this age—especially the larger integrated academic medical centers. It is not so much the initial amounts of money—it is the exponential returns that biomedical research can produce. The voters of the State of Texas voted in a new special purpose entity to fund basic, early stage and clinical research. With the securitization came exponential returns as Texas is now the third largest “clinical trial economy.”
As with much of business in Texas, there is a friendly culture that is directed and ambitious with an appetite for more. It is a big state with a lot of resources, and it seeks to capture and harness more of the knowledge-driven human capital that is the vital ingredient for new oncology R&D innovation. Other states should be thinking about this as well.