1. State of Utah’s Life Science Industry Business, Economic Development, and Labor Appropriations Subcommittee Hearing June 16, 2016

2. BioUtah Utah’s Independent Trade Association Life Sciences Industry Our Mission  Build Utah’s life science ecosystem; enable success and advance innovation for our members Our Vision  Utah to be recognized as a respected global leader in life science innovation that improves the quality of life Our Goals  Educate to retain and attract life science talent in the state  Ensure access to public and private capital and new investment incentives  Lead public policy efforts for the life science ecosystem (State and Fed)  Develop valuable networks and collaborations (among small, medium and large companies and the entrepreneurs and capital providers)

3. Utah’s Life Science Industry Significant to Utah’s Strong Economy  One of Utah’s 7 Strategic Economic clusters, providing significant impact on Utah’s economy  We provides over 27,000 high skilled jobs with an average wage of $62,337 (125% of Utah Ave wage)  We create products with great potential & life saving possibilities and we improve the quality of care for patients  Our industry’s ability to innovate is highly correlated to our universities and their R&D who help to spawn new intellectual property which advances prototype development and the starting of companies

4. 3 Key issues to strengthen and grow the life science industry sector 1.Increase innovation, entrepreneurship by gaining greater access to capital and incentives 2.Meet intellectual talent development and recruitment needs 3.Bridge the innovation gap between large and small companies

5. Ensure access to capital and tax incentives  There is a significant lack of capital for life science companies and the efficiency at the seed and venture state of funding is dramatically low  less than 2% of total venture funds invested in UT companies were place in life science companies  Why? Because of the time between R&D and commercialization is a lot wider due to longer development time horizons, heavy regulation and the high-risk nature of developing innovative drugs, medical devices and diagnostic tests  This trend has driven investors to invest in less risk adverse industries with less risk and time horizons  Providing new sources of capital and incentives to invest is critical to the growth of UT life science sector

6. Sources: Sept 2011 Public Meeting of the GEDCC General Funding Stages: Utah Programs Innovation requires Financial Capital and the Financial Capital Markets do not work the same for Life Science companies as they do for Aerospace, InfoTech or Outdoor Products; therefore, different “programs and incentives” are required

8. The TIME horizon for Life Sciences Innovation differs from Aerospace, Information Tech and Outdoor Products Source: 3 Copyright 2011 © Professor Michael E. Porter 20110602 – Michigan State Competitiveness – Rich Bryden “It is not what fields a state competes in that determines its prosperity, but how productively it competes.” -- Porter Innovation Productivity Competitiveness Wages Jobs Prosperity

9. Vibrant Communities Require “Headquarters” and “ Serial Entrepreneurs” We need to find a way to retain and sale entrepreneurial companies into major enterprises with headquarters in the Beehive State! UT Incentives to attract companies into the State Example: Edwards Lifesciences Corporation accepted $11.5 million incentives to expand new jobs from 228 to 1,000 over a 15 yr period UT faces competition from many other states in expanding operations Example: MN offered Biomerics, a company HQ in UT, the following incentives:  $450K grant (based on the size of Biomerics investment)  $600K low interest loan (based on the size of investment)  Rebates over the next 5 years based on the number of new employees – an estimate of approximately $750K in incentives over 5 years Example: In 2009 Sonic Innovations moved its HQ from UT to NJ

10. Utah Company Acquisitions – Many moved out of UT Company Sorenson Research Catheter Technology Research Medical TheraTech Ballard Medical LANDesk Altiris Omniture Bought Year Abbott1980 Bard1989 Baxter International1997 Watson Pharma1999 Kimberly Clark1999 Avocent Corp.2006 Symatec2007 Adobe2009

11. Talent Development and Recruitment Needs Develop more continued and sustained interest in these high paying and career building jobs that will help grow and sustain Utah’s economy  S.B. 103, Strategic Workforce Investment Act: provides $1.5M to establish a process for investing strategically in workforce development through the development of stackable credentials  Develop a Medical Innovation Pathway (MIP) to address the critical need for life science skilled workforce

12. Bridge the Innovation Gap  In many large life science companies, the number of new ideas emerging from internal R&D has slowed, primarily due to the nature of company operations that emphasize the establishment of sales channels, strict adherence to regulatory guidelines, and milestone-driven processes  The majority of real disruptive innovations come from start up companies often piloted out of universities  A healthy life science cluster in Utah should be capable of bridging the innovation gap both by offering local acquisition targets and by companies engaging local service providers and resources

13. Thank you! Kelly Slone Kelly@bioutah.org 703-969-5403 Phil Grimm Phillip.h.grimm@gmail.com 602-524-2433