Minnesota’s big diabetes project is a bold and audacious strategy

When the University of Minnesota and Mayo Clinic decided to focus much of their research partnership on one medical need, three topics made the final cut: Alzheimer’s, diabetes and heart failure.

At first glance, heart failure seems a logical choice, given Minnesota’s expertise in cardiovascular technologies like pacemakers and implantable cardioverter defibrillators.

But in launching Decade of Discovery — a $250 million-to-$350 million diabetes partnership — the university and Mayo are opting for an approach that requires the help of virtually everyone with a stake in Minnesota’s health-care economy: hospitals, payers, food manufacturers, device companies, biotech startups.

 “We haven’t even scratched the surface of the potential of this partnership,” said Dr. Frank Cerra, the university’s senior vice president of health sciences and dean of the medical school.

It’s a bold and audacious strategy, and not just because of its size and complexity. The university and Mayo Clinic are betting Minnesota’s economic future (and credibility) on the type of high-risk, high-reward project that the state’s risk-averse culture has never been good at accepting.

Brad Lehrman, a venture attorney with Lommen Abdo who co-founded Mojo Minnesota, applauds the partnership for thinking big. But the market should determine Minnesota’s economic focus — not a government, institution or initiative, he said.

Lehrman remembers when the state launched a high-profile effort to create a biotechnology industry. That didn’t go particularly well, he said.

Minnesota continues to flirt with clean energy like wind and biofuels. But that flirtation hasn’t paid off, either. (Anyone remember E-85? I didn’t think so.)

If there is one industry Minnesota should “pick,” it’s one we’re already good at: medical devices. But some experts fear Minnesota is losing its edge even in that industry.

One financial adviser who specializes in medical technology told me he worries about big medical device firms buying up smaller, homegrown companies and startups, like St. Jude Medical Inc.’s planned $1.3 billion acquisition of AGA Medical Holdings.

“Where’s the next Medtronic going to come from?” if the big companies just continue to snatch up the smaller ones, he asked.

Given the lack of early stage capital and an increasingly skeptical Food and Drug Administration, Minnesota should focus its attention on strengthening the innovation ecosystem that produced Medtronic and St. Jude in the first place, he said.

“If you have a big strength, then you should keep it strong,” said outgoing Minnesota House Speaker Margaret Anderson Kelliher who’s now the president of the Minnesota High Tech Association.

At the same time, “you should grow off a strong foundation,” she said. “A diversified portfolio is very important. If you invest in only one or two things, you have less of an ability to weather an economic storm. It’s about smart bets on the economy of tomorrow.”

Diabetes, after all, is the Number One public health problem in America. There are a number of ways to prevent and treat it, including medical devices.

Medtronic, for example, is developing an integrated sensor and insulin pump system, otherwise known as an artificial pancreas. EnteroMedics Inc., based in Roseville, is developing a device that uses electricity to curb hunger.

Yes, Minnesota has plenty of brainpower. But it has traditionally lacked the things the diabetes partnership needs to succeed: strong leadership, long-term commitment, and most importantly, money…lots of it.

In terms of leadership, well, the partnership looks good on paper. The university and Mayo Clinic are a good start, though their six-year-old biotechnogy and genomics partnership has produced only one startup and some grant wins.

The diabetes oversight committee, which includes Nobel Prize winner Dr. Peter Agre and former Minnesota Supreme Court Justice Kathleen Blatz, also is impressive.

But in the end, money talks the loudest. University and Mayo officials say they will need at least $20 million from the cash-strapped state. Good luck with that.

“We have legislators who have already made the investment in the (university and Mayo genomics) partnership,” Dr. Cerra said. “The proof of concept is done.”

But I wouldn’t hold my breath. Even if the state ponies up the money, the partnership still needs private capital. And here’s where the partnership can offer the biggest benefit to Minnesota, which has seen promising startups fold or move because of a lack of early stage money.

If the partnership can effectively market the state as a diabetes hub, we might see some venture dollars roll in. It’s pretty telling that the co-chair of the oversight committee is Vance Opperman, president of Key Investments in Minneapolis and one of the best-known investors in Minnesota.

One possibility, Opperman said, is a partnership-controlled venture fund that makes equity investments in promising companies and technologies that can both boost homegrown startups and lure outside talent to the state. Perhaps companies with internal venture money like Medtronic and Johnson & Johnson could put some cash in the fund, he said.

Or maybe this is all wishful thinking. Fairy tale or not, the diabetes partnership will dominate the state’s agenda for years to come.

That’s one major reason why LifeScience Alley and BioBusiness Alliance of Minnesota recently joined forces to form a “strategic affiliation” to better promote this initiative.

It’s not a coincidence that BioBusiness Alliance CEO Dale Wahlstrom, who also will lead LifeScience Alley, sits on the diabetes oversight committee.

In the end, the best way to measure the success of the diabetes partnership is to follow the money. If the partnership can attract private investment, then we’ve got something cooking.

If not, then the state will have wasted its time on yet another economic pipe dream.

Comments (1)

  1. Submitted by Robert Moffitt on 10/26/2010 - 04:09 pm.

    Sure, I remember E85. I remember that Minnesota has more E85 stations than any other state. I remember that sales are once again on the rise as we slowly come out of recession. I also remember that nearly one in five gallons of fuel used by a state-owned vehicle this year was cleaner-burning E85, not gasoline.

    Sure, I remember E85.

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