Discovery Fund prepares for first research payouts

BYLINE: Eric Engleman

Washington's Life Sciences Discovery Fund is gearing up to announce its first round of research grants.

The Discovery Fund plans to announce between $3 million and $6 million worth of research grants on Sept. 18. These first grants will go toward technology to improve the quality and cost effectiveness of health care.

The Discovery Fund was set up to tap $350 million in bonus tobacco settlement money to fund biomedical and health-care research in Washington. The tobacco settlement money will start flowing in 2008. In the meantime, the fund has secured private funding from the Paul G. Allen Foundation, the Bill & Melinda Gates Foundation and other sources to start making grants immediately. The grants due to be announced Sept. 18 come from those private donations.

As the Discovery Fund ramps up its activities, it's found itself on the receiving end of some pointed criticism from local biotech legend Leroy Hood, who heads Seattle's Institute for Systems Biology (ISB). At a May technology event, Hood lashed out at the fund, saying it had "made every single wrong decision a fund can make," according to media reports. He criticized the fund's small size and lack of scientific focus.

Hood declined a request for an interview, but in a statement, he said that he was "encouraged by the fund's recent direction."

"The focus has narrowed, reimbursement has increased to better reflect the true cost of research and the administrators are effectively engaging with the research community," he said in the statement. He did not elaborate, and the ISB said he was not available for further comment.

Washington's Discovery Fund is dwarfed by what some other states are doing with biotech development. Topping the list is California's $3 billion, voter-approved stem cell initiative. Massachusetts Gov. Deval Patrick has proposed a $1 billion state biotech investment, and other states from Florida to Arizona are throwing huge sums of money at biotech.

California's initiative is both large and targeted, focused entirely on research into human embryonic stem cells, a young field of science that many believe holds potential to cure a range of debilitating diseases.

"There's a legitimate debate when you have a fund like this about how best you use it," said Lee Huntsman, former University of Washington president and executive director of the Discovery Fund. He said the Discovery Fund's trustees discussed various options, but ultimately settled on the model of providing "catalytic support" to scientists and institutions working on a variety of research.

The Discovery Fund received 74 proposals for its first grant round. Many of the applications came from researchers at the University of Washington and Washington State University. A variety of local hospitals and medical centers submitted proposals, including Seattle Children's Hospital and Regional Medical Center. Also in the mix were the Fred Hutchinson Cancer Research Center and Pacific Northwest Research Institute.

Grant proposals ranged from $169,000 to $1.8 million; the Discovery Fund said the average proposal was for $750,000 over three years. The fund did not provide detail on the exact nature of the research proposals or whether the applicants were working in partnership with a drug company or other sponsor.

Huntsman said the first round of grants could total as much as $6 million, depending on whether the Discovery Fund does some additional fundraising that would trigger matching grants from the Gates and Allen foundations. Other private donors include Microsoft Corp., Amgen Inc. and Regence BlueShield. If the total raised is $6 million, that would be enough to fund up to eight grants, Huntsman said.

The Discovery Fund was proposed by Gov. Chris Gregoire and passed by the state Legislature in 2005. The $350 million in funds is a bonus connected to then-Attorney General Gregoire's leadership in the tobacco litigation. That stream of funds will come in over 10 years, in annual increments of roughly $35 million.

The Discovery Fund will dole out its next round of grants in spring 2008. Applications for that round are due in October.

Joseph Cortwright, an economist at Impresa, an economic consulting firm in Portland, Ore., said the $350 million Discovery Fund is "pretty breathtaking in terms of economic development programs, but it's not an overwhelming amount by biotech research standards."

Cortwright, who studies biotechnology clusters and regional economics, said it makes sense to give such a fund a scientific focus, but that is often hard to achieve.

"If you have that amount of money, the way you make an impact is to be laser-like in selecting the area of science to invest in," Cortwright said. "That's a hard thing to do. Politically and academically, often the pressure is to spread the money around."