The moving van at VGTI Florida’s lab served as a stark reminder of the risky nature of Florida taxpayers’ $1.5 billion bet on biotech, a wager that was Jeb Bush’s signature economic policy.
The 18-wheeler was stationed at VGTI’s loading dock in early May, the same week that the nonprofit institute defaulted on a loan from Port St. Lucie. Amid an exodus of researchers from VGTI, the Atlas Van Lines truck waited to haul yet another scientist’s gear out of the shiny new vaccine lab built with $120 million in state and city money.
VGTI acknowledged last month that it’s essentially broke — and it’s not the only publicly funded lab facing financial woes. The Charles Stark Draper Laboratory in Tampa is closing its Florida biotech operation this month.
Perhaps most jarringly, the Scripps Research Institute, the nonprofit lab that Bush personally courted with the largest economic-development subsidy in state history, last year announced it would address its budget squeeze by selling itself to the University of Southern California. That deal fell apart amid an outcry from scientists, but it undermined Scripps’ aura as the juggernaut on which Bush had pinned his plan to upgrade Florida’s notoriously low-wage economy.
Bush announced in October 2003 that he would pay Scripps $310 million to open a Florida lab. Palm Beach County sweetened the pot with $269 million.
Then a popular and powerful second-term governor whose brother was in the White House, Bush envisioned a biotech bonanza — 50,000 jobs in 15 years, demand for millions of square feet of biotech space in northern Palm Beach County, a flood of donations from Palm Beach’s wealthy philanthropists.
None of those promises has materialized. While Scripps Florida met its state-required hiring goals and brings in a steady stream of research grants from the National Institutes of Health, even biotech boosters admit that there’s no sign of the private-sector boom Bush envisioned.
“It’s obvious that it didn’t meet the economic development expectations,” said David Willoughby, an entrepreneur who launched Ocean Ridge Biosciences a decade ago to be near Scripps’ lab in Jupiter. “The spin-offs that have come have already disappeared from the county.”
Biotech officials urge patience and repeat the mantra that a science cluster needs decades to evolve.
“This takes a lot of time to develop,” said Kelly Smallridge, president of the Business Development Board of Palm Beach County. “We didn’t have the infrastructure that was needed to develop the industry at a rapid pace.”
But with Bush scheduled to announce his presidential candidacy today, Florida’s biotech bet is getting its close-up, ready or not.
“I don’t think it’s been a failure, not at all,” said Richard Houghten, head of the Torrey Pines Institute for Molecular Studies in Port St. Lucie. “Has it been as robust as we hoped? Nobody would say that.”
Torrey Pines received $104 million in state and federal money in 2006, Bush’s final year in office, but it has struggled.
Instead of expanding ambitiously toward its state-mandated goal of 189 employees by the end of 2016, Torrey Pines has been shrinking. After peaking at more than 120 employees, Torrey Pines now has about 100 — although Houghten said he has tried to avoid layoffs.
“We’re letting cuts happen by attrition,” Houghten said.
Torrey Pines’ sparkling lab is next door to VGTI’s home along Interstate 95. VGTI’s finances turned so dire that its auditor in November dropped the dreaded phrase “going concern” — accounting jargon that reflects grave doubts about an organization’s solvency.
Across the state, Draper Laboratory likewise failed to hit its hiring goals. Citing “financial pressures,” the MIT spinoff said it would close its biotech facility at the University of South Florida this month.
“Draper has been unable to recover its investments, which exceed those of the Innovation Funding grants from the state and local governments,” spokesman Eric Mazzacone said in an email. Draper invested millions of its own cash in its lab but managed to reach only 70 employees, well short of its goal of 165, Mazzacone said.
Bush name-dropped Flagler, Disney
When Bush pitched his dream of creating a high-wage science sector, the script didn’t include moving vans headed north, shrinking payrolls and going concern letters.
“Just as the visions of Henry Flagler and Walt Disney changed Florida’s future, so, too, will the people of Scripps,” Bush said in 2003. “This expansion will bring Florida into the forefront in this lifesaving research.”
And Bush didn’t stop with the $579 million state and local subsidy to Scripps.
In 2004, Bush directed the Florida pension fund, which then held $102 billion in state workers’ retirement money, to set aside $1 billion as venture funding for tech start-ups. Bush invoked his oft-repeated pitch that luring Scripps would bring high-risk, high-reward entrepreneurs — “dreamers,” he called them — to Florida instead of California.
“I think over the next few years, the dreamers will come,” Bush said.
In 2006, Bush spearheaded the creation of the Innovation Incentive Fund, which would triple down on the state’s biotech bet. In 2006, Bush’s final year as governor, the fund inked three contracts, awarding $311 million in state and local money to the Sanford Burnham Institute in Orlando, $104 million to Torrey Pines and $50 million to SRI International in St. Petersburg.
Bush actively pitched Florida as a biotech hub. He traveled to the Biotechnology Industry Organiztion’s huge annual trade shows in San Francisco in 2004, in Philadelphia in 2005 and in Chicago in 2006 — at each conference, it was clear that nearly every state and nearly every developed nation was vying for the same science jobs Florida coveted.
Charlie Crist was inaugurated as governor in 2007, and while Crist didn’t support biotech as visibly as Bush had, the state subsidies continued with four awards in 2008: $188 million for Max Planck Florida in Jupiter, $120 million for VGTI, $80 million for the Hussman Institute for Human Genomics in Miami and $30 million for Charles Stark Draper Laboratory in St. Petersburg.
Palm Beach County business leaders were giddy to land Scripps and Max Planck, two brand-name research institutes.
“There was a lot of hype,” recalled Smallridge, head of the nonprofit that helped recruit both organizations. “There certainly were expectations that once we landed those two companies, we’d have Merck and Pfizer.”
Bush’s biotech spending spree sailed through the state legislature and local governments with little opposition. After all, the goal — creating high-wage jobs — was one that politicians of any stripe could embrace. And the recipients of the cash were uncontroversial research labs striving to find cures to diseases.
Nearly 12 years after he courted Scripps, Bush now points to the biotech investment’s “tremendous results for the state.”
“Florida’s investment in recruiting world-class research institutes to the state has diversified the economy, created high wage jobs and contributed to significant scientific research advances,” Bush said in a statement.
Biotech jobs stay flat
Despite the massive investment, Florida’s life-sciences employment has been flat. The state’s biotech industry — including drug research and the manufacture of drugs and medical devices — employed 78,925 people at the end of 2012, unchanged from five years earlier, according to a report released last year by research firm Battelle and the Biotechnology Industry Organization.
Despite the recession, biotech hubs California, Massachusetts, Maryland and North Carolina all added bioscience jobs from 2007 to 2012, the study found.
Part of Bush’s pitch was that the biotech industry would prove less cyclical than the overall economy. Biotech boosters point to the Great Recession — along with belt-tightening at the National Institutes of Health and Big Pharma — to explain why Florida’s biotech sector was slow to take root.
“Nobody expected we’d have such as deep recession,” said former county Commissioner Karen Marcus, now a consultant for Scripps Florida. “It’s amazing the way it’s working, considering all the obstacles and challenges that nobody could have anticipated.”
Now, though, Florida’s economy has come back strong. Florida posted the strongest job growth among large states this year, and the state’s housing had the second-highest home-value gain over the past year, according to federal statistics.
Biotech has bounced back too, as evidenced by rich stock market valuations for companies with unproven drugs.
Despite the combination of a strong state economy and a biotech boom, Florida’s cluster continues to struggle, underscoring just how ambitious Bush’s bet was.
“A lot of people like to say, ‘It was a failure, look at all this money we spent,’” Smallridge said. “We can’t look at this through a 10-year microscope. We have to take a broader view. This is a transformational move that will take decades to evolve.”
Supporters say there’s still plenty of time for Bush’s wager to pay off.
“We won’t know for 10 or 20 years whether this was a good investment or not,” Torrey Pines’ Houghten said. “I’m willing to bet that in 10 or 20 years, it will be seen as incredibly insightful.”
Need to Know
- In 2003, Jeb Bush lured the Scripps Research Institute to Florida, the start of a $1.5 billion investment in biotech.
- Bush promised 50,000 jobs just from Scripps alone, but jobs have been slow to materialize.
- One institute that received public money is leaving Florida this month. Two institutes in Port St. Lucie have been shrinking.
JEB BUSH AND SCRIPPS
See a photo gallery that traces the former governor’s history with Scripps at www.palmbeachpost.com/jeb-photos.
See related stories at www.palmbeachpost.com/jebbush-biotech.