by Jeremy J Fugleberg, Sioux Falls Argus Leader
South Dakota may not be the first state many would think of in terms of the biotechnology industry, but don’t count it out.
South Dakota’s traditional role as an agri-business leader and emerging role as a healthcare center puts the state square in the middle of a growing biotechnology industry in South Dakota, despite some hurdles.
“Biotechnology in the state of South Dakota is small, but we’re powerful, and we’re powerful for many reasons,” said Dr. Christoph Bausch with SAB Biotherapeutics, a Sioux Falls-based company that works on genetic modification of livestock to produce human antibodies to fight diseases.
Bausch was speaking before industry insiders and students gathered for the South Dakota Biotechnology Summit on Thursday. A number of state industry leaders also spoke on the growing industry in the state.
The range of biotechnology research in the state is impressive. South Dakota companies are working with enzymes, ethanol, antibodies, biomedical devices and genomic medicine.
"Genomic medicine is a really hot research right now, not only with these hospitals that are in South Dakota but around the nation," Bausch said.
And the state has numerous advantages that make it well-placed for biotechnology work.
“We are small. With 66 companies, this represents less than 1.5 percent of all the establishments in the state of South Dakota,” Bausch said. “So there is definitely room to grow, from building up on our base.”
The Good: South Dakota has expertise, workforce, strong focus
South Dakota has a strong focus on biomanufacturing. About a third of the biotech companies in the state focus on taking raw agricultural products and adding value to them through a manufacturing process.
“We have the expertise and competencies in this, we know how to take big tanks of fermenters and make things work at a commercial scale,” he said. “Not a lot of people have that expertise around the U.S. We do, and we have a focused expertise in that.”
South Dakota’s biotech workforce is another plus, not a hurdle. The state’s universities produce well-trained, qualified workers in the biotech field and about half of them stay in the state. A growing biotech industry could tap young workers leaving the state for jobs elsewhere.
“There is a surplus of new, trained workforce that can fill bioscience growth here in the state of South Dakota,” Bausch said. “Universities are cranking them out.”
And the state is a hotbed of genetically engineered livestock work, with 4-5 companies located within 100 miles of Sioux Falls.
“That’s staggering to me because there are only about 20 of these companies that exist worldwide, and yet here we have a hotbed in the state of South Dakota where the genetics and the agriculture are coming together to produce some very innovative advancements in ag,” he said.
The bad: Funding woes, lack of facility space, workforce leaving
The hurdles, however, are real. While there is funding available for early stage companies and mature companies, there is a gap of funding for companies in the middle state, the growth stage. Bausch called the “valley of death” for biotech companies.
Biotech businesses lack facilities in South Dakota. Most South Dakota research parks equipped to handle biotech companies’ special needs are largely full, There are a few exceptions, including the Sanford Research building in Sioux Falls, home to SAB Biotherapeutics and additional space, Bausch said.
If South Dakota can’t provide a consistent, welcoming home in terms of investment and housing, the state risks losing biotech businesses.
"If we don’t, they’re going to leave and they’re going to find a place where they can grow,” Bausch said.
The projects: Biomedical devices, antibodies, filtering
A number of South Dakota biotechnology companies are amid clinical trials for their innovations.
SAB Biotherapeutics, formerly Hematech, genetically modifies cattle to produce human antibodies, harvested from the cattle in the form of plasma several times a month, which is then purified, tested and used in humans to help fight the Zika virus and other diseases.
"We can use those as a directed therapeutic antibody in treating human disease and that's exactly the process we've been developing here in South Dakota" over a decade, said Eddie Sullivan, president and CEO of SAB Biotherapeutics.
Initial human clinical trials for the therapy have shown positive results.
"Quite frankly we had no drug-related serious adverse effects, which is exactly what we wanted to see," Sullivan said. The studies also indicate the antibodies have the same half-life in humans as antibodies developed in humans, indicating the body accepts them the same as if the antibodies were created within the body.
The company is now starting a phase 2 clinical trial in Saudi Arabia, because the Middle Eastern Respiratory Syndrome (MERS) virus is endemic there.
Sioux Falls-based Alumend, a wholly owned research and development subsidiary has begun U.S. clinical trials of natural vascular scaffolding, an innovation to open plaque-clogged arteries. In the therapy, proteins are inserted into plaque-filled arteries and then activated with light, opening the arteries.
"In 2011, it was a $4.8 billion business projected to grow $7.8 billion by 2018," said Ron Utecht, chief science officer for Alumend. "So not only from a personal perspective from helping people, but from a business perspective, it's a worthy goal."
Alumend formed Alucent in 2013 and licensed it to develop part of the technology. Utecht said the idea is for additional investors to come on board and for Alucent to be eventually be sold.
ImmutriX Therapeutics of Rapid City was formed in 2009 and makes blood cleansing treatment devices, which remove toxins and other things from the blood using adsorbents, such as synthetic carbon beads, and smart hollow-fiber membranes.
ImmutriX's innovation's breakthrough eliminated contamination of blood with dust particles, a plague on previous blood cleansing attempts.
"As a result of our early interaction and continual interaction with the FDA, we're now on a very straight and narrow path and hope to do our first in-human studies this year," said Carol Rae, CEO of ImmutriX.
Rae said people are often surprised to learn about South Dakota's biotech industry. But when members of the wider industry find out how South Dakota firms are on the cutting edge of innovation, it opens their eyes.
"They get it when they come here," she said.
South Dakota biotech, at a glance
• Companies: 66
• Workforce: 2,200
• Pay: $61,141 average annual pay, 57 percent higher than average occupation wage in South Dakota
• Industry strengths: Strong, university-produced workforce; singular focus on transgenic livestock, long-time agricultural leader, emerging healthcare leader
• Industry struggles: Lack of funding for growth-stage companies, lack of available space and facilities for biotech firms, about half of biotech graduates leave the state