Over at Crosscut, John Stang bemoans the fact that less money than expected has gone into Chris Gregoire’s Life Sciences Discovery Fund.   grew out of the tobacco settlement with big hopes for promoting health and jobs in Washington.

Gov. Chris Gregoire at a Langley rally during the 2008 campaign, when political winds were blowing in favor of Democrats.

Stang’s argument is KoolAid.  He is buying into biotech industry hype about jobs.  He is also naive, missing both the trivial amount of money, just over 40 million dollars since the program began, and the lack of evidence that the money has been spent in ways that will “promote jobs” in Washington over the long term.

The original goal, in 2005, was to use Washington State’s part of the tobacco settlement to spend $35 million a year from 2008 though 2017.  The effort was driven ny Governor Gregoire who deserves credit for her role as Attorney General in negotiating the settlement.  Her claim was that investment of state funds would turn that research into jobs. As the economy worsened,  the legislature began dipping into Washington’s tobacco settlement revenues to pay for other programs, sending less than $15 million to life sciences research in 2010 and about $5 million in 2011. Only $41 million in total has been awarded for research and the annual guestimate is now down to about $5 million a year.  By 2o17 this too will be spent out, meaning the total “investment” will have been around $80 million.

With all due respect to the Governor, an average of $7 million a year is a trivial part of the money WASTATE brings in from the NIH or from existing private investment. The claim that the  money, has been used to “leverage another $278 million worth of other investments in 51 companies” borders on being silly. One of the sad facts about local biotech is that has yet to see the establishment of any local company that has put down roots and grown to greatness.  Suppose instead we were to calculate the loss in WASTATE investments by the departures of Merck’s Rosetta and Icos?

While I am sure that the money has been well spent, the grants are short term and often underwrite costs that the NIH will not cover .. such as  UW costs at founding new programs or state-wide practical programs at spreading knowledge of research.

Calling any of this “investment” is simply naive. Other states, North Carolina, Michigan, and California have efforts that dwarf ours.

Politicians also seem to ignore that the pay off ratio for far better researched venture capital. is no better than 1/10.  The likelihood that WASTATE’s “investments” … balanced across the state and emphasizing safe projects .. will pay ff is far less, arguably zero.

What could we have done, or still could be done with this small amount of money?  I think the answer is simple.  We should have and still could make our criteria for investment that the funds will pay off.  The easiest way of doing this is to follow the path Bill Gates has followed in investing in UW’s Genome Sciences Program and in the World Health effort. In both cases, Gates or his foundation have created endowments and used these to bring outstanding new investigators to the UW.  Bob Waterston, Chair of Genome Sciences, and Charles Murry, head of the World Health program at UW, have already paid the investment back manifold by the programs they have built.  Ans, as endowments, this money will continue to give.

There are many more such opportunities in WASTATE.