Research on dairy cows is being conducted at Northwest Missouri State University’s R.T. Wright Farm. JILL TOYOSHIBA JTOYOSHIBA@KCSTAR.COM
Research on dairy cows is being conducted at Northwest Missouri State University’s R.T. Wright Farm. JILL TOYOSHIBA JTOYOSHIBA@KCSTAR.COM

Business

KC-centered Animal Health Corridor reaps global recognition

By DIANE STAFFORD

stafford@kcstar.com

August 30, 2015 7:21 PM

Ten years after its founding, just how firmly fixed in international awareness is the Kansas City-centered Animal Health Corridor?

Monday night, hundreds of people are gathering here, some from around the world, to celebrate the group’s 10th anniversary. On Tuesday, hundreds more will attend an investor showcase here of companies on the cutting edge of animal health.

No question about it. The 300-mile corridor between Manhattan, Kan., and Columbia, Mo., is firmly fixed as “the Silicon Valley for animal health research and development,” said Sam Al-Murrani, interim CEO of Prommune Inc., a startup working on swine and avian flu vaccines that is relocating to Overland Park from Omaha, Neb.

Say “Silicon Valley,” and people worldwide understand it’s a high-tech epicenter. Within the animal health industry, the same understanding now applies to the region bookended by strong veterinary schools at Kansas State University and the University of Missouri.

The corridor, through natural synergy and active economic development recruiting, has become a business site for more than 300 companies devoted to animal health. Companies are working on projects including controlling odor in litter boxes; earlier identification of sick cattle so they don’t show up in the food chain; and developing sophisticated immunotherapies, pharmaceuticals and diagnostics for animals.

Kansas City’s Animal Health Corridor

Nearly 1,000 people will be in Kansas City Monday for the Animal Health Corridor's 10th anniversary dinner and an investor-pitch competition Tuesday. The corridor is the 300-mile stretch between K-State and MU that's considered the international center of animal health research and development. A company based in Queensland, Australia, Integrated Animal Health, has formed a partnership with Northwest Missouri State University, which is situated along the corridor.

JILL TOYOSHIBA jtoyoshiba@kcstar.com

Companies that have a business location within the corridor represent 75 percent of the worldwide sales of animal health products and diagnostics, or about $19 billion of total global sales of $25.2 billion, according to the 2014 Animal Health Corridor Asset Survey by Axxiom Consulting. Companies that have their U.S. headquarters within the corridor account for $7.1 billion of that total.

“The world recognizes the enormous concentration of animal health assets in the corridor,” said Ian Spinks, president and general manager of Bayer Healthcare’s Animal Health Division, North America in Shawnee. “It’s long been the breadbasket of the American agriculture industry, and it was a cattle center with the former Kansas City stockyards.”

Now, it’s not about moving cattle but moving animal science into new frontiers. Industry players from around the globe have noticed.

One of them, Integrated Animal Health, is based in Queensland, Australia. It reached across the miles to set up a partnership with Northwest Missouri State University’s Dean L. Hubbard Center for Innovation and Entrepreneurship, specifically its research farm. The partnership is helping the company conduct trials to improve herd health and take steps to license and market its line of animal health products.

Larry Lee, director of the center, said the partnership provides “a world-class business incubator with an analytical lab and a full-time analytical chemist available to support businesses like Integrated Animal Health.”

That kind of animal health cross-pollination between academia and business occurs throughout the corridor.

“There isn’t another cluster anywhere in the world quite like this,” said Kimberly Young, president of the Animal Health Corridor, the organization founded to trumpet the industry. It shares the message worldwide, touting such assets as multimillion-dollar Kansas City-based research institutions like MRI Global and the Stowers Institute for Medical Research as well as one-person startups. “No one has the diversity we do.”

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Al-Murrani noted that Silicon Valley blossomed from the technology talent coming out of Stanford University, the University of California-Berkeley and other universities in the San Francisco Bay Area. The animal health concentration in Kansas and Missouri similarly grew — and finds continuing talent — from more than a dozen colleges and universities in Kansas and Missouri that provide agribusiness-oriented training.

“The strength of the corridor is keeping graduates here who want to stay in animal health,” Al-Murrani observed. “They can get well-paying jobs here. And it’s a no-brainer when it comes to setting up an animal health company that requires personnel and infrastructure. The Kansas City area is unparalleled for that compared to anywhere else in the country.”

All of which shows why “holding the world’s symposium on animal health” was the first declared success among the Big 5 regional challenges set in 2011 by the Greater Kansas City Chamber of Commerce when it decided to focus on priorities for civic action.

That success will be reflected at the Animal Health Corridor’s “homecoming” dinner Monday night and on Tuesday at the KC Animal Health Investment Forum, where more than 400 entrepreneurs, scientists, investors and others are expected to converge in the Kansas City Convention Center’s Grand Ballroom.

The Tuesday event is billed as the world’s only full-day investment forum exclusively for early- and late-stage companies in the animal health sector.

This year, at the seventh annual investment forum, 17 animal health companies from around the world have been selected to present their business plans and technologies to potential investors. Federal regulations prevent them from talking about their presentations ahead of time, but forum planners revealed some information about this year’s presenters. They:

▪ Each expect revenues of $20 million within five to seven years.

▪ Individually seek between $500,000 and $20 million in funding.

▪ Come from 11 states and three foreign countries.

▪ Will present a wide range of products and treatments for animals.

Companies that presented at previous investment forums have raised more than $160 million from investors. Many have received licensing agreements and distribution contracts.

“We’re getting international companies that want to establish operations here,” said Animal Health Corridor president Young. “They want to establish a brand presence in the U.S., and they know about the corridor. Last year we had people come from 252 companies representing 10 countries, and we expect it to increase this year.”

Education emphasized

As heady as the corridor’s growth is, company leaders are keenly aware that the buzz will fade if they can’t find and keep the skilled workers they need.

Spinks, with Bayer Animal Health, is a transplant to the Midwest. He knows the challenge of convincing people from the coasts that “flyover country” has something to offer. But he testifies that the livability of the Midwest is an easy sell once people get here.

What’s more concerning than recruiting from the coasts is encouraging overall interest in science and, specifically, animal health, Spinks said.

“We need a science-literate population,” he said. “We need interest in the vet schools to continue to grow. We need to grow the skill sets necessary for these science jobs.”

To that end, Monday night Animal Health Corridor will introduce workforce initiatives to raise animal science awareness among pre-college students and to help agri-oriented associations foster interest in animal health careers.

Several companies in the corridor participate in the CAPS program, which provides internships and business experience for high school students in selected Kansas City area school districts. Volunteers from companies also take hands-on experiments and science presentations into elementary schools.

In higher education, corridor companies are working with colleges and universities to spread the word that many kinds of careers — not just veterinary science or biology — are possible in the animal health industry.

Tammie Wahaus, CEO of ELIAS Animal Health in Olathe, came to the industry from a background in finance and public accounting.

“I got involved in the life science industry about five years ago and could really see the possibility of taking a technology and leveraging it into the animal health sector with the universities and resources that are located here,” Wahaus said.

Wahaus helped develop ELIAS as a subsidiary of TVAX Biomedical. Earlier this year, it closed on a $2 million financing round to further development of cancer treatments for companion animals such as dogs, cats and horses.

“When we looked to launch the animal health subsidiary, there was no better place than the corridor, with the wealth of knowledge in the area,” Wahaus said. “The corridor is perfect for what we do.”

Similarly, Davide Rossi, co-founder and CEO of FitBark, said the corridor community “is made of phenomenal cheerleaders” and “thrives on the success of its early-stage companies.”

Rossi said FitBark, which makes a wearable activity tracker for dogs that’s sold in retail stores, first came to Kansas City in 2014 to be part of the Sprint Techstars Accelerator inaugural class. The company stayed here because of the networking with companies and the vet schools that helped the company fine-tune its product, he said.

“Whereas our consumers are everywhere — we shipped product to 45 countries — the breadth and depth of animal health expertise you can find in the corridor is unparalleled,” Rossi said in an email from Italy.

To keep the bloom on the corridor rose, company leaders agree, the area must continue to create, attract and keep the appropriate worker talent. And some corridor participants pointed with dismay to the recent gutting of the Kansas Biosciences Authority, a state-sponsored venture capital fund.

The Olathe-based KBA, created in 2004 by state legislation, was designed to spur bioscience development in the state. It did that for several years by helping recruit and provide venture capital for agribusiness, animal health and human life science enterprises. Along the way, it helped Manhattan land the National Bio and Agro-Defense Facility and the University of Kansas Hospital gain National Cancer Institute designation.

But state budget cutbacks and changing political winds have nearly blown shut the authority’s door, and it’s no longer making investments.

“Unfortunately, the KBA isn’t there anymore, really,” said Prommune’s Al-Murrani. “As such, we’re back to square one when it comes to funding in Kansas. You survive on your wits and try to make the right impression with investors.”

And that’s what 17 animal health companies will try to do Tuesday in Kansas City.

To reach Diane Stafford, call 816-234-4359 or send email to stafford@kcstar.com. Follow her online at kansascity.com and @kcstarstafford.

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