Sioux Falls: The Unlikely Hub for Biotech Innovation and Cloned Cows
I’m standing in a barn in Sioux Falls, South Dakota, watching several dozen dairy cows chomp on hay. Outside, on this gusty April day, the flat farmland of southeastern South Dakota seems to roll on forever. The cows, big-eyed and content, occasionally pause from their feeding to sniff and snort in the general direction of their human visitors. They look cute. They also look exactly the same, which is because they are. These cows are genetically identical clones. Their spots differ a little because the size and placement of spots on a cow are not genetically determined. Their size and weight vary slightly. Their personalities have some quirks. But otherwise…yup. They’re the same.
The cows of SAB
Scientists at SAB Biotherapeutics, a small biotech company in Sioux Falls, South Dakota, created these cows, which is a fascinating story on its own. Two scientists at U-Mass Amherst, Jim Roble and Steven Stice, first cloned cows (they named their creations George and Charlie) in 1998. Roble would become one of the intellectual drivers of SAB. Equally fascinating is what SAB is doing with the animals: Thanks to some groundbreaking genetic engineering, these transchromosomic (Google it) cows carry human immune cells. Their cow immune system is turned off; their human immune system is up and running. This means that, when vaccinated against human diseases such as COVID-19, influenza, and plague, these cows produce antibodies that can then be used to help humans fight those diseases. That’s the theory, and there’s growing proof to support it. In mid-April, the company received both breakthrough and fast-track approval from the FDA for its influenza therapy. These two designations show that the FDA thinks the treatment is safe and effective enough to study as fast as possible.
Back in the SAB conference room, Eddie Sullivan, one of SAB’s cofounders and now its president and CEO, is happy to explain why SAB cows are so special. An instantly likable man with a quick and contagious laugh, Sullivan has surely given similar pitches hundreds of times to potential investors and other audiences since SAB was founded about two decades ago. It doesn’t seem to matter; his enthusiasm feels wholly genuine.
SAB cows, Sullivan explains, are raised with tender loving care; they’re well-fed, well-housed, and get better medical care than most Americans. (“If you come back as an animal in your next life,” says Joni Ekstrum, executive director of trade group South Dakota Biotech, “you want to be an SAB cow.”)
When the cows are about three years old, SAB vaccinates them against certain human diseases, against which the cows’ immune system produces antibodies. Then, up to three times a month, SAB harvests plasma from the animals—it’s essentially the same process used to draw plasma from humans—and the antibodies are purified from the plasma. These polyclonal antibodies—meaning that they’ll target multiple points of an antigen—can be used to fight human diseases, even viruses such as COVID-19 that frequently mutate. “Those animals that you just saw are a human therapeutic-generation engine,” Sullivan says. “We are using the natural way that our bodies fight disease.”
I asked Sullivan how valuable the cows were. “Well, of course, there’s the cost of production,” he said, which he wouldn’t specify except that it was in the “tens of thousands” per cow. “But when you imagine that each one of these cows gives literally thousands of doses of human medicine every year, they’re priceless.” As if to absorb his own words, Sullivan paused. “They’re priceless,” he said again.
SAB’s story is one of science and entrepreneurship. It’s also a story about Sioux Falls, South Dakota, and why this small Midwestern city is such an amenable place for an entrepreneurial enterprise like an animal biotech firm. Sioux Falls, in the state’s southeastern corner, is slightly different from the rest of South Dakota. With about 250,000 people, it’s the state’s biggest city. It’s also the most liberal—relatively speaking. While South Dakota went for Trump in 2016 and 2020 by almost a two-thirds margin, about 45% of voters in Sioux Falls vote Democratic. That equation may change as Sioux Falls attracts transplants from other states who cheered South Dakota governor Kristi Noem’s high-profile attacks on anti-Covid measures such as mask and vaccine mandates.
“The number one reason for our growth the last couple of years has been the way that our state handled the pandemic,” says Sioux Falls mayor Paul Tenhaken. “We’re attracting that kind of freedom-loving mentality.” (It doesn’t hurt that South Dakota has no personal or corporate income tax.) The relative political equilibrium in Sioux Falls means that folks here don’t talk politics much. Instead, they focus on building their city.
Forty years ago, Sioux Falls was a much smaller place; its population was around 80,000. Then, during the high inflation era of the 1980s, South Dakota became an unexpected hub of finance. At the time, credit card accounts were regulated by the states, limiting interest rates lower than the inflation rate. As a result, banks were losing money on their customers’ credit card debt. Then, in 1980, Citibank offered then-governor Bill Janklow a deal: If the economically depressed state eliminated its caps on credit card interest and fees, Citibank would move there. South Dakota did, and Citibank relocated its headquarters to Sioux Falls, soon followed by Wells Fargo, Capital One, and others. Today, if you’re paying 27% interest on credit card debt, you have a legit reason to be angry at South Dakota.
For Sioux Falls, however, the banking boom led to wealth creation and economic development. While agriculture and commodities—including dairy and beef—are the state’s largest industries, in Sioux Falls, the biggest employers are two giant healthcare companies, Sanford Health, and Avera. Thanks to a nearby Dakota State University program, cybersecurity is growing. A company called Aerostar makes stratospheric balloons (think China’s spy balloon, but less obvious). An agricultural products company called POET is the world’s largest producer of biofuels. “We have a mile wide and an inch deep of industries,” says Jodi Schwan, the founder of a news website called South Dakota Business. “We don’t have all our eggs in one basket.”
Biotech is a small part of the Sioux Falls economy. Still, it’s growing: the potential financial rewards are great, it brings high-skilled labor to the state (and helps keep STEM graduates of state universities from leaving), and it’s not a drain on material resources. And in the even narrower niche of animal biotech, well, it doesn’t hurt to have a lot of cows around, along with people who know how to take care of them.
“SAB is a very quiet company,” says Mayor Tenhaken. “You don’t see them. You don’t hear from them. But there are some incredibly brilliant minds over there that could be doing a lot of different things in different markets. We lift them up a lot in terms of showing what innovation can look like right here in South Dakota.”
Anyway, Tenhaken adds, “SAB couldn’t be doing their work in Silicon Valley. They need to be here because of the bovines.”
SAB’s Eddie Sullivan points out some other reasons—the low taxes, the relatively light regulatory environment (“I don’t call it friendly,” he says, “but it’s reasonable”), the fact that Sioux Falls has some excellent restaurants and cultural attractions for a small city. But yes, ultimately, the bovines matter. As Sullivan explains, “If we want to make more antibodies, we just make more cows.”
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