Sky’s the Limit for 2 Biotech Regions

By Michelle Wong, Biospace.com

Two regions that are doing exceptionally well in the biotech industry are Massachusetts and Southern California. Massachusetts, also known as Genetown, has flourished with its attractive resources such as its world class academic institutions reeling in several well-established, as well as, start-up companies. San Diego, part of Biotech Beach, despite having undergone a downturn in the past year, has since redeemed itself as being one of the U.S.’s top biotech hub.

Massachusetts

Massachusetts, a small state, has grown tremendously in the biotechnology industry within the last couple of years. Susan Windham-Bannister, president and chief executive of the Massachusetts Life Sciences Center, marked Massachusetts as being home to “one of the world’s leading biotechnology clusters, world-class academic and scientific institutions, top teaching hospitals, and the best educated workforce in the United States.” Currently, the state is home to the greatest concentration of biotechnology research employees in the nation – comprising more than 500 companies and more than 49,000 employees.

Since 2007, this state has certainly attracted well established biotech companies such as EMD Millipore, Sanofi, Pfizer, Novartis, Takeda, AstraZeneca, Merck and Bristol-Myers Squibb that have taken advantage of the two million square feet of space dedicated for new biopharma labs and manufacturing. To further attract companies into the area, the Life Science Act recently awarded $21.2 million in tax incentives which it distributed to 28 life science companies. Under the terms of agreement, those companies that move must promise to create 940 total new jobs in order to receive the incentive. If they fail to meet their promise, they will have the financing withdrawn. Among the companies receiving these tax incentives are Vertex Pharmaceuticals and AVEO Oncology. As of now, Vertex Pharmaceuticals has agreed to commit to 100 jobs in return for $2.4 million, Raynham and Momenta Pharmaceuticals have agreed to create 50 jobs, and both Biogen Idec and Ironwood Pharmaceuticals are promising to add 75 jobs.

As established companies are moving into Massachusetts, start-up companies are establishing their roots there, too. Several venture and investor companies are now eyeballing and showing interest in start-ups. For example, Catalyst Health Ventures is currently looking to develop a new fund. In May 2012, the firm revealed a $33 million securities offering. The firm hopes to invest in technologically advanced medical devices, drug development, diagnostics, and instruments. Companies which are included in their portfolio are GI Dynamics Inc., Hansen Medical Inc., Novazyme Pharmaceuticals, and Lantos Technologies.

Ember Therapeutics launched with $34 million worth of aid from Third Rock Ventures, LLC. Other start-up companies include Warp Drive Bio and H3 Biomedicine.

San Diego

While Massachusetts continues to do well in the biotech industry, about 3,000 miles west of Massachusetts’ coast is San Diego. Prior to 2010, San Diego was ranked among the top three metropolitan biotech cities receiving venture capital funding. In late 2010, however, it dropped down to fourth place. In 2011, it slipped again to tenth place. Reasoning behind this downfall may have been that early-stage experimental drugs were moving out of San Diego. Venture companies may have decided to look where investments were less risky.

Since 2011, San Diego has revitalized itself. It now stands as one of the U.S.’s top biotech regions. In the first quarter of 2011, biotech investment nationwide fell 22 percent but San Diego’s venture investment rose. In its second quarter of 2011, San Diego received $253 million worth of capital investments towards the development of new companies. In January 2012, San Diego received $357 million in venture capital investment, 11 times the national average per-capita of biotech venture investment. Of the $357 million, $170.3 million went into biotechnology, $139 million went into industrial and energy sectors, $27 million went into consumer products and services, and $20.7 million went into other sectors.

With the $170.3 million portion dedicated to biotechnology, several start-ups focusing in R&D have received part of this share in efforts to lift their companies off the ground. One of these start-ups is Celladon Corp. which received the largest share amounting $43 million to fund research for developing drugs to treat heart failure.

In June, Astute Medical, a medical device company, received $40.4 million in Series C Financing which was led by MPM Capital and Kaiser Permanente Ventures. Astute Medical plans to use its funds to expand R&D and to commercialize its first product, the Nephro Checka Test, for acute kidney injury. Global Blood Therapeutics focused on sickle cell treatment, received $41 million from Third Rock Ventures.

In addition to start-up companies receiving financing, companies like Silicon Biosystems have already expanded in San Diego. Silicon Biosystems opened their laboratory facilities in May this year. The increased laboratory space will support the expansion in the U.S. Market. SG Biofuels, an energy crop company, recently opened their headquarters to support commercial advancements. The additional space, covering nearly 60,000 square feet, is being used for laboratory, greenhouse, and office space.