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Super Cluster Ideas, perspectives, and trends shaping the global impact of the Massachusetts life sciences
Super Cluster Ideas, perspectives, and trends shaping the global impact of the Massachusetts life sciences
Super Cluster Ideas, perspectives, and trends shaping the global impact of the Massachusetts life sciences
Super Cluster Ideas, perspectives, and trends shaping the global impact of the Massachusetts life sciences
Super Cluster Ideas, perspectives, and trends shaping the global impact of the Massachusetts life sciences

Super

Cluster

Ideas, perspectives, and trends shaping the global impact of the Massachusetts life sciences industry

Volume II June 2008

Ideas, perspectives, and trends shaping the global impact of the Massachusetts life sciences industry Volume II
Ideas, perspectives, and trends shaping the global impact of the Massachusetts life sciences industry Volume II
Ideas, perspectives, and trends shaping the global impact of the Massachusetts life sciences industry Volume II
Ideas, perspectives, and trends shaping the global impact of the Massachusetts life sciences industry Volume II

About the New England Healthcare Institute The New England Healthcare Institute (NEHI) is a nonprofit, health policy institute focused on enabling innovation that will improve health care quality and lower health care costs. Working in partnership with members from across the health care system, NEHI brings an objective, collaborative and fresh voice to health policy. We combine the collective vision of our diverse membership and our independent, evidence-based research to move ideas into action. www.nehi.net

About the Massachusetts Technology Collaborative The Massachusetts Technology Collaborative is the state’s development agency for renewable energy and the innovation economy. It works to stimulate economic activity in communities throughout the Commonwealth by bringing together leaders from industry, academia, and government to advance technology-based solutions that lead to economic growth and a cleaner environment in Massachusetts. www.masstech.org

About the Massachusetts Life Sciences Center The Massachusetts Life Sciences Center is a quasi-public entity created by the legislature in 2006 to promote the life sciences within Massachusetts. The Center is at the heart of the state’s $1 billion life sciences initiative. The Center is fast becoming the hub for connecting all sectors of the life sciences community—encouraging unprecedented public-private collaboration among industry, research, academia, and government. The Center is making strategic investments in our life sciences workforce and in translational research at critical stages of the development cycle. These investments will foster and grow the Massachusetts life sciences enterprise, cultivating innovation at institutions whose research, development, and commercialization of therapies, products, and cures hold great promise for improving and saving lives. www.masslifesciences.com

About PricewaterhouseCoopers Health Industries PricewaterhouseCoopers Health Industries serves as a catalyst for change and the leading advisor to organizations across the health continuum, including payers, providers, health sciences, biotech, medical device, pharmaceutical, and instrumentation companies, and employer practices in the public, private, and academic sectors. With a distinctive approach that is collaborative, multidisciplinary, and multi-industry, PricewaterhouseCoopers draws from its broad perspective and capabilities across and beyond the health industries to help solve the array of emerging complex problems health organizations face, lead cultural and clinical transformation, and create a new, sustainable model for care delivery that is quality driven, patient centered, and technology enabled. www.pwc.com/healthindustries

Introduction by Governor Patrick

Introduction by Governor Patrick June 2008 Dear fellow citizens of Massachusetts, The past year has been
Introduction by Governor Patrick June 2008 Dear fellow citizens of Massachusetts, The past year has been

June 2008

Dear fellow citizens of Massachusetts,

The past year has been an eventful and exciting one for the Massachusetts life sciences super cluster. Since our life sciences initiative announcement at the BIO International 2007 Convention in Boston, the Legislature has made significant progress towards passing a comprehensive $1 billion life sciences law. Important discoveries have been made at our world-class medical and research institutions in a range of areas from cancer to HIV, which will result in life-saving treatments and cures and save millions of lives. Companies are continuing to come and grow in our Commonwealth, creating new jobs.

This is just the beginning. I now look forward to advancing key programs that will enable the life sciences industry sectors to continue flourishing in the Commonwealth. From stem cell research, biomedical device manufacturing, and pharmaceutical development, the investments being made by the state and through the Massachusetts Life Sciences Center are providing real support for Massachusetts’ emerging technologies and innovations.

And our perspective is a global one. Last December, I went to China to develop and strengthen partnerships to connect our life sciences super cluster to this important and growing region. We had the opportunity to see first-hand how the life sciences industry is exploding overseas, and to create our own global collaborations. Today, we remain actively engaged in China and other key emerging international economies, understanding that the impact and scope of our work necessarily moves beyond the border of our state and of our country.

Together we will develop a lasting legacy for the economy and citizens of the Commonwealth. The products of this legacy will include health care advancements around the world for generations to come. With focus and discipline, we will grow and protect our position as a global leader in the life sciences. We will strengthen our role as the international hub of healing.

Sincerely,

in the life sciences. We will strengthen our role as the international hub of healing. Sincerely,

Governor Deval Patrick

Contents

01

Executive Summary

02 Introduction letter by PricewaterhouseCoopers

03 Introduction letter by the Massachusetts Life Sciences Center

04 Defining the Massachusetts biomedical industry

08 Perspective: Massachusetts life sciences—locally linked, globally connected

09 Perspective: Strategic economic development built upon international collaborations

10

Technology and entrepreneur development

11

Public funding

13

Perspective: Ushering in a new age of biomedical research

16

Perspective: Crossing the bridge from academia to industry—technology transfer in biotechnology

17

Perspective: The role of state government in promoting innovative research in the life sciences that can lead to new medical treatments

18

Interview: Raju Kucherlapati

20

Perspective: The role of entrepreneurship in building a biotech cluster

21

Perspective: Projecting tactics and message—promoting startup companies as an economic, scientific, and healthcare engine for continued growth in central Massachusetts

22

Early stage company development

23

Perspective: Accelerating academic research to solve real problems—a story of academic innovation and the translation of ideas to impact

26

Interview: Phillip A. Sharp

28

Private financing

32

Perspective: Capital formation

33

Perspective: A model for utilizing Massachusetts’ resources to create the next generation of life sciences companies

34

Perspective: Fostering medical device entrepreneurship

35

Perspective: A statewide effort to accelerate the pace of creating life sciences companies in Massachusetts

36

Perspective: Gateway to growth and the global market

37

Perspective: Incubating innovation at Tufts Veterinary School

38

Employment

39

Introduction and industry overview

43

Perspective: Inspiring the next generation of life sciences innovators

44

Perspective: Life sciences talent leadership

46

Perspective: The importance of training minorities

47

Perspective: The Massachusetts Life Sciences Talent Initiative

48

Maturing companies

49

Perspective: Bay State’s super cluster provides optimal ecosystem for innovation

50

Interview: Christoph Westphal

52

Perspective: Covering all the bases: biopharmaceuticals and Boston

53

Perspective: Innovative medicines based on a breakthrough discovery

54

Clinical trials

55

Perspective: Global opportunities for clinical trials

57

Perspective: Initiatives in clinical research to provide quality care to patients

58

Perspective: Translating research results into clinical therapies

59

Perspective: Synergistic drug combinations for treating serious diseases

60

Biomedical manufacturing

62 Perspective: Global growth

63 Perspective: Massachusetts’ manufacturing strategy

64

Global companies

65

Perspective: BI3—a new model for transforming discovery into therapeutics

66

Perspective: Lessons learned—our transformation from R&D to a commercial enterprise

68

Perspective: From Chinatown to China, Genzyme’s commitment to patients motivates its global development

70

Interview: Deborah Dunsire

72

Looking forward

76

Conclusions by the New England Healthcare Institute and the Massachusetts Technology Collaborative

Executive summary

In the cosmos, gravity holds together super clusters, the massive structures of unimaginable size composed of clusters of galaxies, themselves made up of billions of stars and planets.

In Massachusetts, it is the leading institutions in academia and business that comprise a super cluster focused on curing disease and improving living conditions around the world. And it is innovation, not gravity, which binds this group together.

The Massachusetts life sciences super cluster is one of largest, best known and most established centers for biotechnology and medical device research and development in the world. The super cluster encompasses the universities, hospitals, and companies directly involved in the life sciences, and a cadre of well educated, well financed investors. It also involves a large public and commercial effort to support those enterprises.

This life sciences super cluster represents a vital, growing economic foundation for the Commonwealth, a heritage of innovation, and an ability to converge ideas, imagination, resources, and capital. Because of the groundbreaking work that has emanated from the super cluster, Massachusetts is recognized as around the world as a leader in discovering treatments and cures for the infectious and chronic diseases that afflict society.

Even though the federal government continues to invest heavily in life sciences research in Massachusetts, National Institutes of Health (NIH) funding has stagnated in recent years.

• The Commonwealth received $2.2 billion in NIH funding in 2006. This figure has remained virtually the same since 2003, while inflation has risen and research costs have increased.

• This flatline funding trend may dishearten an entire generation of Massachusetts scientists. It may also discourage researchers from tackling society’s most difficult medical problems, pushing them instead toward conservative proposals that will be easier to fund.

• The Commonwealth received $313 per capita in NIH funds in 2006, more than any other state or district. While this highlights Massachusetts’ relative strength in winning grants, it also underlies the importance of NIH funding to the future state of its research capabilities.

Private investment in Massachusetts-based life sciences com- panies has grown 66 percent, to $1.3 billion, in the past 5 years.

• Biotechnology companies received 72 percent of venture capital funding in 2007, and medical device companies received nearly all of the remainder.

• PricewaterhouseCoopers/Xconomy survey participants ranked Massachusetts venture capitalists highly on their life science expertise and connections, but gave them poor marks on their willingness to fund radically new ideas.

The Commonwealth’s life sciences industry boasts a growing, innovative, entrepreneurial work force. As competition heats up around the world, one of Massachusetts’ most daunting challenges will be to produce the next generation of scientists, researchers, entrepreneurs, and leaders.

• The life sciences work force, representing 77,247 employees, grew 8 percent between 2001 and 2006. In comparison, the entire Massachusetts work force shrunk by 2.5 percent during this period.

• Confidence runs high in Massachusetts, as two-thirds of survey respondents said they want to work for startup companies in their next position, and 70 percent said they believed they would find a position of equal or better stature in the super cluster if they lost their job.

• Lifestyle issues are more likely to lure life sciences workers away from the Massachusetts super cluster than pay or commute times, according to survey results.

• Industry leaders say Massachusetts must create more workers by inspiring local children to pursue careers in life sciences. Business, education, and government officials must expose students to the world of work in the life sciences by expanding internship and cooperative education programs.

Globalization represents Massachusetts’ life sciences industry’s greatest challenge, and its biggest opportunity. Industry and government leaders must work to ensure that the super cluster becomes the preeminent hub for global life sciences research and collaboration.

• Massachusetts-based companies are already discovering ways to tap foreign markets for sales, clinical trials, and biomedical manufacturing.

• Massachusetts hosts a large number of clinical trials compared to states with a larger population. As life sciences continues to evolve into a global enterprise, pharmaceutical companies may shift more clinical trials outside the United States, especially to counties and cities with trained professionals, established healthcare systems, and lower research costs.

• Executives considering to open or expand biomedical manufacturing facilities in Massachusetts must weigh the Commonwealth’s research and technical prowess against high wages, burdensome permitting procedures, and high taxes.

• Researchers and companies around the world look to Massachusetts for groundbreaking ideas and products. Two of the Commonwealth’s biggest life sciences acquisitions in the last 12 months involved foreign companies.

This report looks at how Massachusetts’ biomedical practitioners are using the super cluster’s resources to transform the life sciences industries and the practice of healthcare. It begins in the lab, where federal funds often play a critical role, and progresses to a worldwide perspective. Along the way, some of the super cluster’s most notable leaders— including a Nobel Prize winner, chief executive officers, venture capitalists, and academic and government officials—share their perspectives on the region’s growth and its impact in the global marketplace. The report is designed to help the life sciences industry assess its strengths and weaknesses at a time of mounting challenges, rising needs, and bountiful opportunities. 1

1 This report contains articles, titled “Perspective” and “Interview,” from and about individuals in the Massachusetts’ life sciences industry. These articles do not represent the views of PricewaterhouseCoopers LLP.

Introduction by PricewaterhouseCoopers

Introduction by PricewaterhouseCoopers Massachusetts remains a worldwide leader in healthcare. With the world’s largest
Introduction by PricewaterhouseCoopers Massachusetts remains a worldwide leader in healthcare. With the world’s largest

Massachusetts remains a worldwide leader in healthcare. With the world’s largest concentration of life sciences firms, researchers, and academic medical centers, this is the place where scientists discover new therapies, improve diagnostic methods, and create better analytical instruments. It’s where entrepreneurs grow new businesses and policymakers work to find innovative new solutions to issues such as insurance.

However, competition for talent and funding is rising—not only from other states, but from around the world.

Globalization is one of Massachusetts’ biggest threats, but also one of its greatest opportunities. Our super cluster can evolve into the premier international hub for ideas and cooperation.

Industry and government leaders must continue to collaborate if Massachusetts is to remain a global leader. The past is not a guarantee of future success. Strengthening the ties that unite our different communities and interests into a common super cluster will help this state preserve its role as a national and global leader in the life sciences industry.

PricewaterhouseCoopers is committed to the economic vitality of Massachusetts, the growth of the life sciences industry, the future of medicine, and the sustainability of our nation’s healthcare system. As one of the largest advisors to Massachusetts-based organizations in the health sector—biotech firms, pharmaceutical companies, medical device and instrumentation firms, academic medical centers, providers, payers, employers and policymakers—we have a distinctive, broad view of industry challenges and opportunities.

PricewaterhouseCoopers’ Health Industries Practice has been active in helping the industry reach its potential. We presented the Massachusetts Life Science Caucus, published Pharma 2020, and hosted the Healthcare 180° conference.

We have brought our experience to this updated report, Super Cluster II. We are honored to again team with Massachusetts Technology Collaborative and the New England Healthcare Institute, and we are very pleased to be joined by a new partner, the Massachusetts Life Sciences.

Super Cluster II brings together economic analysis, robust survey results, and unique perspectives from local industry leaders. We may discover that the world is indeed getting smaller, flatter, and more competitive, but we believe Massachusetts has the distinct and inimitable assets to remain the worldwide leader.

Sincerely,

inimitable assets to remain the worldwide leader. Sincerely, James M. Connolly Partner, Health Industries

James M. Connolly Partner, Health Industries PricewaterhouseCoopers LLP

Partner, Health Industries PricewaterhouseCoopers LLP Gerald J. McDougall Partner, Health Industries

Gerald J. McDougall Partner, Health Industries PricewaterhouseCoopers LLP

Super Cluster II Ideas, perspectives, and trends shaping the global impact of the Massachusetts life sciences industry

Introduction by the Massachusetts Life Sciences Center

Introduction by the Massachusetts Life Sciences Center There has not been a more thrilling moment in

There has not been a more thrilling moment in history for the Massachusetts life sciences super cluster. Since Governor Deval Patrick announced the $1 billion Life Sciences Initiative just over a year ago, the Legislature has led us to the threshold of a new law that will commit an unprecedented level of state funding for these important economic sectors. Significant investments in infrastructure will increase the supply of necessary lab space and equipment. New tax incentives will enable established companies to grow here and encourage new companies to come here. Obtainable funding for research grants and workforce development programs will provide essential resources at a time when NIH funding is flat and there is a critical need to grow the pipeline of talent that supports the life sciences.

The Massachusetts Life Sciences Center was created by the Legislature in 2006 to promote the life sciences throughout Massachusetts and already is making progress. Now, the pending life sciences bill promises to further propel the Center towards becoming the nucleus for public-private collaboration among our academic, research and industry partners.

Having spent the last 35 years working in the life sciences and healthcare sectors, I am proud to be the new President and CEO of the Center and look forward to contributing to our next exciting chapter in life sciences.

Our Research Matching Grant program, one of our primary initiatives, was launched in February 2008. With support from the John Adams Innovation Institute, this program will fund up to $12 million for translational research in Massachusetts, providing vital support for young investigators, new faculty, and cooperative research. Grants will be awarded this summer through a competitive peer-review process based on scientific merit and economic development impact and under the guidance of our expert Scientific Advisory Board.

A second major initiative is our funding approval for a Stem Cell Registry and Stem Cell

Bank, both to be located at the UMass Medical School. The web-based Stem Cell Registry will be a comprehensive and extensively documented international human embryonic stem cell (hESC) registry, providing the public with access to important documentation relative to hESC lines. The Stem Cell Bank will serve as a repository of hESC lines that are derived in research institutions throughout the Commonwealth and beyond.

A third initiative underway is our Life Sciences Talent Initiative. In partnership with

the Massachusetts Biotechnology Council, we have commissioned research through UMass’s Donahue Institute to better understand the current and future trends of our world-renowned life sciences work force. We will continue to work closely with academia, industry, and government to develop synergies between the needs of our employers and those of our talent pool.

Through continued collaboration with our partners, and empowered by the passage of the life sciences bill, the Center will build on this momentum to expand life sciences research, promote economic growth, and improve health outcomes for our patients. We are well on our way to solidifying Massachusetts’ position as the global leader in the life sciences. Let’s keep going.

Sincerely,

leader in the life sciences. Let’s keep going. Sincerely, Susan Windham-Bannister Incoming president and CEO of

Susan Windham-Bannister Incoming president and CEO of the Massachusetts Life Sciences Center

Defining the Massachusetts biomedical industry

From the Massachusetts laboratory to the global marketplace

The life sciences industry propels Massachusetts’ economy and sets the Commonwealth apart from many other states in the country. The discoveries made in Massachusetts laboratories and realized, commercialized, and manufactured by Massachusetts businesses save countless lives around the world.

State leaders recognize the industry’s massive contribution to scientific research, economic growth, quality of life, and job creation, and have responded with the Commonwealth’s life sciences initiative, a billion-dollar investment in Massachusetts biotechnology programs and enterprises over the next 10 years.

Around the globe, markets are opening up and patients are becoming more exposed to the medical breakthroughs and products that Massachusetts companies have to offer. This growing demand has enticed a number of multinational companies to acquire or merge with promising, innovative Massachusetts life science companies to feed pipelines and search for solutions to unmet medical needs.

As a leader in the life sciences by many measures, and with its history as a center of both education and innovation, the Commonwealth’s competitive advantages cannot be replicated overnight. Being complacent with its past success is not an option, however. Competition from other states and countries compels the industry and government to work to ensure Massachusetts’ future success in the life sciences.

This report begins by showing how Massachusetts became a leader in the life sciences. It then highlights the efforts of local researchers, entrepreneurs, financiers, and executives involved in global life sciences efforts, and their thoughts about the biomedical industry’s strengths and challenges in the Commonwealth. The report also looks at industry’s inputs—a steady stream of public and private funding, and an educated work force—and its outputs—research, development, and the manufacture of innovative biomedical products. The economic analysis reveals trends related to employment, wages, and public funding.

2 This report contains articles, titled “Perspective” and “Interview,” from and about individuals in the Massachusetts’ life sciences industry. These articles do not represent the views of PricewaterhouseCoopers LLP.

This report draws on economic research and the 2008 PricewaterhouseCoopers/Xconomy Massachusetts Life Sciences Super Cluster Survey. More than 140 people from all sectors of the life sciences industry participated, addressing the compelling features that make this region rewarding to life science practitioners, articulating opportunities to enhance the community and describing threats that need to be addressed.

Woven into the report are perspectives from key practitioners in the life sciences industry in Massachusetts, focusing on the global implications of the work being performed in the Commonwealth. 2 Massachusetts has developed a competitive advantage in life sciences since the seventeenth century. This advantage is the result of a tradition of innovation combined with clustering, a practice in which inter-related organizations collaborate, share infrastructure, and form synergies in geographically concentrated areas. The concept of clustering, which was first described in academic terms by Michael Porter of the Harvard Business School, brings benefits to the organizations and communities involved, such as access to innovation and ease of collaboration. Clusters attract the best and brightest workers, who are drawn to a cluster’s vibrant, collaborative atmosphere and opportunities for career advancement.

Figure 1. How important is it to you to be working inside the Massachusetts super
Figure 1. How important is it to you to be working inside
the Massachusetts super cluster, in close proximity to
other life sciences firms and supporting industries?
Important
4%
Somewhat
important
Not important
25%
71%

Source: 2008 PricewaterhouseCoopers/Xconomy Massachusetts Life Sciences Super Cluster Survey

Super Cluster II Ideas, perspectives, and trends shaping the global impact of the Massachusetts life sciences industry

In astronomy, a super cluster is a large grouping of smaller galaxy groups and clusters.

In astronomy, a super cluster is a large grouping of smaller galaxy groups and clusters. Super clusters are among the largest structures in the cosmos, an apt analogy for the Commonwealth’s life sciences industry. The Massachusetts life sciences super cluster includes:

• The activities of universities, teaching hospitals and research institutions

• Biotechnology, medical device, pharmaceutical, and diagnostic and instrumentation companies

• Software, venture capital, trade councils and associations

• Specialized business services companies that contribute to the growth and vitality of the life sciences

The core of the cluster is in the Boston-Cambridge area, which houses some of the country’s most prestigious institutions of higher learning. As the cluster has grown over the years, this core has spread across much of Massachusetts, with burgeoning anchors emerging around Worcester and operations in Framingham, Natick, Foxboro, Fall River, and Devens.

Table 1. Life sciences-related organizations in the Longwood Medical area

Hospitals and health centers

Brigham and Women’s Hospital

Beth Israel Deaconess Medical Center

Dana-Farber Cancer Center

Children’s Hospital Boston

Joslin Diabetes Center

Massachusetts Mental Health Center

Schools

Harvard University Medical School

Harvard University School of Public Health

Harvard School of Dental Medicine

Massachusetts College of Pharmacy and Health Sciences

Simmons School for Health Sciences

Commercial organizations

Merck Research Laboratories

CBR Institute for Biomedical Research, Inc.

The seeds of the Massachusetts life sciences cluster were sown with the founding of Harvard University in 1640 and the Massachusetts Institute of Technology in 1865. On each side of the Charles River sit two of the key centers of the cluster:

Kendall Square in Cambridge and Longwood Medical Area (LMA) in Boston. The two centers are less than three miles apart, and they house institutions that lay claim to some of the oldest, as well as some of the most recent scientific discoveries in the fields of medicine. LMA represents the cutting edge of medicine, while Kendall Square represents the laboratories and discoveries of biotechnology and pharmaceuticals.

LMA, a one-third square mile section of Boston, grew up around Harvard Medical School, which purchased 26 acres of nearby property in 1906 and built a quadrangle of five buildings on Longwood Avenue. Harvard sold some of the remaining property to other hospitals, to ensure that Harvard students could benefit from collaboration, and this section of the cluster was born. Today, LMA is home to more than a dozen life sciences organizations, with several rated among the top five in the US in their respective fields.

Kendall Square’s birth as a life sciences hub began in 1915, when MIT moved its campus to the area. After molecular biology breakthroughs in the 1940s and 1950s, MIT converted a factory into Technology Square in the 1960s. The following decades saw top research organizations and top biotechnology firms such as Genzyme and Biogen Idec plant roots in the area. Large pharmaceutical companies, such as Novartis, were also drawn to the area for research capabilities and opportunities for collaborations. Today, there are over 150 life sciences companies in this area.

As science and medicine has grown and evolved, so has the life sciences cluster. While the original Boston–Cambridge core remains strong, more recent mini-clusters have been created north, west, and south of Boston. Dating back to the early twentieth century with stories of innovation, the timeline in Figure 5 provides a summary of some of the important discoveries and milestones of the cluster, and how it has spread throughout Massachusetts.

The cluster’s impact and reach continues to expand beyond Massachusetts. Collaboration, particularly international collaboration, is crucial in a world where integration of disciplines is important for the development of new clinical practices and biomedical products. Respondents from the survey reported that approximately 80 percent of their institutions have working relationships outside the Massachusetts super cluster, many with commercial importance. Despite this, the survey showed a lack of funding for these efforts remains a significant barrier. More focus and funding are needed to foster international collaboration and expand the super cluster’s influence around the world.

Figure 2. Sum of net revenue of top 25 public life sciences companies in Massachusetts
Figure 2. Sum of net revenue of top 25 public life sciences
companies in Massachusetts
($ Millions)
$35,000
$30,000
2007
$25,000
$20,000
2006
2005
$15,000
2004
$10,000
2002 2003

$5,000

Source: Boston Globe Top 25 Life Sciences as of April 7th, 2008

Figure 3. Does your institution have significant collaborations with institutions outside of the Massachusetts super
Figure 3. Does your institution have significant
collaborations with institutions outside of the
Massachusetts super cluster?
Yes
No
19%
81%

Source: 2008 PricewaterhouseCoopers/Xconomy Massachusetts Life Sciences Super Cluster Survey

Figure 4. What factor most strongly motivates your participation in the life sciences? Intellectual stimulation
Figure 4. What factor most strongly motivates your
participation in the life sciences?
Intellectual
stimulation
10%
A desire
to improve
healthcare
Money
14%
Other
45%
31%

Source: 2008 PricewaterhouseCoopers/Xconomy Massachusetts Life Sciences Super Cluster Survey

Super Cluster II Ideas, perspectives, and trends shaping the global impact of the Massachusetts life sciences industry

Figure 5. Life sciences innovation timeline

Figure 5. Life sciences innovation timeline 1914 —Theodore Williams of Harvard University was the first of

1914—Theodore Williams of Harvard University was the first of more than 30 Massachusetts scientists to win a Nobel Prize.

1926 —William T. Bovie, a Harvard physicist working at Brigham & Women’s Hospital, conducted research that resulted in the creation of an electrosurgical knife, used to treat tumors that previously were considered inoperable.

1938—Cardiac surgery is elevated to a new level with the first successful congenital cardiovascular defect surgically corrected by Dr. Robert Gross at Children’s Hospital.

1952—Paul Zoll of Beth Israel Hospital was the first to succeed in using electrical stimulation to restart a patient’s heart, and the pacemaker was born. More than half a century later, Zoll Medical Corporation

is still a leader in resuscitation devices.

1962—James Watson of Harvard shared a Nobel Prize with Francis Crick and Maurice Wilkins, for the discovery of the double helix, the molecular structure of DNA.

1962—University of Massachusetts Medical Center in Worcester was found- ed, helping to create a second anchor of the cluster in Massachusetts.

1978—Walter Gilbert of Harvard and Phillip Sharp of MIT helped found Biogen, the first of Massachusetts’ biopharmaceutical companies, to focus on human gene research to improve healthcare. Both men went on to receive Nobel Prizes.

1979—Indicative of the life sciences cluster spreading from its original base, Boston Scientific, is formed. With a market capitalization of over $23 billion, the company is now the largest life sciences company in the state.

1985—Genzyme Corporation had its first drug, Ceradase, approved to treat Gaucher disease, an extremely rare condition afflicting less than 10,000 people world-wide.

1986—Researchers at the Massachusetts Eye & Ear Infirmary isolated the first human cancer gene.

1988—Building on the early research in genomics, molecular geneti- cists at Harvard received the first U.S. patent for a genetically altered mouse.

1996—Wyeth Pharmaceuticals acquired Genetics Institute, becoming the first large pharmaceutical company to establish significant manufacturing operations in Massachusetts.

1999—The sequencing of the human genome is completed, due in large part to the Whitehead Institute/MIT Center for Genome Research.

2002—Novartis establishes operations in Massachusetts, illustrating

a trend of traditional pharmaceuticals setting up operations in the state.

2003—The Broad Institute, a research collaboration among Whitehead Institute, MIT and Harvard University, was founded, where genom- ics research continues to flourish.

2006—Craig Mello, of the University of Massachusetts Medical Center shared the Nobel Prize with Andrew Fire for their discovery of RNA interference, which paved the way for future medical advances.

2007—Governer Deval Patrick announces $1 billion Life Sciences Initiative.

2008—David H. Koch Institute of Integrative Cancer Research ground-breaking.

Perspective

Massachusetts life sciences—locally linked, globally connected

By Christian Ketels

linked, globally connected By Christian Ketels Christian Ketels Harvard Business School Does it make sense

Christian Ketels Harvard Business School

Does it make sense to focus on strengthening local linkages when competition in life sciences is so clearly global? The experience of the Massachusetts life sciences super cluster gives a resoundingly positive answer: local linkages and global connections are complements, not substitutes. But the Massachusetts experience also indicates that more can be done to square the local with the global to the benefit of the cluster.

Stronger local linkages make a cluster not only more competitive, but more attractive. The Massachusetts life sciences super cluster has attracted numerous researchers and companies from other parts of the US and abroad. They have benefited from what they found here. More importantly, they have made a significant contribution to the cluster’s success. Without them, the cluster would not be what it is today.

The experience of many clusters suggests, however, not all the necessary capabilities can be attracted. That’s why strong local linkages need to be supplemented by well developed global connections: clusters become stronger if they have well established ties to clusters elsewhere that provide complementary functions. Some of these other clusters might be in the neighborhood—for example, in other parts of New England where manufacturing can be done more efficiently. Others might be far away—for example, in clusters where later stage clinical tests can be done more efficiently or where particular research strengths add to Massachusetts’ capabilities. Identifying and building bridges to the right partners is a new role that cluster initiatives are starting to play.

The impact of globalization does not stop there. Competing internationally might look like a game where everybody is running the same race. Collaborating internationally shows that, in fact, success is about defi ning your own race. To be an attractive partner and find the right collaborators elsewhere, you need to know what specific value you provide. Companies have learned this lesson; it is now increasingly also heard in clusters.

The Massachusetts life sciences super cluster is in the enviable position of having strong local linkages as well as many global connections. The initiatives in the cluster have so far focused on strengthening the local linkages and marketing it to a national and international audience. It might now be the time to complement these efforts by building targeted partnerships with other clusters, based on a clear understanding of where the Massachusetts cluster aims to position itself. Far from being a sign of weakness, this can help the cluster focus on what it does best: combine the skills and capabilities of many partners to deliver world-class results.

Christian Ketels is a member of the Harvard Business School faculty at the Institute for Strategy and Competitiveness.

8 •

Perspective

Strategic economic development built upon international collaborations

By Christa Bleyleben

Succeeding in today’s biotechnology industry requires strategic global reach to access ideas, scientific collaborators, manufacturing expertise, and markets. As the official Commonwealth agency focused on international relations, the Massachusetts Office of International Trade and Investment (MOITI) helps those from outside the region access our rich life sciences super cluster, and assists our local organizations in reaching out to the world.

MOITI administers all of Massachusetts’ international agreements, from cultural to economic, and places special emphasis on fostering life sciences research and commercial collaborations. As part of Massachusetts’ Business Resource Team, we can also help provide access to the Commonwealth’s many life science incentive programs.

Many of the world’s leading life sciences companies are located in Massachusetts. More than 50 nations maintain consulates here, and numerous foreign trade organizations have a presence in the state. Massachusetts’ super cluster is positioned to connect the world of life sciences in many ways:

• Cross border collaboration: Our industry, academia, and institutions reach far beyond the state for partners. For example:

—The University of Massachusetts, the Massachusetts Technology Transfer Center and Tsinghua Hebei-Langfang Institute have established the Massachusetts Technology Transfer Base in Hebei.

—Massachusetts is the US gateway for the European Union’s Transbio project, which actively facilitates biotechnology transnational technology transfers among six European Union regions and North America.

—Massachusetts and the Lombardy province in Italy are collaborating on developing international clinical trial capabilities and are bringing metabolic disease researchers together from our regions.

metabolic disease researchers together from our regions. Christa Bleyleben MOITI • International physical presence:

Christa Bleyleben

MOITI

• International physical presence: Massachusetts organizations have facilities throughout the globe. MOITI itself has locations in Europe, Latin America, and China.

• Participation in world life science forums: our researchers participate in countless scientific conferences and our companies are found in nearly every trade show. The recent trade mission to China by Governor Deval Patrick with leaders of our companies and universities demonstrates our interest in engaging everyone in life sciences. MOITI helps our local companies participate in trade shows such as the major medical device conventions of MEDICA in Germany, Arab Health in Dubai, and CMEF in China.

• Access to investment capital: Massachusetts contains a vibrant native financial and venture capital community. In addition many European, Pacific Rim, West Coast, and New York investment firms maintain offices in Massachusetts.

Massachusetts’ super cluster has a history of welcoming ideas and working with the best talent from around the globe. This heritage inspires MOITI to practice a new style of economic development: one that is driven by collaboration rather than competition. This win-win economic development philosophy is evidenced by Massachusetts’ creative programs that help companies work together across national boundaries to develop products that benefit everyone—actions that go far beyond traditional government incentives.

Massachusetts is a strategic gateway into the US life sciences community of researchers, companies, and investors.

Christa Bleyleben is executive director of the Massachu- setts Office of International Trade and Investment.

Technology and entrepreneur development

The federal government is not just an important partner for Massachusetts’ life sciences industry. It is also an instrumental investor.

Grants from the National Institutes of Health (NIH) provide the funding for studies and laboratory research that lead to new medical breakthroughs—which, in turn, spur new jobs and economic growth for the region. Small Business Administration (SBA) programs help small companies compete effectively and bring new technologies to market.

Public funding

NIH Funding

How much NIH funding does Massachusetts receive?

The NIH, the primary federal agency that funds health and biotech research, gave $2.2 billion in grants, fellowships, and research contracts to Massachusetts-based organizations in 2006, a 29.4 percent increase from five years ago.

There are two ways to compare Massachusetts against other states for NIH funding. In terms of absolute dollars, the Com- monwealth was number two in 2006, ranking behind California but ahead of New York , Pennsylvania, and Texas, as illustrated in Table 2. These five states each received over $1 billion in NIH funds.

Table 2. Top ten NIH grantee states—fiscal year 2006

Rank & State

($ millions) Amount of funding received

1. California

$3,143

2. Massachusetts

$2,204

3. New York

$1,898

4. Pennsylvania

$1,392

5. Texas

$1,077

6. Maryland

$999

7. North Carolina

$933

8. Washington

$813

9. Illinois

$694

10. Ohio

$627

Source: National Institutes of Health, Office of Extramural Research

Compared on a per capita basis, Massachusetts was number one in NIH funding in 2006. Figure 6 shows that the District of Columbia received the second highest level of funding, followed by Maryland, Rhode Island, and Connecticut.

NIH funding has stagnated nationally in recent years; as illustrated in Figure 7, Massachusetts has not been immune to this issue.

Figure 6. 2006 NIH funding per capita

Massachusetts $343 Washington, DC $316 Maryland $178 Rhode Island $123 Connecticut $129 Washington $128
Massachusetts
$343
Washington, DC
$316
Maryland
$178
Rhode Island
$123
Connecticut
$129
Washington
$128
Pennsylvania
$112
Vermont
$102
North Carolina
$105
New York
$98

Source: National Institutes of Health, Office of Extramural Research

Figure 7. NIH funding for Massachusetts

2006 $2,204 2005 $2,273 2004 $2,264 2003 $2,207 2002 $1,872 2001 $1,714 2000 $1,536 1999
2006
$2,204
2005
$2,273
2004
$2,264
2003
$2,207
2002
$1,872
2001
$1,714
2000
$1,536
1999
$1,356
1998
$1,177
($ millions)

Source: National Institutes of Health, Office of Extramural Research

Where do the NIH funds come from?

Out of the 27 different agencies that make up the NIH, the National Institute of Allergy & Infectious Diseases was the most active in Massachusetts in 2006, funding $388 million in research, as shown in Table 3. The National Cancer Institute funded $335 million; the National Heart, Lung and Blood Institute funded $268 million; and the National Institute of Diabetes and Digestive and Kidney Disorders funded $181 million. These four institutes represented the largest sources of NIH funding in 2006, accounting for about half of the $2.2 billion Massachusetts researchers competed successfully to win that year.

Table 3. Massachusetts’ share of NIH funding by funding institute, 2006

 

($ millions)

% MA

Institute

MA amount

share

National Institute of Allergy and Infectious Diseases

$388

18%

National Cancer Institute

$335

15%

National Heart, Lung, and Blood Institute

$268

12%

National Institute of Diabetes and Digestive and Kidney Disorders

$181

8%

National Institute of General Medical Sciences

$179

8%

National Institute of Neurological Disorders and Stroke

$133

6%

National Human Genome Research Institute

$97

4%

National Institute on Aging

$90

4%

National Institute of Mental Health

$89

4%

All Other Institutes

$527

24%

Total—All Institutes

$2,204

100%

Source: National Institutes of Health, Office of Extramural Research

Where do the NIH funds go?

Massachusetts General Hospital was the biggest beneficiary of NIH funds in 2006, receiving a total of $301 million. Nine institutions, including the Massachusetts Institute of Technology and the medical and public health programs at Harvard University, each received over $100 million. Table 4 lists the state’s largest NIH grantees.

3 The R01 grant is an award made to support a discrete, specified, circum- scribed project to be performed by the named investigator(s) in an area representing the investigator’s specific interest and competencies, based on the mission of the NIH.

4 Drew Faust Testimony before Senate Committee on Health, Education, Labor, and Pensions, March 11, 2008.

Table 4. Fifteen largest NIH grantee institutions in Massachusetts, fiscal year 2006

 

($ millions)

Rank

Award

1. Massachusetts General Hospital

$301

2. Brigham and Women's Hospital

$241

3. Massachusetts Institute of Technology

$184

4. Harvard University (Medical School)

$166

5. Boston University Medical Campus

$129

6. Beth Israel Deaconess Medical Center

$129

7. Dana-Farber Cancer Institute

$128

8. Harvard University (School of Public Health)

$116

9. University of Massachusetts Medical school, Worcester

$109

10. Children's Hospital Boston

$92

11. Tufts University Boston

$66

12. Boston University

$50

13. New England Medical Center Hospitals

$47

14. Harvard University

$44

15. Boston Medical Center

$41

Source: National Institutes of Health, Office of Extramural Research

Research grants represented the lion’s share of NIH funding in Massachusetts in 2006: the agency awarded 4,467 such grants. The remaining funds went to 342 fellowship grants, 188 training grants, 3 construction grants and 12 other awards.

Recent trends suggest researchers, especially young researchers, are having a difficult time securing NIH grants— especially prestigious R01 grants 3 :

• The average age of a first-time recipient of an R01 grant, which is considered the premier NIH grant, and a way for researchers to establish credibility, is 43 years old up from 39 in 1990.

• The success rate of an R01 grant application when first submitted is only 12 percent today, down from 29 percent in 1999.

• Rejected grant proposals may lead to downsized labs, layoffs of postdoctoral students, slipping morale, and more conservative proposals geared toward winning future grants.

• After multiple submissions and a protracted process, only about 20 percent of grants will ultimately be funded.

• The percent of R01 grants that will go to first time investigators was 25 percent in 2007, down from 29 percent in 1990. 4

Super Cluster II Ideas, perspectives, and trends shaping the global impact of the Massachusetts life sciences industry

Perspective

Ushering in a new age of biomedical research

By David A. Williams

As any parent can tell you, children are not just small adults; their biological systems are different from adults, and their bodies do not respond to therapies in the same way. Despite the fact that children have dissimilar needs than adults—and they may hold the key to unlocking the cures to some of the deadliest diseases—biomedical research continues to undervalue pediatric research.

Children represent 20 percent of the population, but only an estimated five percent of National Institutes of Health (NIH) research funding is directed to children’s diseases. To make matters worse, years of fl at funding from NIH are deterring many young scientists from entering pediatric research, robbing our country of future investigations in this field.

It is vital to the long-term health of the entire population that this trend be reversed. Too many children are dying each year from diseases that are within our grasp to cure— children whose untold potential is lost. The emergence of new pediatric disease epidemics, such as Type II diabetes and asthma, pose new threats to human life and longevity. In addition, we now understand that many of the deadliest adult diseases—including obesity, Type II diabetes, heart and respiratory disease, mental illness and even addictive behaviors—have their origins in childhood.

The completion of the sequencing of the human genome has opened a treasure trove of information on the biological and genetic bases of disease. Our ability to identify genes that are responsible for disease creates an extraordinary opportunity to predict at-risk people and potentially intervene at an early age in preventing diseases or their complications from emerging in adults. Stopping disease in its infancy has tremendous potential for extending productive human life and significantly reducing health care expenditures.

life and significantly reducing health care expenditures. David A. Williams Children’s Hospital Boston Advances in

David A. Williams Children’s Hospital Boston

Advances in treating childhood forms of disease have been instrumental in developing new adult therapies. Children’s Hospital Boston is a case in point. As one of the world’s leading pediatric research centers, with more than 1,500 scientists and a research budget of $177 million, our researchers are at the forefront of applying stem cell therapies to treat cancer and blood diseases in adults as well as children. The late Dr. Judah Folkman pioneered angiogenesis at Children’s, and today more than 1.2 million patients, mostly adults, are receiving angiogenic therapies for cancer and macular degeneration.

However, the capacity to use this newfound knowledge is limited not only by inadequate and declining support of pediatric research but by how that research is organized. As there are only a relatively small number of sick children, only a handful of pediatric hospitals like Children’s have research enterprises of sufficient breadth and depth to fully exploit the opportunities in genomic and proteomic research.

The Pediatric Research Consortia Establishment Act being considered by Congress would establish regional pediatric research networks of scientists and institutions conducting pediatric research, organized around major pediatric research hospitals.

The economies of scale realized by establishing common protocols, sharing insights and knowledge, and pooling patients for clinical trials will accelerate basic research and speed the translation of treatment from bench to bedside, helping to usher in a new era of pediatric research with limitless possibilities for extending and enhancing the quality of human life.

David A. Williams, MD, is chief of hematology/oncology and director of Translational Research at Children’s Hospital Boston.

Small business administration funding

What are the SBIR and STTR programs?

Just as the NIH invests in groundbreaking research and pioneering ideas that may pave the way for new cures, medicines, and lifesaving techniques, the SBA competitively distributes federal research grants to small enterprises with the potential to bring these innovations to market.

SBA funds represent just a sliver of total NIH funding, but they play a critical role in moving research from the laboratory to the commercial sphere.

Companies in the Massachusetts life sciences cluster benefit from the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, which are both administered by the SBA’s Office of Technology.

The SBIR program is designed to help high technology companies, including life sciences firms, develop their research into commercial products and services. The STTR program is similar, targeting small firms and nonprofit organizations working in partnership with research organizations to bring innovations to market. For both programs, firms must be based in the United States and have 500 or fewer employees.

The various federal agencies that have their own research and development programs, such as the Department of Defense, National Aeronautics and Space Administration, and National Science Foundation, are required by law to set aside funds for SBIR and STTR grants. 5

5 This report examines the SBIR and STTR grants funded by the NIH.

Table 5. NIH SBIR and STTR grants to Massachusetts, fiscal year 2006

SBIR

($ millions)

Phase I

$19.1

Phase II

$57.4

Total

$76.5

STTR

Phase I

$1.9

Phase II

$4.3

Total

$6.2

Total SBIR and STTR

$82.7

Source: NIH Office of Extramural Research

Table 6. Life sciences patents issued per 100,000 people

State

Life sciences patents

Life sciences patents per 100,000 people

Massachusetts

999

15.53

New Jersey

735

8.48

California

3,028

8.35

Maryland

417

7.44

Pennsylvania

621

5.01

North Carolina

284

3.20

New York

597

3.10

US Total

6,681

2.24

Source: Patent and Trademark Office, 2006

Figure 8. How effective is your organization at spinning off or commercializing new ideas that
Figure 8. How effective is your organization at spinning
off or commercializing new ideas that do not fit its core
mission or business lines?
Effective
9%
Somewhat
effective
Not effective
28%
63%

Source: 2008 PricewaterhouseCoopers/Xconomy Massachusetts Life Sciences Super Cluster Survey

Super Cluster II Ideas, perspectives, and trends shaping the global impact of the Massachusetts life sciences industry

Table 7. Ease of establishing a working relationship with university technology transfer offices—Top 5

1. University of Massachusetts

2. Massachusetts Institute of Technology

3. Dana Farber Cancer Institute

4. Tufts University

5. Worcester Polytechnic Institute

Source: 2008 PricewaterhouseCoopers/Xconomy Massachusetts Life Sciences Super Cluster Survey

Table 8. Per capita NIH SBIR and STTR grants, select states, 2006

 

SBIR & STTR funding

Per capita

State

funding

Massachusetts

$82.7

$12.84

California

$118.3

$3.26

North Carolina

$24.1

$2.72

New Jersey

$16.9

$1.95

New York

$28.5

$1.48

Source: NIH Office of Extramural Research

($ Millions)

Figure 9. Do you consider yourself an entrepreneur? Yes No 34% 66%
Figure 9. Do you consider yourself an entrepreneur?
Yes
No
34%
66%

Source: 2008 PricewaterhouseCoopers/Xconomy Massachusetts Life Sciences Super Cluster Survey

How much SBIR and STTR funding does Massachusetts receive?

Massachusetts companies received $82.7 million in NIH- related SBIR and STTR grants in 2006, as shown in Table 5.

A company typically receives a Phase 1 SBIR grant to explore

the possibility of turning new research into a new product or

service. The Phase 1 test is expected to take six months, and

if it is promising, the company is eligible for a $750,000

Phase 2 grant to continue testing commercialization over a

two-year period.

Massachusetts companies received a total of $76.5 million in NIH SBIR grants in 2006. This figure includes $19.1 million in Phase 1 funding, and $57.4 million for Phase 2 funding.

The SBA awarded a total of $1.9 million in Phase 1 NIH STTR grants and $4.3 million in Phase 2 grants to Massachusetts firms and nonprofit organizations in 2006. The Phase 1 grants are typically for $100,000 and allow a year for feasibility testing, while Phase 2 provides $750,000 for more comprehensive marketability and commercialization testing.

Innovation in Massachusetts

Massachusetts continues to lead the nation, on a per capita

basis, in producing inventions that prove worthy of patents, as

shown in Table 6, but survey respondents said Commonwealth institutions could further improve their ability to commercialize new or radical ideas, as illustrated in Figure 8.

A crucial aspect of commercialization is the ability to harness

new technologies developed at universities and academic institutions. University technology transfer offices play an important role in this step. Table 7 shows survey respondents’ rankings of the ease of establishing working relationships with various technology transfer offices in Commonwealth academic institutions.

How does Massachusetts compare to other states for SBIR and STTR grants?

Massachusetts compares favorably to other large states known for life sciences and technology research, especially when the funding is measured on a per capita basis.

In 2006, the Commonwealth received $82.7 million, or $12.84

per capita, in combined NIH SBIR and STTR funding. In comparison, California received $118.3 million, or $3.26 per capita, and New York received $28.5 million, or $1.48 per capita, as shown in Table 8.

Perspective

Crossing the bridge from academia to industry—technology transfer in biotechnology

By Lita Nelsen

Massachusetts is rich in universities and research hospitals where basic research leads to a fundamental understanding of cellular processes in health and disease and to discovery of new compounds, materials, and engineering principles to address disease and improve food and clean energy production. But in order to bring these findings into public benefit, they must first be transferred to the commercial sector for investment in development into products.

This is particularly challenging in the biotechnology field, since it may take a decade or more to move from a research finding to a product, with hundreds of millions of dollars in investment needed—and no guarantee that the investment will be successful.

Patents are one key to meeting this challenge. The Bayh- Dole Act of 1980 allowed research institutions to own the patents arising from research funded by the federal government. The research institution could now provide an incentive for early investment by licensing its patent to a first mover company willing to take the risk; then, if the company’s development was successful, the patent would protect the final product from copycats.

This technology transfer from universities through patents and licensing has been notably effective in biotechnology. For example, of the 120 or so licenses MIT grants each year to its patents, approximately 30 percent are in biotechnology. This includes ten to 15 licenses each to startup companies in the biotechnology field, formed specifically to develop the technology. In fact, the great majority of new companies in Massachusetts in the bio/ medical space were founded, at least in part, in technology licensed from universities or research hospitals.

16 •

licensed from universities or research hospitals. 16 • Lita Nelsen MIT Technology Licensing Office These startups

Lita Nelsen MIT Technology Licensing Office

These startups are themselves a critical link in the biotechnology chain: frequently, the research findings from universities are at too early (and too risky) a stage to attract the attention of large companies. Instead, the long-range vision and risk-tolerance of scientific founders, entrepreneurs and their angel and venture investors are needed to bridge the gap—and take the first steps toward development. Later, strategic partnerships between the startup company and large pharmaceutical or energy companies complete the chain.

Universities in Massachusetts have also been playing

a part in developing entrepreneurial eco-systems:

environments in which researchers and students learn the skills of technology entrepreneurship and mix with the

business and investment communities. Business schools

are offering individual courses and entire degree programs

in entrepreneurship. Community-oriented organizations

such as the MIT Enterprise Forum educate working entrepreneurs; mentoring services (e.g. the MIT Venture Mentoring Service and First Founders at Boston University) provide guidance to new entrepreneurs; and an untold number of venture clubs and networking organizations throughout the region provide numerous opportunities for connections between people that lead to companies.

Finally, success breeds success: as more and more scientists and faculty engage in bringing their research findings into commercial reality, students are continuously exposed to them as role models—and the students come to believe that they can (and will) do it themselves some day (if not now)! The universities are building not only the biotechnology industry of the present, but that of the future.

Lita Nelsen is director of the Technology Licensing Office at the Massachusetts Institute of Technology.

Perspective

The role of state government in promoting innovative research in the life sciences that can lead to new medical treatments

By Harvey Lodish

that can lead to new medical treatments By Harvey Lodish Harvey Lodish Massachusetts Life Sciences Center

Harvey Lodish

Massachusetts Life

Sciences Center

Significant advancements in biomedical research are frequently made by very young investigators who have new insights into old or intractable problems. Increasingly, researchers trained in fields such as mathematics, engineering, and computer science are collaborating with biomedical scientists to make significant advances in disease-related research. Encouraging creativity and innovation by our top investigators in many fields is critically important, but flat funding from the National Institutes of Health since 2004 and restrictions on federal funding for certain types of research is threatening the development of life changing therapies and cures for many diseases. Progress in areas like genomics, bioengineering, and cell biology is threatened, and many projects that have received early funding are being halted due to a lack of funding, or funding levels that are not keeping up with inflation.

This critical gap in financial support has proven a disincentive for innovative and groundbreaking discoveries. Fewer dollars mean more competition for scarce resources and stricter guidelines by which NIH reviewers are examining applications. This tighter level of scrutiny is forcing many of our brightest and most promising junior and senior researchers to play it safe, resisting the more risky research in order to increase their chances of receiving federal grant support. Notably, it is often the risky projects that yield the greatest developments for positive medical outcomes.

Massachusetts, perhaps more than any other state—with our world-class academic, research, and healthcare institutions—has proportionally more to lose if we squander the talent in our brightest young scientists and engineers. The Massachusetts Life Sciences Center (MLSC), created

in 2006 by the legislature and invigorated by a recent $1 billion life sciences initiative, has launched its first programs to spur innovative research by new investigators, attract new, nationally prominent faculty to the state’s higher education institutions, and incentivize cooperative partnerships between industry and academia. The MLSC created a Scientific Advisory Board (SAB) to ensure the state’s money is spent on the most promising people and projects, and to provide advice on future programs that could increase life sciences research and education in the Commonwealth. As chair of the SAB, I am proud of the work that we are doing to promote economic growth and improve health outcomes in Massachusetts.

The Massachusetts Life Sciences Center is not attempting to replace or replicate the role of the National Institutes of Health, nor does it have resources that would enable it to come close to doing so. But the MLSC’s commitment to funding innovative basic and translational research, with promise for solid economic development and job creation, will enable the Commonwealth to leverage its own limited resources while furthering discoveries in new medical applications, therapies, and diagnostics.

Other state governments would do well to share in this commitment—increasing economic development while simultaneously benefiting the quality of human life.

Harvey Lodish is chair of Scientific Advisory Board for the Massachusetts Life Sciences Center. He is also a member of the Whitehead Institute for Biomedical Research, and a professor of biology and bioengineering at the Massachusetts Institute of Technology.

Interview

Raju Kucherlapati

On how I came to Massachusetts

I was at Albert Einstein College of Medicine in New York, and I was fortunate to be a part of the human genome mapping and sequencing program. One of the things I realized was what a great opportunity we had to apply the lessons of the human genome sequence directly to patients. As it happened, Harvard Medical School and hospitals affiliated with Partners Healthcare have been thinking independently about the same goal of trying to bring genetics to the clinic. They were interested in establishing a collaborative effort to explore exactly those opportunities in a strong clinical setting. And I was asked to come to Boston and to head this effort, which was very exciting.

In addition, I had been one of the scientific founders of Millennium Pharmaceuticals in 1993, and served on the board. I’d been commuting from New York to come to scientific meetings, board meetings, and so on. The opportunity to work in Boston, and be close to the company that I was very heavily involved in, was also tremendously attractive. It illustrates how this super cluster concept can build on itself.

18 •

On Massachusetts’ knowledgeable investors

Massachusetts has thrived as a center of innovation not only because there is a tremendous amount of

talent in its medical and academic institutions but also because there is

a vibrant community of intellectually

powerful investors here. They are highly sophisticated and deeply knowledgeable, and they are not intimidated by technical subjects. They can understand the vision behind the research; they are very interested in medically related pursuits and very receptive to supporting these activities.

On the importance of personal contacts

Even with the Internet and other means

of transferring knowledge, there’s really nothing that substitutes for the ability to be able to see and talk to someone in person. If you want to try to make a deal with somebody or to collaborate with somebody, then it’s important to be able to talk to them, so the proximity

is very important.

On reaching out globally

Entrepreneurs should keep their minds focused not just on local markets but also on international markets. While there is incredible talent here, they also should think about how to be able to fully leverage all of the talents that are really available around the world. For example, Mass Insight is trying to build these kinds of bridges between Massachusetts on the one hand and India and China on the other. Entrepreneurs should take advantage of that.

On managing global regulatory regimes

All of these markets are becoming so global that we need to think about how the discoveries that we make can indeed be exported to other countries. And that means that we need to know more about the regulatory atmosphere not only in this country, but also the atmosphere in other parts of the world. While we have a great amount of experience with dealing with regulatory agencies in Europe, we don’t have an equally good understanding of the regulatory systems elsewhere. We need to build that capability.

Raju Kucherlapati is scientific director of Harvard-Partners Center for Genetics and Genomics and Paul C. Cabot Professor of Genetics and a professor of medicine at Harvard Medical School. Previously, Dr. Kucherlapati was chairman of molecular genetics and a professor at Albert Einstein College of Medicine in New York. Dr. Kucherlapati was a member of the editorial board of the New England Journal of Medicine and is a leading contributor to scientific literature.

On change in the winds

The Bay Area and Boston have long been the places to be for biotechnology in this country, but something has happened over these last seven or eight years. Things are shifting here. Boston has really attracted all of these big pharmaceutical companies and, to the best of my knowledge, nothing like that has happened in the Bay Area. For example, the company that I’ve been associated with, Millennium Pharmaceuticals, just merged with Takeda Pharmaceuticals in Japan. While the transaction made sense on many levels, one of the attractions certainly was the fact that Millennium is based here in Boston, in a center of the life sciences.

Millennium is based here in Boston, in a center of the life sciences. Technology and entrepreneur

Perspective

The role of entrepreneurship in building a biotech cluster

By Ken Morse

It takes a village to foster breakthrough technologies and create great companies. The Massachusetts biotech cluster is a community with a culture of creativity, competition, and collaboration where entrepreneurs are encouraged to lean over the fence and borrow a cup of sugar (or other carbon source) from their neighbors.

Our world-class universities and global life science companies are the magnets which attract the talent needed to fuel invention. The spirit of Yankee ingenuity has converted old mills and warehouses into high tech hothouses to give them good places to innovate.

By definition: innovation = invention + commercialization.

Commercialization requires passionate, workaholic entrepreneurs who believe that the job of invention is not complete until breakthrough technologies are coaxed from the comfort of the lab to the crucible of the marketplace.

20 •

of the lab to the crucible of the marketplace. 20 • Ken Morse MIT Entrepreneurship Center

Ken Morse MIT Entrepreneurship Center

The critical role of our ambitious entrepreneurs is to build powerful teams around the inventors and achieve the many milestones from bench science to bedside.

The power of our super cluster, and the entrepreneurs within it, preclude bureaucracy, complacency, and mediocrity. New companies are benchmarked against the best and most successful players. Over 150 biotech companies, large and small, have taken root here because our scientists and engineers believe in commercial success through excellence, and entrepreneurship.

Our job here at the MIT Entrepreneurship Center is to train entrepreneurs to be capable of moving from medical research to sustainable success, measured by improving healthcare and saving lives on a global scale. There can be no higher calling.

Ken Morse is executive director of the Massachusetts Institute of Technology Entrepreneurship Center.

Perspective

Projecting tactics and message—promoting startup companies as an economic, scientific, and healthcare engine for continued growth in central Massachusetts

By Kevin O’Sullivan

growth in central Massachusetts By Kevin O’Sullivan K e v i n O ’ S u

Kevin OSullivan Massachusetts Biomedical Initiatives

We all agree that the Massachusetts life sciences industry holds tremendous potential for our future. But other states and nations are nipping at our heels. The Commonwealth’s competitive advantage is diminishing as businesses and talent are increasingly attracted to other locations. At the BIO 2007 convention held in Boston last spring, dozens of regions aggressively targeted our companies and our talent. Other states have invested more money in funding research and development. Other states have invested more in stem cell facilities and research.

That is why the Massachusetts’s life science legislation is so important to our economy as well as in bolstering our continued leadership within the healthcare field. This legislation helps to expand tax incentives for life science companies doing business here in Massachusetts. It provides badly needed infrastructure improvements to our public university system. Benefits include new jobs and the attraction and the retention of the best scientists in the world. Most importantly, we continue to strive to fund cures for lifesaving medical therapies—and ultimately an enhanced standard of living throughout the entire world.

The University of Massachusetts Medical School in Worcester proposes to establish the Massachusetts Human Embryonic Stem Cell Registry, a comprehensive and extensively documented international cell database, as the first phase of a broader Massachusetts initiative. This web- based registry would provide Massachusetts researchers, commercial entities, and the international biomedical research community with access to critical information on cell lines to facilitate greater development of research and the commercialization of science.

Innovation by way of the promotion of biomedical incubator facilities for startup companies in Central Massachusetts has also been an integral part of the Commonwealth’s emphasis on the implementation of a statewide strategy to compete within the life sciences global economy.

Several key goals have been embraced by this statewide economic development effort on behalf of seed life science companies:

• Create a higher profile for Worcester and Central Massachusetts as a place to establish and grow the medical industry business

• Establish a lifeline with venture capital funds to match prospective companies with specific angel and VC fund opportunities

• Promote the function of technology transfer and licensing to create more opportunities for the commercialization of science

• Work to create more affordable science-related incubator lab, office, and light manufacturing space to meet this growing real estate need

• Market attractive and diverse financial and real estate packages to grow and attract biomedical companies by assembling grant, loan guarantee, tax incentive, and real estate resources

• Establish educational networking forums to highlight Biotechnology, Medical Device and Informatics business, academic, and science-related activity within the region.

The Central Massachusetts region has continued to grow our life science cluster and is recognized as the anchor to the burgeoning biomedical corridor between Worcester and Boston.

The Governor and the entire Massachusetts Legislature have been extremely forward thinking in their support and pursuit of growth within the life science industry. The future for life sciences within the Worcester region and the entire state is bright and the potential is boundless. By implementing this unified agenda, we remain the very best in the world.

Kevin O’Sullivan is president and chief executive officer of Massachusetts Biomedical Initiatives.

Early stage company development

Super Cluster II Ideas, perspectives, and trends shaping the global impact of the Massachusetts life sciences industry

Perspective

Accelerating academic research to solve real problems—a story of academic innovation and the translation of ideas to impact

By Charles L. Cooney and Leon Sandler

In 2002, the Deshpande Center for Technological

Innovation was established at MIT to accelerate the

translation of early stage ideas to realization of commercial impact. The ideas bubble up from the caldron of basic research on campus that is largely funded by government and industrial sponsors. There is a problem, however, that funding sources perceive the mission of academic research to be more about knowledge creation rather than solution

of

commercial problems. Funding for academic research

is

not intended to take the ideas to commercialization.

A

parallel problem is that the industrial community is

often hesitant to assume the risk of early stage academic research in seeking marketable products and services. Venture capital that might fill this void is constrained by the concerns of uncertainty in early stage academic research.

This dilemma creates a gap in available funding, often called the Valley of Death. Through a generous gift from Desh and Jaishree Deshpande, we were able to create the Deshpande Center at MIT to address this gap and to stimulate the connection of ideas, invention, innovation, and impact.

The model that evolved from our work over the past six years is called Select, Direct, and Connect. One needs a peer review process to select early-stage research from academic researchers that, if successful, will address an

important problem and can be commercialized within a few years. In conjunction with funding of these proposals, we also include mentoring with catalysts, experienced volunteers from the business community who—just like

a chemical catalyst—serve to accelerate the process of

translating ideas to impact without themselves participating

in

the process. This experience is an essential component

of

the funding model and differentiates such funding

from normal project support. Connecting the academic investigators with both the market and the venture finance community is the third leg of success.

We award two types of grants: Ignition grants of up to $50,000, and Innovation grants of up to $250,000. Ignition grants are aimed at projects that are two to three years from commercialization, while Innovation grants are directed toward projects that are just one to two years from commercialization.

that are just one to two years from commercialization. Charles L. Cooney Deshpande Center for Technological

Charles L. Cooney Deshpande Center for Technological Innovation, MIT

L. Cooney Deshpande Center for Technological Innovation, MIT Leon Sandler Deshpande Center for Technological Innovation,

Leon Sandler Deshpande Center for Technological Innovation, MIT

While $50,000 is a modest amount, it allows one to test the hypothesis and begin to explore potential for the technology. Within one year, one can assess both technical and market uncertainty and decide if a second year of funding, up to $250,000, is likely to reduce the technical and market uncertainty to the point that one can attract venture financing or license the IP. At this point the technology is spun out of the university.

Over the first five years of funding, we selected about 75 projects from over 400 proposals and have so far seen the creation of 15 new companies that have attracted about $140 million in venture financing and created over 200 jobs.

At MIT we developed a curriculum around linking technological innovation to the market; we call these innovation teams or I-Teams for short. The challenge is to develop a go-to-market strategy for early stage ideas. If you do not know where you are going, and you do not have a means to measure where you are, then you will not know when you arrive—thus developing the go-to-market strategy is essential to success in achieving impact.

The Massachusetts Life Science super cluster has exhibited phenomenal success. Sustaining this success will depend on how well it can access innovation in the life sciences—not only using local resources, but tapping the power of the Massachusetts innovation ecosystem to address global science and solve global problems.

Recognizing that innovation happens everywhere, the next challenge is to learn how to create and manage multi- disciplinary, multi-institutional and multi-country teams to capture early stage ideas that can be translated to solutions of local problems in different locations. We need to understand the problems, draw upon not only our local but also global innovation, and engage the community in this quest to bring new science to both old and new problems.

Charles L. Cooney is faculty director, and Leon Sandler is executive director, of the Deshpande Center for Technological Innovation at the Massachusetts Institute of Technology.

Translating research dollars into results

Figure 10. Massachusetts Nobel laureates 1914 Theodore W. Richards, Chemistry Harvard University 1934 William P.
Figure 10. Massachusetts Nobel laureates
1914
Theodore W. Richards,
Chemistry
Harvard University
1934
William P. Murphy
Physiology or Medicine
Harvard University
George R. Minot
Physiology or Medicine
Harvard University
1961 Georg von Bekesy Physiology or Medicine Harvard University 1962 James Watson Physiology or Medicine
1961
Georg von Bekesy
Physiology or Medicine
Harvard University
1962
James Watson
Physiology or Medicine
Harvard University
1964
Konrad Bloch
Physiology or Medicine
Harvard University
1965
Robert B. Woodward
Chemistry
1953
Harvard University
1967
George Wald
Physiology or Medicine
Harvard University
1969
1954
Salvador E. Luria
Physiology or Medicine
Massachusetts Institute of Technology
1975
David Baltimore
Physiology or Medicine
Massachusetts Institute of Technology

Fritz Lipmann Physiology or Medicine Massachusetts General Hospital

John F. Enders Physiology or Medicine Research Division of Infectious Diseases Children’s Medical Center

Thomas H. Weller Physiology or Medicine Research Division of Infectious Diseases Children’s Medical Center

Super Cluster II Ideas, perspectives, and trends shaping the global impact of the Massachusetts life sciences industry

Super Cluster II Ideas, perspectives, and trends shaping the global impact of the Massachusetts life sciences industry

The public funding of life sciences research in Massachu- setts has resulted in numerous biomedical breakthroughs over the past three decades. Numerous Massachusetts scientists have received Nobel Prizes for their seminal discoveries, which have saved countless lives and opened up new possibilities for understanding and treating disease.

This history of scientific excellence is a key reason why Massachusetts receives more NIH funding per capita than any other state. As the timeline below illustrates, the biomedical researchers of the future will be standing on the shoulders of these giants.

1995 Mario J. Molina Chemistry Massachusetts Institute of Technology 1981 David H. Hubel Physiology or
1995
Mario J. Molina
Chemistry
Massachusetts Institute
of Technology
1981
David H. Hubel
Physiology or
Medicine
Harvard
Medical School
2006
1993
Phillip A. Sharp
Physiology or Medicine
Massachusetts Institute
of Technology
Center for Cancer Research
Craig C. Mello
Physiology or
Medicine
University of
Massachusetts
Medical School
Torsten N. Wiesel
Physiology or
Medicine
Harvard
Medical School
Richard J. Roberts
Physiology or Medicine
New England Biolabs
1980
1990
Baruhj Benacerraf
Physiology or Medicine
Harvard Medical School
Elias James Corey
Chemistry
Harvard University
2005
Walter Gilbert
Joseph E. Murray
Physiology or Medicine
Brigham and Women’s
Hospital
Richard R. Schrock
Chemistry
Massachusetts
Institute of Technology
Chemistry
Lyman Laboratory
Harvard University
1987
1979
Allan M. Cormack
Physiology or Medicine
Tufts University
Susumu Tonegawa
Physiology or Medicine
Massachusetts Institute of
Technology
2002
1976
1986
William Lipscomb
Chemistry
Harvard University
Dudley R. Herschbach
Chemistry
Harvard University
H. Robert Horvitz
Physiology or Medicine
Massachusetts
Institute of Technology

Interview

Phillip A. Sharp

On the early days of biotechnology in Massachusetts

Back in 1978, biotech was just a word; there was no one experienced in biotech as an endeavor. I think that only one freestanding pharmaceutical company had been started in the previous 50 years. So it was a whole new concept to take promising laboratory-based research, invest in it, establish a freestanding organization and fund it long enough to take a technical development along to pharmaceutical approval.

When we started back in ’78, everyone looked at it and said, oh, this will last a year, maybe two. And then after two or three years they said, well, it will last two or three years, but not much longer than that. What made it have continuity was that Wall Street became comfortable with the concept that these technology companies could be financed on IPOs in a pre-profit situation. That gave us the capital to develop and grow. Ultimately, we became profitable, and then very profitable.

Today, it still is a challenge to develop these products, but it is a much more established and knowable industry now than it was 30 years ago.

26 •

On crosscutting among the sciences and engineering

Engineering and biology at the cellular and molecular levels have begun to merge, and that is a phenomenal change that has happened in the last decade. It is really very exciting. It grew partly out of genomics where engineering and molecular biology met in doing the human genome sequence. Now we are beginning to see engineering with nanotechnology creating nanoparticles that are much smaller than cells, so that we can target these particles to cells. We are optimistic that this merging of engineering and biology will translate into therapies that will make healthcare better and cheaper.

On what motivates him

A most stimulating way to spend one’s day is working with and learning from young scientists and encouraging them to do important work. If I get up in the morning and say, “what am I going to do today,” and I have the option of trying to understand something new, or trying to get a new venture off the ground or working with a group of bright young people to make something happen— that is what I find most interesting and an incredibly stimulating and satisfying way of spending one’s life.

On advice for young entrepreneurs in the life sciences

This is not an unusual conversation for me at MIT. What I tell them first is that they have to get to know the industry and the people in it. When they get their first position, a learning environment is a very important thing. They need to find an opportunity that will teach them the broader aspects of what they are doing and the business they are involved in.

The second thing is that they need to network. This is a “people” business. So, learning from others and getting to know what they are doing and what their aspirations are is a must, not an option.

Third, they should set their knowledge base in as broad a context as they can. They not only need to know what their specialty is and become world leaders at it but they would also have to set it in the context of what the whole industry is doing, what healthcare is doing, what the international market is doing—I cannot imagine an area that is more exciting to be part of. Many people here in the biotech and pharmaceutical world in New England are the best scientists anywhere.

Phillip A. Sharp is Institute Professor at the Massachusetts Institute of Technology and a faculty member in the Department of Biology and the David H. Koch Institute for Integrative Cancer Research. He received the Nobel Prize in Physiology or Medicine in 1993 for his landmark work on the molecular biology of gene expression relevant to cancer and the mechanisms of RNA splicing. Dr. Sharp is co-founder of two biotechnology companies, Biogen (in 1978—now Biogen Idec) and Alnylam Pharmaceuticals (in 2002) and serves as director in both companies. He is elected member of the National Academy of Sciences, the Institute of Medicine, and the American Academy of Arts and Sciences.

the Institute of Medicine, and the American Academy of Arts and Sciences. Early stage company development

Private financing

Private investors have always played an important role in moving innovations from the laboratory to the global marketplace. In a super cluster, a vibrant community of investors brings not just capital, but experience, knowledge, perspective, and connections to the table.

Where is private capital invested?

More than two-thirds of all private capital invested in life sciences invested in Massachusetts’ life industries in 2007, or $925 million, was invested in the biotechnology industry, and nearly all of the remainder, or $347 million, was spent on companies developing and manufacturing medical devices and equipment. Only $6 million, representing a sliver of investment dollars, was spent on healthcare services.

Figure 11. Percent of $1.3 billion invested in Massachusetts health industries, by sector 2007

27% 72%
27%
72%

Medical devicesin Massachusetts health industries, by sector 2007 27% 72% and equipment Healthcare services Biotechnology 1% Source:

and equipment

Healthcareby sector 2007 27% 72% Medical devices and equipment services Biotechnology 1% Source:

services

Biotechnology27% 72% Medical devices and equipment Healthcare services 1% Source: PricewaterhouseCoopers/National Venture Capital

1%

Source: PricewaterhouseCoopers/National Venture Capital Association, MoneyTree TM report, Data: Thomson Financial, 2007

Figure 12 shows investment in Massachusetts-based health- related firms has risen 66 percent from 2002 to 2007.

Figure 12. Massachusetts health industries investment by sector, 2002-2007

2007 $1,278 2006 $1,151 2005 $809 2004 $1,139 2003 $1,042 2002 $768 $ millions Biotechnology
2007
$1,278
2006
$1,151
2005
$809
2004
$1,139
2003
$1,042
2002
$768
$ millions
Biotechnology
Healthcare
Medical devices
services
and equipment

Source: PricewaterhouseCoopers/National Venture Capital Association,

MoneyTree TM report, Data: Thomson Financial, 2007

Table 9. Rank of Massachusetts venture capitalists on the following measures (strongest to weakest)

1. Life sciences expertise

2. Connections

3. Business expertise

4. Willingness to collaborate

5. Approachability

6. Willingness to fund radically new ideas

Source: 2008 PricewaterhouseCoopers/Xconomy Massachusetts Life Sciences Super Cluster Survey

Super Cluster II Ideas, perspectives, and trends shaping the global impact of the Massachusetts life sciences industry

A closer analysis of biotechnology venture capital funding

Venture capital firms invested money in Massachusetts biotechnology companies at all stages of development, from tiny startups to expanding enterprises, as shown in Table 10.

Over the past two years, 24 venture firms have funded 17 biotechnology startup companies in Massachusetts. 6 The majority of venture capital firms contributed funding to a single startup endeavor. HealthCare Ventures LLC and Polaris Venture Partners were most active in startup biotechnology in Massachusetts, funding six and three startups respectively.

At the early-stage level, 41 companies received funding from 56 venture capital firms over the two-year period. The vast majority of venture capital firms committed to one company. Exceptions to this were Atlas Venture, Polaris Venture Partners and Flagship Ventures funding ten, nine, and eight investments, respectively.

Table 10. Analysis of venture capital funding for biotechnology companies at different stages of development, 2006-2007

Eighty-seven venture capital firms invested in 47 expansion- stage biotechnology companies during this period. Most firms funded a single company. Firms that made multiple investments included Flagship Ventures, Oxford Bioscience Partners, HealthCare Ventures, and Polaris Venture Partners.

In the later-stage arena, 28 biotechnology companies at this level received funding from 85 venture firms. Again, the vast majority of venture capital firms invested in one private equity deal. Exceptions to this were MPM Capital and Polaris Venture Partners, each funding six projects. Also, Oxford Bioscience Partners and Venrock Associates both participated in five funding deals during the two-year period.

 

Early stage

Expansion stage

Later stage

Industry

Startups

companies

companies

companies

Number of participating financing firms*

24

56

87

85

Companies funded

17

41

47

28

Number of firms funding one company

15

35

61

60

Number of firms funding two companies

7

9

14

14

Number of firms funding three or more companies

2

12

12

11

Most active venture capital firms at this level

Healthcare Venture,

Atlas Venture, Polaris

Flagship Ventures,

MPM Capital, Polaris

Polaris Venture

Venture Partners,

Oxford Bioscience

Capital Partners, Oxford

Partners

Flagship Ventures

Partners, HealthCare

Bioscience Partners,

 

Ventures, Polaris

Venrock Associates

Venture Partners

* Does not include undisclosed venture capital firms. Source: PricewaterhouseCoopers/National Venture Capital Association, MoneyTree TM report, Data: Thomson Financial, 2007

6 Undisclosed venture firms are not counted in the total.

A closer analysis of medical device venture capital funding

Two hundred venture capital financing offerings were issued to companies at various stages of development over the last two years in Massachusetts: 96 in 2006 and 104 in 2007.

In 2006 and 2007, Polaris Venture Partners was the most prolific venture capital firm with eight offerings. BioVentures Investors, Oxford Bioscience Partners, Prism Venture Partners, Sanderling Ventures, and Triathlon Medical Ventures LLC each invested in five companies. Domain Associates LLC and Morgenthaler Ventures both had four investments.

Table 11. Analysis of venture capital funding for medical device companies at different stages of development

For early stage medical device companies, Venture Capital Fund, Polaris Venture Partners and BioVentures Investors each made three investments over the last two years.

At the expansion stage, Vertical Group was the biggest benefactor in 2006 and 2007, with three investments. J.P. Morgan Partners and Integra Ventures each invested in two companies at this level.

For later-stage medical device manufacturers, Prism Venture Partners and Triathlon Medical Ventures LLC issued a combined total of five venture capital funding rounds. Domain Associates LLC, Morgenthaler Ventures, and Oxford Bioscience Partners each had four venture capital investments, as illustrated by Table 11.

 

Early stage

Expansion stage

Later stage

2006-2007

Startups

companies

companies

companies

Number of participating financing firms*

9

23

31

69

Companies funded

9

35

37

119

Number of firms funding one company

9

14

25

39

Number of firms funding two companies

0

6

5

17

Number of firms funding three or more companies

0

3

1

13

Most active venture capital firms at this level

n/a

Venture Capital Fund of New England, Polaris Capital Partners, BioVentures Investors

The Vertical Group, Integra Ventures, JP Morgan Partners, New England Partners, Sanderling Ventures

Prism Venture Partners, Triathlon Medical Ventures LLC, Domain Associates LLC, Morgenthaler Ventures, Oxford Bioscience Partners

* Does not include undisclosed venture capital firms. Source: PricewaterhouseCoopers/National Venture Capital Association, MoneyTree TM report, Data: Thomson Financial, 2007

What were the biggest deals?

The top 10 private equity deals in Massachusetts in 2007 accounted for more than a third of a billion dollars, and overwhelmingly favored biotechnology firms. As shown in Table 12, Targanta Therapeutics Inc., a Cambridge-based company that develops antibiotics to treat serious infections

Table 12. Top 10 private equity deals in Massachusetts

that can strike patients in hospitals and other medical institutions, received $70 million. Ironwood Pharmaceuticals, a Cambridge-based company working on treatments for cardiovascular and gastrointestinal issues, received $44 million.

Rank & company

Location

Sector

Description

Investment

1. Targanta Therapeutics, Inc.

Cambridge

Biotechnology

Manufactures biological products to treat infections in hospitals and medical facilities.

$69,999,800

(formerly PhageTech, Inc.)

2. Ironwood Pharmaceuticals

Cambridge

Biotechnology

Operates as an entrepreneurial pharmaceutical company.

$44,000,000

(formerly Microbia, Inc.)

3. Sirtris Pharmaceuticals, Inc.

Cambridge

Biotechnology

Develops molecule drugs.

$35,935,000

4. Aciex, Inc.

Boston

Medical Devices

Develops therapeutic products for the treatment of front eye diseases.

$34,000,000

 

and Equipment

5. FoldRx Pharmaceuticals, Inc.

Cambridge

Biotechnology

Develops drug therapies for diseases of protein misfolding and amyloidosis.

$32,251,200

6. AVEO Pharmaceuticals, Inc.

Cambridge

Biotechnology

Develops cancer therapeutics.

$31,913,000

(formerly GenPath Pharmaceuticals)

7. Acceleron Pharma, Inc.

Cambridge

Biotechnology

Develops drugs to treat musculoskeletal and metabolic disorders.

$30,999,800

8. Xcellerex, Inc.

Marlborough

Biotechnology

Provides contract services for bioprocess development and manufacturing.

$30,839,100

9. Archemix Corporation

Cambridge

Biotechnology

Develops nucleic acid-based products and services in the United States.

$29,844,000

10. Elixir Pharmaceuticals, Inc.

Cambridge

Biotechnology

Develops and markets therapies to treat metabolic disease.

$28,030,200

Source: PricewaterhouseCoopers/National Venture Capital Association, MoneyTree TM report, Data: Thomson Financial, 2007

Super Cluster II Ideas, perspectives, and trends shaping the global impact of the Massachusetts life sciences industry

Merger and acquisition environment

Through mergers and acquisitions, companies from around the world claim a stake in Massachusetts’ life sciences technologies and talents, while local companies continue to expand their reach around the globe. Table 13 shows the 10 largest acquisitions and mergers involving Massachusetts- based life sciences companies over the past 12 months.

Japan’s largest pharmaceutical company, Osaka-based Takeda Pharmaceutical, recently acquired Millennium Pharmaceuticals of Cambridge for $8.8 billion. A Swedish firm, Getinge Group AB, purchased Boston Scientific’s cardiac and vascular surgery medical equipment businesses for $750 million. These deals represent two of the five largest transactions involving Massachusetts-based life sciences companies over the previous 12 months.

Many of the top-10 deals didn’t require a passport. Hologic, a Bedford-based company that specializes in diagnostic imaging equipment, merged with Cytyc of Marlborough for $6.2 billion and also purchased BioLucent of Aliso Viejo, Calif., for $70 million. In the health care sector, pharmacy benefits giant Medco Health Solutions of Franklin Lakes, N.J., expanded its market share by acquiring Wakefield’s PolyMedica Corp. for $1.5 billion.

Table 13. Top 10 mergers and acquisitions involving Massachusetts life sciences companies in the last 12 months

Millennium Pharmaceuticals acquired by Takeda Pharmaceutical

$8.8 billion

Hologic Inc. merged with Cytyc

$6.2 billion

PolyMedica Corp. acquired by Medco Health Solutions

$1.5 billion

Biosite acquired by Inverness Medical Innovations

$1.5 billion

Boston Scientific sold its Cardiac Surgery and Vascular Surgery business to Getinge Group

$750 million

Sirtris Pharmaceuticals acquired by GlaxoSmithKline

$720 million

Boston Scientific sold its Fluid Management and Venous Access businesses to Avista Capital Partners

$425 million

Bioenvision, Inc. acquired by Genzyme Corp.

$345 million

ViaCell acquired by PerkinElmer

$300 million

BioLucent, Inc. acquired by Hologic

$70 million

Haemoscope Corp.'s TEG Homeostasis Analyzer business acquired by Haemonetics Corp.

$44 million

Sources: BiopharmInsight, May 6, 2008; MassMedic

Looking solely at the medical device industry, Massachusetts- based companies played a role in three of the 10 largest mergers and acquisitions in the United States last year, as seen in Table 14. The merger of Hologic and Cytyc, mentioned above, was the second-largest such deal in the nation.

Philips Medical Systems purchased Murrysville, Penn.- based Respironics, Inc., a company best known for making devices to help patients suffering from sleep apnea and other breathing disorders. Royal Philips Electronics NV, based in Andover, is a US subsidiary of Netherlands-based Kininklijke Philips Electronics NV.

Inverness Medical, a Waltham-based company that makes medical and diagnostic products, purchased San Diego-based medical products business Biosite.

Table 14. Largest medical device mergers and acquisitions, 2007

 

Value

Acquiring company

Acquired company

(US $B)

Siemens AG

Dade Behring Holdings

$7.0

Hologic

Cytyc

$6.2

Philips NV*

Respironics

$5.1

Warburg Pincus

Bausch & Lomb

$4.5

Medtronic

Kyphon

$3.9

Onex Healthcare Holdings

Eastman Kodak Health

$2.6

Teleflex

Arrow International

$2.0

ReAble (Blackstone)

DJ Orthopedics

$1.6

Medco Health Solutions

PolyMedica

$1.5

Inverness Medical Innovations

Biosite

$1.5

Qiagen NV

Digene

$1.4

Cardinal Health

Viasys

$1.3

* While Philips is headquartered in The Netherlands, the Healthcare division is located in Andover, Mass.

Massachusetts-based companies are in bold.

Source: MassMedic

Perspective

Capital formation

By Chris Gabrieli

There is a tight correlation between access to venture capital and ability to participate in life sciences entrepreneurship. Given the enormous capital needs, especially in biotechnology, and the long time spans before product-based revenues, the companies in this sector depend on institutional venture capital funds to provide the means to pursue their ambitious plans. Massachusetts has a good competitive position on this key supply-side asset for life sciences but could be doing much more to build up its position.

Massachusetts has long been the home of the second largest concentration of overall venture capital dollars in the United States—one-third the size of Silicon Valley’s at the end of last year, but still ahead of other regional clusters. Massachusetts’ position in biotechnology is more competitive with our region running neck and neck with Silicon Valley and San Diego—together, these three clusters commanded two-thirds of all biotech venture capital in the Fourth Quarter of 2007.

One can debate which comes first: the chicken or the egg, the venture capital or the entrepreneurs? In reality, once a cluster of critical mass has been achieved, as clearly we have done in life sciences in Massachusetts, there can be little doubt that more local venture capital would lead to more startups, bigger financings and more growth for life sciences. Some life sciences venture capitalists might be wary of the competition, but the region would be the better for it. And Silicon Valley’s high technology history strongly suggests that no matter how much venture capital accumulates, there seems to be a concomitant growth in entrepreneurs and ideas to absorb it.

Expanding the number and scale of Massachusetts- based, high-quality venture capital firms active in life sciences would lead to more deals here, more jobs, and more opportunities for success. Yet this has not been a public or private policy goal. The largest local pools of potential limited partner capital to support venture funds are the state pension fund ($50 billion in assets) and the endowments of Harvard ($35 billion) and MIT ($10 billion). Each of these players actively participate in the venture capital asset class in pursuit of strong, diversified investing

32 •

class in pursuit of strong, diversified investing 32 • Chris Gabrieli Bessemer Venture Partners for the

Chris Gabrieli Bessemer Venture Partners

for the good of the funds and therefore each has some money invested in Massachusetts life sciences focused venture funds. But none act significantly as a conscious catalyst for local venture fund formation and success.

Massachusetts needs to develop effective win-win ways to align more of this $100 billion in assets (and billions more when other public pension funds and university endowments are included) to the long-term success of the Commonwealth’s most promising innovation-based industry, life sciences. Such strategies cannot be a tax on or a drag on these funds’ returns—this would violate their fiduciary duty. But venture capital returns are very attractive and fiduciary regulations allow trustees to consider second bottom-line goals as long as investment returns are expected to be similar. Can there be any doubt that successful Massachusetts life sciences companies and their concomitant job growth and tax contributions would benefit all Massachusetts-based institutions more than similar success of California or Mumbai companies?

The need is most pressing in two areas: small funds focusing on seed- and earlier-stage ventures, and new funds with no track record. Major institutional investors prefer the simplicity of writing fewer big checks and making them out to funds with decades of experience. But larger funds and everyone in the life sciences cluster live in an ecosystem where someone has to be willing to invest small amounts—sometimes as little as under $1 million—to help launch raw startups than can mature to the promising ventures that can later command rounds of venture financing in the tens of millions of dollars. And we need a steady flow of new venture funds to form a sort of farm club for the great funds of the future. More young partners of big firms would leave to hang out their own shingle if they knew they could gain backing.

More life sciences venture capital means more life sciences companies. It’s a simple formula that could help drive the growth and competitive strength of our super cluster. And it takes no taxes to do it—just a fuller appreciation of benign self-interest and some strong leadership.

Chris Gabrieli is a partner at Bessemer Venture Partners.

Perspective

A model for utilizing Massachusetts’ resources to create the next generation of life sciences companies

By Glenn Batchelder

generation of life sciences companies By Glenn Batchelder Glenn Batchelder BIND Biosciences The unique fabric of

Glenn Batchelder

BIND Biosciences

The unique fabric of Massachusetts’ life sciences community has the opportunity to serve as a model to address some of the significant challenges facing the pharmaceutical industry, such as rising costs and longer development times for new drugs. I believe BIND Biosciences is an example of the possibilities, emerging from the rich local academic, industry, and venture communities to rapidly establish a leadership position in developing targeted nanoparticle therapeutics that will provide more effective yet safer treatment for serious disease.

BIND’s foundational technology was developed at MIT and Harvard through the pioneering research of Dr. Robert Langer of MIT and Dr. Omid Farokhzad of Harvard Medical School. Their research, supported through the Prostate Cancer Foundation and the NCI funded MIT—Harvard Center for Cancer Nanotechnology Excellence, focuses on engineering-targeted nanoparticle technologies to treat cancers and other diseases.

After demonstrating proof of concept for the efficacy of targeted nanoparticles in animal cancer models, Farokhzad and Langer reached out to Dr. Steve Zale to assess the potential for their academic work to be translated into commercially successful products. During his twelve years at Alkermes, Zale helped build an extremely successful polymeric microparticle-based drug delivery platform and the commercialization of products such as Risperdal Consta and Vivitrol. With a positive nod from Zale, the scientific founders reached out to Terry McGuire, a managing partner of Polaris Ventures who had co-founded 13 other companies with Langer. McGuire, Farokhzad, and Langer, together with the Polaris partner and a former Langer lab graduate, Amir Nashat, developed a business plan.

In need of an experienced CEO, McGuire introduced me to Farokhzad and Langer. I immediately saw the power of BIND’s technology and possibilities for its application. Zale joined as vice president of development and, drawing on

our network in the local biotech community, we assembled an experienced team with successful track records in drug development from companies such as Alkermes, Millennium, Infinity, and Momenta. Today we are 22 employees strong and will expand our team to 35 by the end of 2008.

As we formed our scientific advisory board we drew upon the expertise of leaders in the field such as Dr. Phil Kantoff of Dana Farber, Dr. Dennis Ausiello of MGH, Dr. Peter Libby of Brigham and Women’s, and Dr. Ulrich von Andrian of Harvard Medical School, all of whom are in close proximity to BIND’s facility.

In 2007 we in-licensed a large intellectual property estate from MIT and Harvard and raised $18.5 million from Polaris, Flagship Ventures, ARCH Ventures, and Nanodimension. We were awarded a highly competitive $2 million NIST ATP grant to further develop our technology platform.

Having secured the funding, the team, the advisors, and the technology, BIND is now poised to enter the clinic with it first product in 2009 targeting oncology indications and is developing a rich pipeline including a product to treat cardiovascular disease.

This proximity of world-class talent and institutions and the associated network of relationships enabled the rapid creation of BIND and a potential new class of important therapeutics.

Massachusetts provides a synergistic and supportive environment uniquely suited for efficiently translating scientific innovation into important medical advances for patients in the millennium ahead.

Glenn Batchelder is president and chief executive officer of BIND Biosciences.

Perspective

Fostering medical device entrepreneurship

By Stuart A. Randle

The Massachusetts medical device industry, benefiting from being part of the super cluster, faces a challenge:

How to make the jump from the ideas generated by basic research to concepts that are supportable by venture capitalists. On the whole, making this leap has been harder here in Massachusetts than it has been in Silicon Valley.

One significant difference between the medical device industries on the two coasts is that California historically has attracted more classic entrepreneurs: researchers, physicians, scientists, and engineers who have been intent on starting companies and translating concepts into products. Stanford cardiologist Thomas Fogarty, who has helped launch a score of businesses, exemplifies this type of entrepreneur.

While Massachusetts has numerous researchers who are the equal or superior of their West Coast counterparts, many of them are focused more on pure academic work and less on building companies. In the end, this can be limiting: It is more difficult for companies to succeed if their intellectual drivers are not actively involved in getting the business started and organized.

With rapid advances in biotechnology, engineering, and molecular and cellular biology, and an evolution in how products are delivered, the medical devices sector has enormous opportunities. Massachusetts can help its medical devices companies make the most of these opportunities by taking steps to accelerate entrepreneurialism and

34 •

by taking steps to accelerate entrepreneurialism and 34 • Stuart A. Randle GI Dynamics building a

Stuart A. Randle GI Dynamics

building a virtual center of excellence. Several leading players are showing how to do this.

MIT’s Center for Biomedical Engineering illustrates how academic research can be combined with economic development. In fact, this program is attracting brilliant researchers with an entrepreneurial bent who otherwise might be lured to the West Coast. Support for this program, and its replication elsewhere, would be a strong statement.

The Massachusetts Medical Device Industry Council has been promoting entrepreneurialism, conducting workshops for inventors, small businesses, and researchers on how to take great research ideas and develop them to the point at which they are viable. The council, supported strongly by industry, can help nurture tomorrow’s leaders.

The state can do its part by building on the momentum of Governor Patrick’s life sciences initiative. The Governor understands the medical devices sector and knows its importance, and his proposals have provided necessary oxygen for entrepreneurial companies.

Massachusetts has always been on the cutting edge. The life sciences industry represents the future of the Commonwealth’s economy. We should act now to support it, and help build the companies that will provide tomorrow’s jobs and economic growth.

Stuart A. Randle is president and chief executive officer of GI Dynamics.

Perspective

A statewide effort to accelerate the pace of creating life sciences companies in Massachusetts

By Anupendra Sharma and Abigail Barrow

If one stands on Massachusetts Avenue Bridge and walks one mile in either direction, one has everything one would need to start a billion-dollar company. Such a concentration of ideas, entrepreneurs, advice, and money is unparalleled in the world.

Innovation in the Massachusetts life sciences sector goes back more than 150 years. On October 16, 1846, anesthesia was first given to a patient at Massachusetts General Hospital, revolutionizing surgery. Laboratories in Massachusetts discovered the phenomenon of angiogenesis and RNA silencing. Smart infusion pumps invented here have saved thousands of lives. And the Commonwealth has also been at the center of commercializing these inventions with the steady creation of revolutionary companies like Alnylam, Genzyme, Biogen, Boston Scientific, Cubist, Confluent, Hologic, Haemonetics, Momenta, and Sirtris.

The Massachusetts Life Sciences Startup Initiative (MALSI) has a simple mission: ensure that Massachusetts remains the No. 1 place in the world to start, nurture, and grow a life sciences company.

MALSI was set up to proactively confront the growing sentiment that the Commonwealth is surrendering its lead. Although research in Massachusetts is backed by over $2 billion in funding from the National Institutes of Health, life sciences has created fewer jobs in Massachusetts than we would have hoped. In the first quarter of 2008, Massachusetts remains third in the United States in volume of venture investments in life sciences.

As a state of six million people, our resources are limited, yet the willingness and passion to help is widespread. At MALSI’s seminal meeting of stakeholders, 40 leaders met in Waltham to brainstorm about maintaining the state’s leadership and to ensure that every entrepreneur could easily identify the resources needed to start a venture. The group came up with 31 ideas to promote life sciences in the state, which were condensed into eight initiatives, as listed in Table 15. MALSI’s partners are now in the process of prioritizing and executing these initiatives.

the process of prioritizing and executing these initiatives. Anupendra Sharma Massachusetts Life Sciences Startup

Anupendra Sharma Massachusetts Life Sciences Startup Initiative

Sharma Massachusetts Life Sciences Startup Initiative Abigail Barrow Massachusetts Life Sciences Startup

Abigail Barrow Massachusetts Life Sciences Startup Initiative

One of the eight initiatives is the Massachusetts Life Sciences Innovation Day. This is a day to educate, inform, and inspire entrepreneurs and innovators. It is a day where research in the state is showcased, and where an Innovators Marketplace allows anyone to walk into a room and gain access to all the tools and connections needed to launch a company: grant writers, reimbursement experts, design and engineering companies, serial entrepreneurs, legal advice, and sources of funding. A series of panels and lectures discuss how some of our companies were started.

MALSI has received strong support from the Massachusetts Life Sciences Center and the Massachusetts Housing and Economic Development Secretary, Daniel O’Connell.

MALSI wants to ensure that the Commonwealth has the resources and processes in place to make it significantly easier for the very best ideas to move rapidly to funded companies, licenses, or partnerships. If MALSI can help turn a promising discovery into one Biogen, Inverness, or Boston Scientific every year, we will fulfill our mission.

Anupendra Sharmais a founding chair of MALSI and an investment partner at Siemens Venture Capital. Abigail Barrow is a founding chair of MALSI and director of the Massachusetts Technology Transfer Center.

Table 15. MALSI’s Eight Initiatives

Create the MA Life Sciences Innovation Day

Organize a state-funded seed program in life sciences

Create a state-funded entrepreneur-in-residence program

Create education programs to train 50 leaders and 1,000 entrepreneurs

Hold an annual statewide life sciences competition

Improve the funding environment through alternative sources (foundations and angels)

Create the MA startup portal to manage the lifecycle of a start-up

Start a campaign to excite college-30 year olds about life sciences

Source: Massachusetts Life Sciences Startup Initiative

Perspective

Gateway to growth and the global market

By D’Anne Hurd

The Massachusetts life sciences industry is growing from within, as startups proliferate and existing companies expand. It is also growing from without, as companies move here to leverage the synergies of the super cluster and the state’s strategic location for connecting the European and North American markets.

In either case, many growing life sciences companies choose to locate in the western rim of the super cluster. Here they find ample available space, close to Cambridge yet with lower operating costs and high quality-of-life elements that are important for their work force, such as reasonable housing costs and strong public and private schools. Those factors, coupled with the growing academic and clinical resources at University of Massachusetts Medical School, Worcester Polytechnic Institute (WPI), and Tufts University’s Cummings School have made the greater Worcester area an anchor of the Massachusetts super cluster.

At Gateway Park in Worcester, for example, we are now building out a 12-acre mixed-use life sciences campus development with a total of 550,000 square feet of flexible lab, office, and support space. The first building at Gateway Park, WPI’s $50 million life sciences and Bioengineering Center, opened in the fall of 2007 and is now fully occupied with a mix of academic labs and emerging life sciences companies.

The activity at Gateway Park reflects the growth trajectory for companies in this key industry. We have research labs where discoveries drive innovation. We have the Massachusetts Biomedical Initiatives, a nonprofit incubator that helps translate innovative technologies into start-up companies. We host rapidly growing young companies, such as Blue Sky Biotech and RXi Pharmaceuticals (the company co-founded by Nobel laureate Craig Mello to develop drugs

36 •

by Nobel laureate Craig Mello to develop drugs 36 • D’Anne Hurd Worcester Polytechnic Institute based

D’Anne Hurd Worcester Polytechnic Institute

based on his breakthrough RNAi research), which moved into Gateway Park in December of 2007. The next phase of development at the park will be two new science buildings of approximately 120,000 square feet, giving early stage companies room to grow and providing larger blocks of space for mature companies ready to expand.

The life sciences companies in the greater Worcester area are also well positioned to reach into the European market because of easy air travel between the two regions and a time difference that allows for overlapping hours during the work day. Those same logistics make this area ideal for European companies looking to establish US operations.

For example, in March 2008 the Irish company Creganna, which develops components for minimally invasive medical devices, officially opened its US manufacturing facility in Marlborough. Other states competed for the Creganna manufacturing operation, but central Massachusetts won because of our strategic location and the existing infrastructure of life sciences resources.

These growth patterns will continue during 2008 and beyond because the Massachusetts life sciences super cluster remains one of the most dynamic in the world. With the build-out of WPI’s Gateway Park and with the University of Massachusetts Medical School as the flagship for the Commonwealth’s $1 billion Life Sciences Initiative, the greater Worcester region will continue to offer opportunities for companies across the continuum of the life sciences.

D’Anne Hurd is Worcester Polytechnic Institute’s general counsel and vice president of business development at Gateway Park.

Perspective

Incubating innovation at Tufts Veterinary School

By Deborah Kochevar

The Cummings School of Veterinary Medicine at Tufts University is one example illustrating the catalytic role of universities in the regional super cluster. Recognizing that over 70 percent of infectious diseases emerging in the last 20 years came from animals, and that most human medical therapies require validation in one or more animal models prior to FDA approval, New England’s only veterinary school pursued its unique niche in discovery and preclinical research. The discovery research and preclinical contributions of Cummings School’s faculty, have led to human and veterinary medical breakthroughs, including blood substitutes, orthopedic fixation devices, a therapy against E coli toxicity, and the first approved human pharmaceutical produced in transgenic animals. Cummings faculty’s own work has spawned six life science companies in Massachusetts, as shown in Table 16 and Table 17.

The Cummings Veterinary School’s catalytic role is demonstrated on a larger scale in the collaborative research it conducts with other institutions and life science companies in the Massachusetts cluster. Since 1985, the school has made its faculty expertise and unique research infrastructure available to other investigators and companies in the region through its collaborative and contract research program. This program is about to take a huge leap forward with the completed construction of the New England Regional Biosafety Laboratory in spring 2009. This regional resource will provide BSL-3 labs and ABSL3- vivaria, aerobiology suite, and insectary for discovery and pre-clinical research in infectious diseases, including select agents. Through these collaborative research efforts, Cummings School, and other universities in Massachusetts, use their expertise and research resources to help power the R&D success of the commercial life science sector.

Sometimes companies need more from universities than research collaboration and a technology license, and many Massachusetts universities provide more. Cummings Veterinary School operates the Tufts Biotechnology Transfer Center on its Grafton/Westborough campus. This business incubator hosts small startup companies and the preclinical operations of larger companies that want to be closer to their Tufts collaborators and the shared scientific and preclinical resources at the Cummings School. Thus far 19 companies have been tenants in Tufts incubator, some renovating or constructing other specialized facilities on the campus to meet their specific R&D needs.

on the campus to meet their specific R&D needs. Deborah Kochevar Tufts Veterinary School Recognizing the

Deborah Kochevar Tufts Veterinary School

Recognizing the need expressed by incubator tenants and other life science companies for larger life science friendly real estate, embedded among the research resources of the university, the Cummings School has begun development of Grafton Science Park. This smart growth location is permitted for 702,000 square feet of science-oriented real estate development on nearly 100 acres of Tufts’ campus. The 41,000-square-foot New England Regional Biosafety Laboratory is the anchor tenant and the balance of this master-planned science park is available for build- to-suit opportunities. State and municipal tax incentives, development capability, and financing are available.

These catalytic and supportive contributions of Cummings School of Veterinary Medicine at Tufts University are one of many examples of Massachusetts colleges and universities powering the life science super cluster in the Commonwealth.

Deborah Kochevar is dean of Tufts Veterinary School.

Table 16. Companies Incubated on Tufts Cummings School of Veterinary Medicine’s Campus

Company

Field

Antigenics

Antisense

Biovalve

Medical devices

Circe Biomedical

Xenotransplantation

Diacrin

Xenotransplantation

GTC Biotherapeutics

Transgenics

Pulmonary Metrics

Imaging

Sequitur

Biotechnology

Stryker Biotech

Orthopedic

Verigen

Immunotherapy

Vivo Rx

Xenotransplantation

Source: Tufts Veterinary School

Table 17. Companies founded with Cummings School Technology

Company

Field

COLLEGIUM Pharmaceuticals, Inc.

Therapeutic Testing

IDEXX Veterinary Services-N.E. Lab*

Diagnostic Testing

Midas Biologicals, Inc.*

Transgenics

SECUROS Veterinary Orthopedics*

Surgical Devices

Transgenic Sciences, Inc.

Transgenics and Medical Testing

CF Technologies

Food & Water Biosafety

* Also incubated on the Veterinary School campus.

Source: Tufts Veterinary School

Employment

Introduction and industry overview

By Michael D. Goodman

The Commonwealth of Massachusetts is widely recognized as a science and technology powerhouse and as home to the world’s leading universities, teaching hospitals, and research institutions. While these extraordinary institutions have helped make Massachusetts a global innovation powerhouse, the fuel that powers the Massachusetts innovation economy is the Commonwealth’s world-class work force. Highly skilled Massachusetts workers have produced a steady stream of scientific breakthroughs and transformed these cutting edge ideas into life-saving commercial products which truly have made our state a global leader in life sciences.

Public and private sector leaders recognize the critical importance that a well educated work force plays in preserving and enhancing the competitiveness of the numerous biopharmaceutical and medical device firms that call the Commonwealth home. That is why in 2007, the Massachusetts Life Sciences Center and the Massachusetts Biotechnology Council engaged the University of Massachusetts Donahue Institute to identify emerging work force needs in the state’s life sciences super cluster, and support the development of a comprehensive strategy to ensure life sciences employers have the talent they need to succeed and grow in Massachusetts.

To date, our work has documented the extraordinary strength of the Commonwealth’s life sciences work force, and has identified challenges that state officials and industry stakeholders have already begun to address. This ongoing effort has yielded important lessons gleaned through intensive research and extensive outreach to industry CEOs, human resource professionals, higher education leaders, and state policymakers. To maintain our competitive advantage in the life sciences, we must:

our competitive advantage in the life sciences, we must: Michael D. Goodman University of Massachusetts •

Michael D. Goodman University of Massachusetts

• Expand the pipeline of future workers by doing a better job of inspiring our children to pursue careers in life sciences, and ensuring they possess the knowledge and scientific habits required to fully reap the benefits of these opportunities and meet the needs of our growing employers.

• Expose our students to the world of work in the life sciences by expanding internship and cooperative education programs. This will allow students to apply the lessons they learn in some of the best classrooms on earth to the real world scientific and technological problems being addressed by life science employers in Massachusetts.

• Recognize the industry’s need for talent in a broad array of fields. In addition to world-class medical and biological scientists, life sciences employers require professional staff with education and expertise in computer science, information technology, legal and regulatory affairs, sales, marketing, management, accounting, engineering, and manufacturing.

The Commonwealth’s highly innovative life science companies are poised to take full advantage of all that the Bay State has to offer. Through efforts such as the Life Sciences Talent Initiative, our public and private sector leaders are committed to ensuring that Massachusetts will continue to provide life sciences employers with the brainpower they need to thrive for years to come.

Michael D. Goodman, PhD, is the director of Economic and Public Policy Research at the University of Massachusetts Donahue Institute and managing editor of MassBenchmarks, the quarterly journal of the Massachusetts economy.

The life sciences work force

How many people work in the life sciences industry?

The life sciences industry in Massachusetts employed 77,247 people in 2006. The medical device and equipment field represents the largest employer in the industry with 23,467 workers, or 30 percent of the total. Biotechnology employers account for 20,909 workers, or 27 percent of the industry total. Figure 18 illustrates the distribution of employment in 2006.

Massachusetts’ life sciences work force grew by 8 percent from 2001 to 2006, matching the growth rate for California, but falling slightly behind the industry as a whole, as shown in Table 19. North Carolina’s life sciences industry grew 20.9 percent over this period, but its 61,086-employee work force is four-fifths the size of Massachusetts.’

The health care industry has added jobs in Massachusetts at a faster clip than the life sciences industry over the past five years. Health care employers gained 40,199 jobs, a 10.8 percent increase, between 2001 and 2006, compared to the life sciences industry’s 8 percent gain. The state labor force declined by 81,310 workers, or 2.4 percent, over the five-year period, as the manufacturing sector lost nearly one-fourth of its work force, as Table 20 demonstrates.

Biotechnology is the fastest growing segment of the life sciences industry, growing by 28 percent over five years, as illustrated by Table 21. While medical device and manufacturing remains one of the largest employers in the industry, this sector lost 8 percent of its work force between 2001 and 2006. Medical and testing laboratories, teaching hospitals, and wholesale trade added employees at a faster rate than the industry as a whole, while the pharmaceutical sector lost 3 percent of its work force during this period.

Table 21. Life sciences industry employment in Massachusetts by core sector, 2001-2006

Table 18. Distribution of employment in the Massachusetts life sciences industry

Sector

2006

Distribution

Pharmaceuticals

6,976

9%

Biotechnology

20,909

27%

Medical Device and Equipment

23,467

30%

Wholesale Trade

11,257

15%

Medical and Testing Laboratories

5,068

7%

Teaching Hospitals

9,570

12%

Total

77,247

100%

Source: Bureau of Labor Statistics Quarterly Census of Employment and Wages, and PricewaterhouseCoopers analysis.

Table 19. Life sciences industry employment by select states 2001 and 2006

 

2001

2006

Change % change

California

247,391

267,064

19,672

8.0%

Massachusetts

71,522

77,247

5,725

8.0%

New Jersey

113,408

109,523

– 3,886

– 3.4%

New York

120,496

121,813

1,317

1.1%

North Carolina

50,536

61,086

10,549

20.9%

United States

1,739,200

1,883,092

143,892

8.3%

Source: Bureau of Labor Statistics Quarterly Census of Employment and Wages, and PricewaterhouseCoopers analysis.

Table 20. Massachusetts life sciences industry employment compared to other select Massachusetts sectors, 2001 and 2006

Industry

2001

2006

Change

Change

All Industries

2,861,824

2,789,469

– 72,355

– 2.53%

Manufacturing

389,232

299,389

– 89,843

– 23.08%

Wholesale Trade

141,086

136,752

– 4,334

– 3.07%

Healthcare Industry

371,427

411,626

40,199

10.82%

Life Sciences Industry

71,522

77,247

5,725

8.01%

Source: Bureau of Labor Statistics Quarterly Census of Employment and Wages, and PricewaterhouseCoopers analysis.

Note: NAICS 622000 is allocated to the Healthcare Industry and partially to the Life Sciences Industry

Sector

2001

2002

2003

2004

2005

2006

Change 2001 to 2006

Pharmaceuticals

7,169

7,673

8,149

6,208

6,922

6,976

– 3%

Biotechnology

16,346

17,288

17,070

18,794

19,708

20,909

28%

Medical Device and Equipment

25,455

25,353

23,409

22,532

22,159

23,467

– 8%

Wholesale Trade

10,059

10,274

11,506

11,364

11,010

11,257

12%

Medical and Testing Laboratories

4,264

4,539

4,820

4,863

4,971

5,068

19%

Teaching Hospitals

8,229

8,686

8,966

9,116

9,308

9,570

16%

Total

71,522

73,813

73,921

72,877

74,078

77,247

8%

Source: Bureau of Labor Statistics Quarterly Census of Employment and Wages, and PricewaterhouseCoopers analysis.

Super Cluster II Ideas, perspectives, and trends shaping the global impact of the Massachusetts life sciences industry

Figure 14. In your next position, are you more likely to work for a large company, a startup, or in academia?

8% 23% 69%
8%
23%
69%

Startupfor a large company, a startup, or in academia? 8% 23% 69% Large company Academia Source:

Large companycompany, a startup, or in academia? 8% 23% 69% Startup Academia Source: 2008 PricewaterhouseCoopers/Xconomy

startup, or in academia? 8% 23% 69% Startup Large company Academia Source: 2008 PricewaterhouseCoopers/Xconomy

Academia

Source: 2008 PricewaterhouseCoopers/Xconomy Massachusetts Life Sciences Super Cluster Survey

What do life sciences workers in Massachusetts earn?

Although the health care industry employs more than five times the people than the life sciences industry in Massachusetts, Table 22 shows that wages for life sciences workers outshine those in the health care field. The overall life sciences industry wage, $80,432, represents a 65.4 percent increase over the overall weighted health care industry wage of $48,625. The average annual salary for workers in Massachusetts is $52,435.

Table 22. Healthcare industry wages

Industry name

Wage

Health Insurance Carriers

$53,116

Ambulatory healthcare services

$54,821

Hospitals

$53,362

Nursing Homes and Residential Care Facilities

$30,207

Overall weighted average healthcare industry wage

$48,625

Overall weighted average life sciences industry wage

$80,432

Source: Bureau of Labor Statistics Quarterly Census of Employment and Wages, and PricewaterhouseCoopers analysis.

Every sector in the life sciences industry boasts a higher annual average wage than the state average, as seen in Figure 15. The pharmaceutical sector average, $99,450, represents

a 89.7 percent increase over the state average. Teaching

hospitals’ average, $53,032, is a 1.1 percent increase over the

state average.

Figure 15. Average life sciences wages by sector, 2006 Estimated average wages by sector Pharmaceuticals
Figure 15. Average life sciences wages by sector, 2006
Estimated average
wages by sector
Pharmaceuticals
$99,450
Biotechnology
$99,137
Medical Device
$76,685
and Equipment
Wholesale Trade
$74,267
Medical and Testing
Laboratories
$59,866
Teaching Hospitals
$53,032
Massachusetts state
average annual salary
$52,435

Source: Bureau of Labor Statistics Quarterly Census of Employment and Wages, and PricewaterhouseCoopers analysis.

Survey respondents said lifestyle issues, not pay, would lead them to pursue employment outside Massachusetts, as Figure 16 demonstrates. Respondents are confident that Massachusetts offers sufficient opportunities for employment and job growth, as illustrated in Figure 17.

Figure 16. What is the most important factor that would cause you to pursue or
Figure 16. What is the most important factor that would
cause you to pursue or accept a job outside of the
Massachusetts super cluster?
Lifestyle
Pay
Commute time
Other
27%
40%
8%
25%

Source: 2008 PricewaterhouseCoopers/Xconomy Massachusetts Life Sciences Super Cluster Survey

Figure 17. How confident are you that if you lost your job today, you could find an opportunity in Massachusetts of equivalent or higher level?

2% Confident Somewhat confident Not confident 28% 70% Source: 2008 PricewaterhouseCoopers/Xconomy Massachusetts
2%
Confident
Somewhat
confident
Not confident
28%
70%
Source: 2008 PricewaterhouseCoopers/Xconomy
Massachusetts Life Sciences Super Cluster Survey

Work force distribution and impact

While the Boston area is home to the highest concentration of life sciences workers, these employees are making an impact across the Commonwealth.

Approximately one-third of all life sciences workers are based in the Boston metropolitan area. Neighboring Middlesex County accounts for an additional 15 percent of Massachusetts’ life sciences work force, and organizations in the region along Interstate 495 employ another 8 percent of these workers.

Outside the greater Boston area, Worcester boasts the biggest life sciences work force, followed by Massachusetts’ North Shore, as shown in Figure 18.

The Massachusetts Biomedical Initiatives organization estimates that each employer in the Boston-Cambridge area spends an average of $139,000 annually on wages and benefits for each fulltime position, which calculates to a total economic impact of $2.3 billion. Looking at the entire region encompassing Boston and Worcester, this average is $154,918 for each fulltime position, and the total economic impact is $8.8 billion.

Figure 18. Massachusetts life sciences employees by region

Region Route 90 corridor 8% North Shore 5% Boston 16% Greater Boston 16% Worcester 16%
Region
Route 90 corridor
8%
North Shore
5%
Boston
16%
Greater Boston
16%
Worcester
16%
Middlesex County
15%
Other
24%

Source: Massachusetts Biomedical Initiatives, 2008

Education

A highly educated work force contributes to the success of the life sciences cluster in Massachusetts, and differentiates the Commonwealth from other states pursuing life sciences employers and economic opportunities, as depicted in Table 23.

Table 23. Life sciences PhDs granted per 100,000 people, 2006

 

Biological,

Health

State

biomedical sciences

sciences

Chemistry

Massachusetts

6.67

1.49

2.13

Maryland

3.86

2.46

0.64

New York

3.15

0.47

0.81

North Carolina

3.04

1.05

0.86

Pennsylvania

2.55

0.85

0.94

California

2.20

0.38

0.92

Source: NORC at the University of Chicago, Survey of Earned Doctorates, 2006

Super Cluster II Ideas, perspectives, and trends shaping the global impact of the Massachusetts life sciences industry

Perspective

Inspiring the next generation of life sciences innovators

By Ioannis Miaoulis

For decades, the Museum of Science in Boston has inspired young people, sparking those moments of discovery at the heart of science through hands-on learning and lively encounters with museum educators. Our visitors can engage in hundreds of life science explorations, including investigating primate evolution by observing live tamarin monkeys, learning about anatomy by touching a sheep’s lungs, or using the tools of geneticists to analyze DNA fragments.

Today, life science research is changing our lives. No topic touches people as deeply as this one. In response to the dramatic growth in the bioscience world, the museum is expanding its historic focus in life science and the technology behind it. We are creating new permanent exhibits and programs as well as strengthening the presence of life sciences in temporary exhibitions, teacher professional development, community forums, and other formats. As we create the science and technology center of the 21st century, our goal is to motivate the next generation of life science innovators—both scientists and engineers— while introducing adults to the wonders of the living world and fostering the decision-making skills needed to become informed citizens.

With the profound implications of the biotechnology revolution on our lives, inspirational and enlightening life science-related experiences in our exhibit halls are more important than ever. To bring this knowledge and technology to our audience, we are creating the largest permanent exhibit and program initiative ever developed by the museum: the Hall of Human Life project. When completed, this effort will offer a comprehensive picture of what it means to be human, including the dramatic impact of biological and medical technologies on our lives.

Located in a hub of life science research and medical innovation, the museum is grateful to the Massachusetts- based corporate partners that lend their educational and financial support to our efforts. In 2006, the Genzyme Corporation made a $2 million gift, the largest in its 25-year history, to create the Genzyme Biotechnology Education Initiative. Also the largest single corporate gift

Education Initiative. Also the largest single corporate gift Ioannis Miaoulis Museum of Science in the museum’s

Ioannis Miaoulis Museum of Science

in the museum’s history, it supports interactive exhibits, programs for students and teachers, and K-12 science and technology curricula. Recently, we collaborated with Genzyme scientists in a first-of-its-kind professional development seminar that introduced Massachusetts middle school teachers to bioengineering through the seemingly simple task of baking bread.

Another corporate partner, the Novartis Institutes for BioMedical Research, is the lead sponsor for our annual Biotechnology Symposium for Educators and has helped create an international exchange program between Massachusetts and European science teachers.

Our role in teacher support continues to grow as we begin our fourth year as a Regional Training Center for the MassBioEd BioTeach program. Museum staff assisted in the development of this program’s innovative curriculum and associated materials kits, supporting an initiative that outfits high school biology labs with state-of-the-art biotechnology equipment.

Our life science initiative also reflects the museum’s championship of technological literacy across the country as it incorporates cutting-edge technology and engineering into interactive exhibits and programs at the museum and in classrooms nationwide through our National Center for Technological Literacy®. By expanding our engagement with life science and technology, the museum honors its past as a natural history museum, while connecting to the future through the latest scientific discoveries and technological innovation.

As the museum evolves from New England’s most visited cultural attraction into a national leader in science and technology education, we look forward to partnering with the Commonwealth’s life science leaders. Our mission—to stimulate interest in and further understanding of science and technology and their importance for individuals and society—has never been more important.

Ioannis Miaoulis is president and director of the Museum of Science.

Perspective

Life sciences talent leadership

By Paul Harrington

The life sciences industry serves as a core source of

growth for the Commonwealth’s economy. Over the course

of the current economic recovery the biotech sector in

the state has added jobs at nearly three times the rate of overall payroll employment gains produced statewide. The biotech sector is a major source of export income for the state, and that, combined with its very high levels of worker pay and considerable purchases made from other goods and services producers in the Commonwealth, means that it has helped spark the overall resurgence in state economic activity since the end of 2003.

These gains are largely built of the talent, skills, and drive

of the life science work force, an extraordinary group of

individual in many ways. Perhaps the most distinguishing feature of this group is their high level of educational attainment. Nearly three quarters of those who work in the biotech sector have earned a college degree. Four in ten life sciences workers hold advanced degrees.

A critical challenge for Massachusetts is to expand the

Massachusetts has been unable to keep pace with the nation in increasing the flow of students into graduate programs. Between 1996 and 2006 the nation increased the number of bachelor’s degree awards in SEIT fields by 20 percent, but Massachusetts colleges had only a 2 percent rise in degree awards over the 10-year period. The nation also outpaced Massachusetts in the production of master’s and doctor’s degrees in SEIT fields

At the graduate level we have become increasingly dependent on admitting students from overseas who enroll under the temporary F-1 student visa program to fill our SEIT graduate classrooms. The result, of course, is a growing share of advanced SEIT degree awards by Massachusetts colleges to foreign students, who are increasingly likely to return to their home country as economic opportunities increase there. By 2006, 42 percent of all master’s and doctoral degrees granted in the SEIT fields in Massachusetts were awarded to students with these temporary visa degrees.

available supply of workers with advanced degrees in the scientific, engineering, and information technology

In a field where labor supply already serves as a considerable constraint on economic growth, the rising

(SEIT) fields. Job vacancy rates for workers in these fields ranged in the 8 percent to 10 percent range at the end

share of SEIT degrees granted to students with temporary visa status places the domestic skill development pipeline

of

2007. These vacancy rates signal considerable losses

in long-term jeopardy. We need immigration reforms that

in

potential output, income, and employment for the

can place these extraordinarily educated foreign students

Commonwealth and are clear indicators of labor supply constraints that limit the capacity of the biotech sector to grow and prosper.

on a fast track to permanent residency and citizenship. But we also need to develop a set of strategies that can expand the number of native born students who choose the SEIT fields of study at the undergraduate level and to foster the enrollment of SEIT undergrads into graduate programs in these fields.

44 •

Several alternatives should be considered:

• We must address the need to better reward life sciences masters and PhDs to counter the flow of students to MBA and JD programs. Too many talented SEIT undergraduates are diverted out of their fields at the graduate level by the lure of high paying jobs that utilize their intellectual skills in nonscientific settings in finance and law.

• A large proportion of high school seniors have strong math skills, but many of these students—especially young women—opt out of SEIT fields of study at the undergraduate level. We need to start working with middle- and high-school students around a whole set of career and educational decision making activities—to help them make more informed decisions about what to study in college.

• The share of black and Hispanic high school graduates who choose SEIT fields as their undergraduate majors is very low. Part of this low participation rate is associated with low math proficiencies at graduation. We need to figure out how to raise the math and related literacy scores of these youngsters to provide them with access to among the best sets of jobs in the American economy. Model training programs exist such as the programs at Middlesex Community College and Worcester Technical High School, but we must expand on these types of programs and create better avenues to industry.

types of programs and create better avenues to industry. Paul Harrington Northeastern University Through the work

Paul Harrington

Northeastern University

Through the work at the Massachusetts Life Sciences Collaborative and other efforts, we are starting to scratch the surface, but we must boldly continue taking a strategic and collaborative approach. The talent pool in Massachusetts is the primary reason research institutions and companies locate here. If this talent disappears, so will this super cluster. Thus, we must be proactive and not let our leadership in life sciences slip away to other nations who are aggressively developing their talent.

Paul Harrington is associate director of the Northeastern University Center for Labor Studies and co-chair of the Massachusetts Life Sciences Collaborative Human Capital Task Force.

Perspective

The importance of training minorities

By Joan Reede

The importance of training minorities By Joan Reede Joan Reede Biomedical Science Careers Program As founder

Joan Reede Biomedical Science Careers Program

As founder of the Biomedical Science Careers Program (BSCP), my vision was to develop a program to address the issue of the underrepresentation of minorities in the biomedical sciences and other science-related fields. The solution for me was to develop a pipeline creating opportunities for young students to get exposed to and excited by the world of science, and ultimately to desire to pursue a science career. In 1991, in collaboration with the Massachusetts Medical Society and the New England Board of Higher Education, BSCP was launched by the Harvard Medical School Minority Faculty Development Program.

By 1994, BSCP was a 501(c) (3) organization designed to identify, support, and provide mentoring for underrepresented minority students, trainees, and professionals pursuing biomedical and other science- related careers and consequently contributing to increase the pool of tomorrow’s scientists.

BSCP’s success is due to its collaborative community- based philosophy involving academia, private industry, medical centers, public education, and professional societies. It is widely known throughout the country as being the definitive model for bringing talented, disadvantaged youth into a setting where serious discussions about science and future career opportunities can be held.

To date, more than 6,000 students—including those in middle school, high school, college, medical, dental, and graduate schools—and 1,000 postdoctoral fellows and junior faculty have passed through BSCP. All programs are offered at no cost to the students.

From a modest beginning in 1992, the Biomedical Science Careers Student Conference has grown into an event that, in 2008, saw over 850 students register and was attended by 250 advisors and speakers. This conference is designed for students from high school to the postdoctoral level and addresses the need for student mentoring, guidance, support, and career development.