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Top 10 U.S. Biopharma Clusters

After a generation spent shaping the growth and development of biopharma clusters, Alexandria Real Estate Equities executive chairman and founder Joel Marcus recently spoke publicly about what will most likely drive the upcoming generation of hubs for biopharma and other emerging life sciences.

“If we focus for a moment on the next life science frontier, it’s pretty clear that the sheer scale of unmet medical needs for patients suffering from diseases of the brain is quite staggering, the cost to society enormous,” Marcus told analysts on Alexandria’s quarterly conference call July 30, according to a transcript published by Seeking Alpha. He cited the growing cost of treating dementia and Alzheimer’s disease, and the nation’s opioid epidemic.

“Discovering new treatments and cures for diseases of the brain has become a goal of ever-increasing urgency and one on which Alexandria is super-laser focused on with our financial capital as well as our human capital,” Marcus said.

Marcus also emphasized the importance of thinking long-term—“Clusters take about a generation, 25 years, to really evolve and develop”—then offered a quick take on three markets where Alexandria has been especially active in recent years: “Boston, Cambridge is in there, second generation. So is San Francisco. But New York is really in the first decade.”

More recently, a top-10 cluster leader delivered some more practical insight on the science of life-sci community building. Richard Bendis of the BioHealth Capital Region (Maryland, Virginia, and Washington, DC) told BioBuzz of his six key elements to a strong, globally-competitive biocluster: Strong leadership, significant industry engagement, talent access to capital, research assets and facilities, and marketing and brand awareness.

Some of those criteria are harder to quantify than others. Not so with GEN’s annual ranging of the nation’s top 10 biopharma clusters. GEN ranks regions based on five quantifiable criteria:

  • NIH funding—Taken from the publicly available NIH RePORT database, for the current federal fiscal year, from its start on October 1, 2018, through September 9, 2019.
  • Venture capital (VC) funding—Taken from figures for all of 2018 and Q1 and Q2 2019, furnished by the publicly available PwC/CB Insights MoneyTree™ Report.
  • Patents—Based on the number of patents containing the word “biotechnology” awarded since 1976 in namesake cities and suburbs where key companies are located.
  • Lab space—Based on total-size-of-market figures, in millions of square feet, furnished by the commercial real estate company JLL in its annual U.S. Life Sciences Outlook report for 2019. Where two or more real estate companies differ widely, as occurred this year, the range is averaged, with the high and low figures reported.
  • Jobs—Based on JLL’s report. While job numbers are included in the rankings, less weight had to be given to job totals in regions where GEN has found widespread discrepancies in job figures. However, workforce size was factored in when deciding the ultimate position of a region.

While this year’s A-List includes all 10 regions included on past lists stretching back to the first one in 2014, there is one twist since last year: The 2019 rankings show the No. 9 and No. 10 regions switching positions since the 2018 A-List, with this year’s No. 10 region slipping three spots from where it ranked in the 2017 A-List.

Of particular interest are the regions just below the top 10. In its February report “2019 U.S. Life Science Clusters: Markets Positioned for ‘Century of Biology’” commercial real estate firm CBRE ranked nine “emerging” life-sci clusters, with Seattle on top. Four of those regions came close to cracking GEN’s top-10: Denver (11th in VC funding and lab space), and including Austin (11th in patents), Pittsburgh (11th in NIH funding), and Houston (11th in jobs).

10. Seattle

By recovering from the loss of Amgen in 2014, Seattle’s biopharma industry has proven itself adaptive. So, it’s fitting that one of the region’s brightest successes is named Adaptive Biotechnologies: The personalized diagnostics and therapeutics developer started 2019 with an up-to-$2.1 billion collaboration with Genentech, a member of the Roche Group, to develop personalized cancer cell therapies.

Adaptive went public on June 27, raising approximately $321 million in net proceeds. Six weeks later on August 7, Adaptive agreed to triple the size of its South Lake Union headquarters by 2021, signing a 100,000-square-foot lease at 1165 Eastlake Ave. East, owned by Alexandria Real Estate Equities. That day, Seattle Mayor Jenny Durkan announced that Alexandria agreed to pay $143.5 million to acquire the Mercer Mega Block site across from the University of Washington (UW) School of Medicine from the city. Alexandria also agreed to pay $5 million toward efforts against homelessness, and promised to build a community center and 175 units of below-market “affordable” housing there.

Home-grown Immune Design was acquired by Merck & Co. for $300 million in February. In August, UW topped out its $230 million Population Health Initiative building, set to open in fall 2020. The Bill and Melinda Gates foundation funded $210 million of the cost, with $15 million coming from Washington state. UW helped propel Seattle to sixth in patents (2,170), though the region places only 10th in NIH funding (1,431 awards totaling $894.4 million). The region fares better in lab space (eighth with 10 million square feet), and in VC (ninth with $282.4 million in 16 deals), but Seattle’s workforce of nearly 36,000, according to Life Sciences Washington (JLL counts only 26,209) ranks the region 11th behind the other regions ranked here and Minneapolis-St. Paul (9th).

9. Chicagoland

Northwestern University attracts more than $700 million annually in federal research funding—a number it says will rise by $150 million after opening the Louis A. Simpson and Kimberly K. Querrey Biomedical Research Center on its Chicago lakefront campus June 17. The 12-story facility includes more than 625,000 square feet of research space, potential for a 16-story second phase, and more than 2,000 jobs. Also building lab space is Chicago-based Sterling Bay, which announced plans in May for a Windy City campus called Prysm Life Sciences, to include a 120,000-square-foot lab/office building, a 20,000-square-foot incubator, and access to capital. Sterling Bay also plans to develop nearby 50-acre Lincoln Yards into a mixed-use campus with early-stage and graduate research facilities; on September 16, a judge dismissed a lawsuit challenging Lincoln Yards’ planned $1.4 billion tax increment financing. One regional anchor, AbbVie, has committed to keeping its headquarters in suburban North Chicago, IL, after it completes its planned $63 billion acquisition of Allergan.

On August 2, Illinois Gov. JB Pritzker (D) enacted a five-year extension of the state’s R&D Tax Credit through December 31, 2026. Statewide industry group iBIO called for a permanent extension in its Life Sciences Economic Blueprint for Illinois. To spur job creation, Pritzker also enacted an apprenticeship tax credit covering up to $3,500 of qualified education expenses incurred by employers on behalf of a qualifying apprentice; the program is capped at $5 million per year.

Chicagoland is eighth in both jobs (50,931, according to JLL), and VC ($409 million in seven deals). Chicagoland is ninth in all other criteria, including lab space (13.9 million square feet), NIH funding (1,984 awards totaling $912.2 million, up 33% from last year), and patents (1,620).

8. Los Angeles/Orange County

At-home feline DNA test developer Basepaws—an El Segundo, CA, startup dubbed “23andMe for cats”—shined a spotlight on the Los Angeles region in April when it won $250,000 from Robert Herjavec and Kevin O’Leary on “Shark Tank.” Life sciences have become the cat’s meow across the region: On March 30, a $63 million, 78,000-square-foot Medical Research laboratory building was opened in Torrance, CA by LA BioMed—which in September changed its name to The Lundquist Institute, following an unrestricted $70 million gift by philanthropists Richard and Melanie Lundquist to mark their 70th birthdays. The couple also contributed $3 million toward the Institute’s bioscience incubator, BioLabs LA at The Lundquist, with another $4 million coming from Los Angeles County toward construction and outfitting.

Amgen remains the region’s largest biopharma with 21,500 employees as of December 31, 2018 (up 700 employees or 3.4% from a year earlier), and headquarters in Thousand Oaks, CA. Also in Thousand Oaks, the 160,980-square-foot Think Here campus is being repositioned into a life-sci hub called HATCHcampus@Conejo Spectrum following its acquisition from Harbor Associates by LA-based HATCHspaces and Chicago-based Singerman Real Estate for an undisclosed price. The region anchored by the “City of Angels” ranks second in employment with 125,214 jobs in L.A., Orange, and four surrounding counties according to the California Life Sciences Association (JLL tallies 116,978). LA/Orange remains seventh in NIH funding (1,886 awards totaling $988 million) but is eighth in patents (1,714) and 10th in both lab space (12.4 million square feet) and VC ($241 million in 22 deals).

7. Raleigh-Durham, NC (includes Research Triangle Park, NC)

The region is reaping the fruits of cell and gene therapy growth. Pfizer on August 21 joined North Carolina Gov. Roy Cooper (R) to announce plans to boost its manufacturing of gene therapies in Sanford, NC, where the company plans a $500 million facility expansion projected to add 300 jobs to its current 650 employees. In March, bluebird bio officially opened its first wholly-owned manufacturing facility in Durham, where it will produce lentiviral vector for the company’s investigational gene and cell therapies, including bb2121 and bb21217, and potentially Zynteglo™ (autologous CD34+ cells encoding BA-T87Q-globin gene), which won European approval in June and is under FDA review. Also, AveXis, a Novartis Company, in February disclosed it will add 200 jobs to double the workforce planned for a Durham gene therapy manufacturing site first announced last year.

Vaccine development is also growing regionally: On July 25, Merck & Co. announced a $680 million, at least 425-job expansion that will include building a 225,000-square foot addition to its Maurice R. Hilleman Center for Vaccine Manufacturing in Durham at Treyburn Corporate Park, and expand packaging operations and warehouse space in Wilson, NC.

The parade of expansions should eventually raise the region’s job ranking (10th with 36,507 jobs, according to JLL, though the state-funded North Carolina Biotechnology Center counts more than 63,000 statewide). Raleigh-Durham-RTP is also 10th in patents (1,281), but places seventh in both VC funding ($726 million in 14 deals) and lab space (14.7 million square feet), and fifth in NIH funding (2,145 awards totaling nearly $1.15 billion).

6. Greater Philadelphia

University City Science Center plans to join developer Wexford Science + Technology and Chicago real estate investment trust Ventas to develop One uCity Square. The 389,000-square-foot, 13-story office-lab-retail building is slated for completion in the fourth quarter of 2021. Also at the Center, the new Launch Lane accelerator will begin accepting applications in October; up to 12 startups will be accepted early next year.

In February, the Science Center welcomed Cranbury, NJ-based Amicus Therapeutics, which is creating a Global Research and Gene Therapy Center of Excellence bringing 200 jobs to 3675 Market St. The region houses 30+ cell and gene therapy developers, including Spark Therapeutics. The spinout of Children’s Hospital of Philadelphia has found a buyer in Roche, but the planned $4.8 billion acquisition has been delayed for months while the companies try to resolve competitiveness concerns raised by the U.S. Federal Trade Commission and U.K. regulators.

In suburban Montgomery County, Thomas Jefferson University has opened the $7 million Jefferson Institute for Bioprocessing in collaboration with the Dublin, Ireland-based National Institute for Bioprocessing Research and Training. In Harleysville, PA, Colorcon on September 17 created the $50 million Colorcon Ventures VC fund to invest in companies across manufacturing, the supply chain, and delivery of pharmaceutical products and services. The “City of Brotherly Love” and suburbs remains a consistent sixth in VC ($806 million in 37 deals), NIH funding (2,340 awards totaling $1.108 billion), lab space (10.6 million square feet), but is seventh in patents (1,912) and jobs (54,709 according to JLL; 49,000 according to Select Greater Philadelphia).

5. San Diego

“America’s Finest City” will be the center of the biopharma industry next June when the Biotechnology Innovation Organization holds its annual BIO International Convention at the San Diego Convention Center. The “Plymouth of the West” and vicinity will have much to showcase: Takeda Pharmaceutical in April opened a 165,000-square-foot Global Research Center where 250 employees apply specialized drug discovery technologies and advance discovery research in gastroenterology and neuroscience. Home-grown Gossamer Bio, launched by former Receptos executives last year, raised more than a half-billion dollars in 13 months, completing an IPO in February that raised $291.3 million in net proceeds on top of $300 million in VC.

Home-grown Sitari Pharmaceuticals on September 11 was acquired for an undisclosed price by GlaxoSmithKline (GSK), which with La Jolla, CA-based VC firm Avalon Ventures launched the celiac disease drug developer in 2013 through an up-to-$495 million partnership created in 2013. VC is San Diego’s sweet spot; the region ranks highest in capital raised (third with $2.3 billion in 64 deals). The region also holds its own in patents (fourth with 5,303), lab space (fifth with 18.4 million square feet), and jobs (fifth with 65,572, according to California life science group Biocom). NIH funding continues to lag (1,604 awards totaling $912.3 million), but has improved to eighth from ninth last year. The city signaled its intent to help grow the industry further by creating a “capacity bank” allowing biopharmas, as well as breweries, to buy cut-rate excess water and sewer capacity from manufacturers whose facilities have switched to other commercial uses.

4. BioHealth Capital Region [Maryland/Virginia/Washington, D.C.]

The Maryland/Virginia/Washington, DC “BioHealth Capital Region (BHCR)” has won over numerous employers as it strives to grow into a top-three cluster by 2023. Kite, a Gilead Company, chose Maryland’s Frederick County to build a 279,000-square-foot manufacturing site for CAR-T therapies, including its marketed Yescarta® (axicabtagene ciloleucel). Also in April, Paragon Bioservices (since acquired by Catalent) opened a 151,000-square-foot commercial manufacturing center in Harmans, MD. AveXis, a Novartis Company, agreed to use Harmans as a manufacturing site for recently-approved gene therapy Zolgensma® (onasemnogene abeparvovec-xioi). A month later, Gaithersburg, MD-based Viela Bio filed for a $150 million IPO; the company spun out last year from AstraZeneca, a regional anchor since 2007 when it acquired MedImmune (a name retired in February). French diagnostics developer HalioDx, a Qiagen spinout, opened its first North American lab in Richmond at Virginia Bio+Tech Park, which is partnering with Activation Capital to develop additional space for expansion-stage companies.

Regional anchors also include the NIH, FDA, and Johns Hopkins University, which won 40% ($648.971 million) of the region’s $1.6 billion (3,272 awards) in NIH extramural funding, ranking it third; the agency also devotes about 10% of its $39.234 billion FY 2019 budget to intramural research. BHCR is third in NIH funding (3,272 deals totaling $1.608 billion) and patents (5,367), and fourth in lab space with 22.8 million square feet according to Rockville, MD-based Scheer Partners, which measures the entire region [JLL counts 12.95 million for Northern Virginia/Suburban Maryland/Baltimore). In VC, JLL records $1.229 billion, good for fifth (and better than the $750 million counted by PwC/CB Insights). BHCR’s 55,882 jobs (JLL) ranks the region sixth.

3. New York/New Jersey

Manhattan’s lab space inventory should nearly double in two years as another 1.5 million square feet gets built, according to commercial real estate firm CBRE. Leading the way is Alexandria Real Estate Equities, now constructing a third building—the 550,000 rentable-square-foot North Tower—at Alexandria Life Science Center-New York City in Manhattan. Across the East River in Long Island City, Alexandria last year bought The Bindery, a 175,000-square-foot building, for a reported $75 million, then spent $25 million in July for a site across the street. Alexandria also plans to expand its LaunchLabs® accelerator to a second Big Apple location at Columbia University’s Lasker Biomedical Research Building.

Deerfield Management this month closed on financing to acquire 345 Park Avenue South for conversion into life-sci space, while Larry Silverstein’s Silverstein Properties and Taconic Investment Partners have converted 619 West 54th Street into The Hudson Research Center. North of NYC, BioMed Realty on August 29 plans to renovate two buildings totaling 97,000 square feet for smaller biotechs at Ardsley (NY) Park. In New Jersey, Gov. Phil Murphy (D) enacted a doubling of the state tax credit for angel investors in July. The Garden State has 60% of the region’s jobs, in which the two-state tandem ranks first (127,376, according to JLL). NY-NJ is second in lab space (figures range from 30.33 million square feet [JLL] to roughly 20 million square feet [CBRE]), as well as NIH funding (4,525 awards totaling $2.16 billion). However, the region places fourth in venture capital ($1.512 billion in 40 deals, up 40.5% from a year ago), and fifth in patents (4,539).

2. San Francisco Bay Area

The Bay Area’s biopharma cluster has broadened beyond drug development: 10x Genomics, a Pleasanton, CA-based developer of single-cell genomic analysis tools and technologies, racked up an estimated $411.9 million in net proceeds at the close of its initial public offering September 16 after underwriters exercised in full their option to buy additional shares, bringing the IPO to 11.5 million shares. Redwood City, CA-based full stack genome engineering platform developer Synthego grew to $158 million in total capital by raising $110 million in Series C financing late last year. And in South San Francisco, CA, the “Birthplace of Biotechnology,” Mammoth Biosciences is pursuing a first-to-market CRISPR-based disease detection platform; Mammoth’s co-founders include CRISPR pioneer Jennifer Doudna, PhD.

As for biopharma, AbbVie leased nearly the entire first phase of BioMed Realty’s Gateway of Pacific business park and is set to move in next year—so BioMed is proceeding with the second phase. In March, the Novartis Institutes for Biomedical Research agreed to lease 78,000 at the EmeryStation research campus in Emeryville, CA. In Menlo Park, CA, Astellas Pharma is partnering with incubator Mission Bay Capital BioLabs on a “Golden Ticket Competition” offering researchers or startups a year’s use of the facility and access to Astellas’ R&D resources and business leaders. The San Francisco Bay Area is first in patents (11,731), second in VC ($6.466 billion in 176 deals) and third in lab space (figures range from 28.2 million square feet [CBRE] to 20.8 million square feet [JLL]). The region also ranks fourth in NIH funding (2,905 awards totaling $1.556 billion) and jobs (82,568, according to the California Life Sciences Association).

1. Boston/Cambridge

Rather than rest on its laurels, the nation’s largest biopharma cluster seeks new avenues for growth, and thinks it has found one in digital health. Addressing a Massachusetts Biotechnology Council (MassBio) conference on September 9, Gov. Charlie Baker (R) committed the Bay State to advancing digital health through creation of a digital health record database, citing McKinsey’s estimate that the industry will grow to more than $350 billion by 2025. Another new avenue is gene editing: In March, Cambridge-based Beam Therapeutics, co-founded by CRISPR pioneer Feng Zhang, PhD, raised $135 million in Series B financing, bringing its total capital raised to $222 million in less than a year.

Longtime strengths like top-tier universities and talent have fueled an increasingly strong startup ecosystem. On September 13, a team of industry veterans and academic researchers—including George Church, PhD, of Harvard Medical School—opened Petri, a startup accelerator offering a 12-month program for translating research ideas into commercial success; its tools include $250,000 or more in capital and access to the team’s expertise. However, the region’s clogged highways and Massachusetts Bay Transportation Authority—plagued by two train derailments in June—must improve or biopharma job growth cannot continue, MassBio’s Elizabeth Steele told The Boston Globe. The region ranks lowest at third in employment with 95,209 jobs (JLL), while MassBio recorded 74,256 biopharma jobs last year. Boston/Cambridge is second in patents (7,935), and leads the nation in lab space (figures range from 30 million [Colliers|Boston] to 23.9 million [JLL]), NIH funding (5,004 awards totaling $2.627 billion), and VC funding ($6.789 billion in 174 deals).

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