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BioWorld Today May 15, 2009(BioWorld Today Via Acquire Media NewsEdge) Hub Health (Editor's note: This is the last of a five-part series looking at how the current economic climate is affecting the industry by focusing on the nation's top biotech clusters.) Like San Francisco, San Diego and Boston, the biotech communities in the Washington metro/Maryland area, North Carolina's Research Triangle Park and Seattle have been affected by the economic downturn. While the impact of the global financial crisis has varied for biotechs in each of those hubs, one thing they all share is the new focus the downturn has placed on the importance of the industry to their communities' overall economic health. Whether you call it a recession or a structural breakdown in the credit, financial and banking markets, there have been some silver linings for the biotech industry, such as the $10 billion in the economic stimulus funds directed at the National Institutes of Health (NIH), which has had a positive effect for firms, especially those in the Washington metro/Maryland market, said Joel Marcus, CEO of Alexandria Real Estate Equities Inc., a company that specializes in biotech cluster development. Laboratory space in the region has been in high demand by biotechs in recent months, partly due to the new stimulus funding, Marcus told BioWorld Today. There also has been an uptick in high-quality, high-paying jobs for scientists and other biotech-related employment in the Maryland/District of Columbia metro area, he said. More than 400 biotechs are located in Maryland, including Human Genome Sciences Inc., MedImmune Inc., BioReliance Corp., Novavax Inc. and Emergent BioSolutions Inc. Given that biotechs in the Washington metro/Maryland region rely mostly on government funding, with few depending on venture capital, the economic downturn has had only a slight negative impact so far on biotechs in that hub, said Daniel Haimovic, director of life sciences and new markets at Alexandria Real Estate Equities. Before the bottom fell out of the market last fall, Maryland's governor in June 2008 revealed a plan to invest $1.1 billion in the bioscience industry over 10 years to attract new companies to the state and grow its existing firms. The state shows no signs of trimming or postponing that plan due to the current economic strain. The so-called Maryland BIO 2020 initiative includes a new biotechnology center, proposed as a one-stop-shop to showcase and support biotechnology innovation and entrepreneurship and consolidate various state, academic and private sector ventures. The Maryland Biotechnology Center is intended to bring together the state's technology development corporation tech transfer initiatives with the Department of Labor, Licensing and Regulation's regulatory functions and various University of Maryland initiatives. The BIO 2020 initiative also expands the state's $6 million biotech investment tax credit by doubling it in fiscal year 2010 and again by 2013, which is expected to leverage almost $50 million in private investment for biotechs each year, according to the Maryland Department of Business and Economic Development (DBED). The tax credit program, administered by the Maryland DBED, encourages investors to provide seed and early-stage funding to qualified, privately held biotechs in the state. Despite the economic downturn, Maryland plans to invest $60 million over 10 years to leverage $120 million in private and federal investment funds and grow the state's incubator network by 50 percent. The state's BIO 2020 proposal also includes $20 million for stem cell research. Marcus noted that biotechs in the Washington metro region also benefit from having some of the nation's top research universities in the area, including Georgetown University, George Washington University, Virginia Tech, the University of Maryland and Johns Hopkins University. Johns Hopkins received $575.9 million in NIH funding in 2008 - greater than any other academic institution for the year. North Carolina/Research Triangle Park Despite the financial downturn, North Carolina's Research Triangle Park (RTP) has remained one of the nation's top areas for biotech-related jobs and locations for start-ups, said Chris Brodie, director of public relations and communications at the North Carolina Biotechnology Center (NCBC), a private, nonprofit corporation supported by the N.C. General Assembly that supports biotechnology research, business, education and strategic policy statewide. RTP, located at the core of the Raleigh-Durham-Cary combined statistical area, is a 7,000 acre development that is home to more than 170 companies employing more than 42,000 full-time "knowledge" workers and an estimated 10,000 contract employees. Duke University, North Carolina State University and the University of North Carolina at Chapel Hill are all nearby. One new biotech that recently set up shop at RTP with the help of a loan from NCBC is NeuroScience Pharmaceuticals Inc., which is developing treatments for brain disorders using technology licensed from Duke University and Durham Veterans Affairs Medical Center. The NCBC provides loans ranging from $50,000 to $350,000 for company inception, technology enhancement, strategic growth and research. In addition, the group has several grant programs related to biotech ranging from $3,000 to $250,000. However, the economic downturn and shrinking state budgets has taken somewhat of a toll on those programs and the NCBC, Brodie noted. North Carolina's governor recently asked agencies to decrease budgets for the current fiscal year by 9 percent. As a result, the NCBC asked all employees in March to take one day of unpaid leave per month. The measure was put in place to prevent staff cuts, which Brodie said so far has been successful. The center expects to save $250,000 per year by implementing the furlough measure, he noted. In addition to the employee furloughs, NCBC also reduced the number of strategic growth loans from seven to five. Nonetheless, Brodie told BioWorld Today, North Carolina has remained strong. "We were strong going into the crisis, but we are getting stronger because of the crisis," he said. "I think what the downturn does is it emphasizes the underlying strength of an area," Brodie added. He noted that North Carolina has about 520 biotechnology-related companies in the state, which includes those engaged in R&D, manufacturing and contract research, with about 57,000 employees. In addition to RTP, the state is working to expand its biotech presence in other areas, such as Wilmington and Asheville, Brodie noted. What has not changed because of the economic downturn, Brodie said, is North Carolina's commitment to keeping biotech a priority. In fact, he added, North Carolina's high unemployment rate, which currently is at about 10.8 percent, has been an even greater incentive for the governor to "latch on" to biotech as a way to improve the state's economy. A study conducted by the Battelle Technology Partnership Practice released last fall found that the direct biotechnology sector revenues in North Carolina totaled nearly $29 billion, with a total economic impact of the industry of $45.8 billion. The state and local communities gained $1.4 billion in taxes from the biotech sector, according to the Battelle report. It has yet to be seen whether the economic downturn will substantially cut those amounts, or if they will be only slightly trimmed. However, one big project that is expected to benefit North Carolina's job market is a new research collaboration between the Hamner Institutes for Health Sciences and China Medical City, China's leading medical research park. The partnership is intended to act as a "gateway" for firms in China interested in developing drugs for the U.S. market and vice versa for American firms looking to gain an entry into the Chinese market, Brodie said. While Hamner, which is located at RTP, is widely known for its environmental health and chemical risk assessment activities, it recently broadened its mission to include translational research in biotechnology and pharmaceutical safety, metabolic disorders, respiratory disease, oncology and drug delivery, Brodie noted. Seattle Down, but Not Out While Seattle area firms like Dendreon Corp. and Seattle Genetics Inc. have weathered the economic storm fairly well, other companies, like ZymoGenetics Inc., have been pelted. ZymoGenetics, which had lower-than-expected sales last year of its plasma-free thrombin product Recothrom, recently announced that it was cutting 32 percent of its work force, or 161 employees, as part of a corporate restructuring. The firm said it hoped to save about $30 million beginning in the third quarter by taking the action. Dendreon, on the other hand, recently capitalized on its positive Phase III data for its prostate cancer vaccine Provenge (sipuleucel-T), which sent its stock skyrocketing, to initiate a public offering. Seattle Genetics raised more than $55 million in late January by selling nearly 6 million new shares of stock and just last month announced a new partnership with Cambridge, Mass.-based Millennium to develop antibody-drug conjugates, which garnered the Bothell, Wash.-based firm $4 million up front. The company remains the Seattle area's strongest biotech. Unlike North Carolina's RTP hub, the Seattle area suffers from having a lack of successful biotech drug products, said Rahsaan Thompson, of counsel in the health law practice at Quarles & Brady LLP. In addition, he said, there is little academic support in the area for biotechs. Universities are critical to fostering ideas and driving innovations and are vital to supporting the growth of the biotech industry, Thompson said. Nonetheless, the University of Washington in Seattle remains one of the top academic centers for NIH funding, receiving $391.2 million in 2008, with the greatest share going to the institution's medical school. Despite the Seattle hub taking a beating from the financial crisis, Foster City, Calif.-based Gilead Sciences Inc. has chosen to house its local research and development organization in Seattle, which means new jobs for the area and also signals that there are still growth opportunities in the region. But, said Thompson, Seattle will need more than Gilead to bring the hub back up to the competitive level analysts and other market watchers anticipated it would be five or 10 years ago. n (c) 2009 Thomson BioWorld, All Rights Reserved. |