After down year, 2020 brings new cash into Massachusetts biotech
The sea of cash that has hit biotech since the pandemic began has not left out its biggest sector: Massachusetts.
Through the first half of 2020, venture capital firms have poured more than $2.1 billion into biotechs in the state, setting the sector on a pace to rebound after a down year in 2019. The new figure, included in a new industry snapshot from the trade group MassBio, is more than 2/3 the $3.1 billion biotechs in the state raised through the entirety of last year, and would put the sector on track to raise more than any year in the last decade besides 2018.
The historic IPO boom hasn’t passed the sector over either. A third of biotech IPOs came from Massachusetts, with each company averaging $187 million.
“This is all happening during a pandemic that is crippling the world economy, but it is definitely putting a spotlight on our industry and biopharma innovation,” Elizabeth Steele, vice president of programs and global affairs at MassBio and author of the report, told Endpoints News. “In 2019, there was a dip in venture capital, there was a dip in IPOs over the year before, and I think in 2020 everyone understands what it feels like to have an unmet medical need.”
The report comes out as BIO, PhRMA and the industries they represent go toe to toe again with the White House on pricing legislation, after President Trump on Friday signed executive orders designed to curb drug prices. BIO CEO Michelle McMurry-Heath spoke out against the orders — which are considered largely symbolic on their own — on Friday.
My response to yesterday's executive orders:
"We will not overcome this pandemic or future ones if we adopt foreign price controls from systems that don’t value innovation…"https://t.co/KLe4Q1eFxN
— Dr. Michelle McMurry-Heath (@DrMichelleBIO) July 25, 2020
In a statement, MassBio CEO Robert Coughlin argued the Massachusetts report and the deflated 2019 numbers were evidence that drug-pricing legislation that advanced last year, which included a bipartisan bill in the Senate and a Democratic bill in the House, had culled investment. Notably, though, funding in Massachusetts had been down since the first half of 2019, before either bill was introduced. The issue had, however, already appeared on the Democratic campaign trail.
“In 2019, we saw some of the most severe legislation around drug pricing for the industry, both in Massachusetts and federally, which led to a decline in investment as we predicted it would,” Coughlin said. “The COVID-19 pandemic has since upended our country’s economy, put a spotlight on the true value of the biopharma industry in addressing a human health crisis, and created a better understanding of just how difficult it is to develop a therapy or vaccine.”
The new report also shows that despite reports of traffic and overcrowding in Kendall Square — or at least pre-pandemic reports of traffic and overcrowding — Massachusetts remains the fastest growing state for biotech R&D jobs. Those jobs rose 18% last year to over 45,000, putting the state just behind California. And total Massachusetts biotech jobs rose 7.7% last year to just under 80,000. Takeda and Sanofi were the largest employers.
Cambridge alone continues to receive 59% of all investment, although MassBio expects to see that number decline in the near future.
“We’re hoping that more mini-clusters pop up in the areas around Boston/Cambridge and push further out,” Steele said. “Cambridge is definitely special and remarkable but it doesn’t mean that a company can’t be based 20 minutes away and still when the pandemic is over come into Cambridge for a coffee and meet people face to face.”
The leading Massachusetts private rounds came from Blackstone-backed Anthos Therapeutics, which raised $250 million in a single round, Elevate Bio, and Beam Therapeutics. The leading IPOs came from Forma Therapeutics, which raised $278 million, and Black Diamond Therapeutics, which raised $231 million.
Steele said she expects after a huge year in 2018 and a down year in 2019, the next few years will bring the steady rise the industry saw for much of the 2010s.