Massachusetts Biotechnology Council: Sustaining the Biotechnology Ecosystem

March 31, 2008
Beth Israel Deaconess Medical Center Genocea Alnylam
Beth Israel Deaconess Medical Center Genocea Alnylam EMD Serono
S. A. Karumanchi, MD Jessica Flechtner, Ph.D. Rachel Meyers, Ph.D. Lee Ferrande
Division of Molecular and Vascular Medicine Senior Scientist and Group Leader Senior Director, RNAI Lead Development Clinical Trials Manager
Beth Israel Deaconess Medical Center Genocea Biosciences, Inc. Alnylam Pharmaceuticals EMD Serono
Research Hospital Small Biotech Mid-Sized Biotech Large Bio/Pharma

Message of Hope: Advancing Science to Solve Unmet Medical Needs

Massachusetts Biotechnology Council: Sustaining the Biotechnology Ecosystem

In the Message of Hope radio series, you hear real stories of three Massachusetts researchers and a clinical trials manager who work each day to produce cures for unmet medial needs.</p

These talented individuals come from a cross-section of the Massachusetts Biotechnology Council Membership (MBC): an academic research institution, a small biotechnology company with 15 employees, a medium sized, public biotechnology company pushing for their first product, and a large biopharmaceutical company working on its next promising therapy.

Their stories could be from any of the biotechnology, pharmaceutical, or major research institutions that make up the membership of the MBC, the oldest biotechnology trade association in the United States. Supporting these research institutions are the MBC members the industry needs to sustain growth.

Short History of Biotechnology in Massachusetts

While the pharmaceutical industry is greater than 100 years old, the biotechnology industry is far less mature - roughly 30 years old. The first biotechnology company in the U.S. was San Francisco's Genentech, founded in 1976. But Cambridge's Biogen, founded in 1978 (now Biogen Idec), and Genzyme, founded in 1981, soon followed.

After nearly three decades of growth, the Commonwealth ranks as one of the most significant biotechnology centers in the world. Today, there are over 400 biotechnology companies located in the state, of which 235 are developing therapeutic drugs. Roughly 42,917 biotechnology employees in Massachusetts are responsible for over $5 billion of in-state payroll. Biotech employment grew by 25.6 percent between 2001 and 2005, adding over 8,000 jobs. It is estimated that for each new biotech position, five positions are created in other supporting industries.

Over this short span of time, Massachusetts-based biopharmaceutical companies have already developed 50 large molecule drugs covering a range of illnesses, including areas such as cancer, infectious and neurological diseases. Today, there are nearly 1,769 drugs being developed in Massachusetts, representing over 7 percent of the global drug pipeline.

pipeline

The Commonwealth's biotech industry continues to grow. Twenty-one of the top 50 biopharmaceutical companies by revenue have a Massachusetts presence. These companies average $21 billion each in revenue over the past year.

How does a biotech drug differ from a traditional drug?

Traditional pharmaceuticals are small molecules made through chemistry. Biotechnology therapies are made using living cells. These therapies are 100 to 1000 times larger than pharmaceutical pills, and are typically injected or delivered through another special delivery system.

A few milestones mark the development of this field. The first breakthrough was the decoding to DNA's structure in 1953. Then in 1973, scientists learned how to create artificial, or recombinant DNA. With recombinant DNA, researchers developed a way to take DNA from one organism and put it in the DNA of another. This process was used to develop human insulin for diabetics. Human insulin DNA was placed into the DNA of a bacterium, which then became an insulin-producing factory.

In 1982, the Food and Drug Administration approved the first biotech therapy - bacterially produced human insulin. Today, 200 biotechnology companies have at least one commercial product, covering diseases such as diabetes, hepatitis B (vaccine), anemias, hemophilia, bone growth, rheumatoid arthritis, pneumococcal disease (vaccine), and cancers.

How did Massachusetts become the Biotech Hub?

In the 1930s, the United States Congress formed a new agency, the National Institute of Health. Over time, "Institute" became "Institutes" as appropriations and mandates grew.

Massachusetts research hospitals and academic medial centers soon became the epicenter for discovery. Today, the Commonwealth is home to the top five National Institutes of Health funded hospitals, including Beth Israel Deaconess Medical Center, Brigham and Women's Hospital, Children's Hospital Boston, Dana-Farber Cancer Institute, and Massachusetts General Hospital.

With federal and private funding, researchers at these hospitals as well as Harvard University, the Massachusetts Institute of Technology, University of Massachusetts, and other MBC member higher education institutions have produced novel, paradigm shifting research - knowledge that can be used to build new therapeutics.

Novel research, or "technology", produced by academic researchers is then often licensed to entrepreneurs who believe they can take this knowledge and develop it further into cures.

But to build new drugs from fundamental research you need further investment. Fortunately, Massachusetts has strong support from venture capital funds. Last year, eighteen percent of U.S. biotechnology venture capital was invested in Massachusetts.

The Biotech Landscape: Massachusetts is not alone

Many states in the U.S., as well as foreign countries, are seeking to build economies around biotechnology. There are roughly 4,500 public and private biotechnology companies worldwide (compared to 12,000 pharmaceutical companies). In the U.S., there are approximately 1,452 public and private companies accounting for 180,800 jobs.

In terms of public companies, in 2006 the U.S. had 336 public companies, Europe had 156, the Asia-Pacific region had 136, and Canada had 82. In total, the U.S. had 43 percent of the public biotechnology companies worldwide.

Massachusetts and the U.S. in general are seeing growing international competition around the biotechnology sector. Already, Sweden, Israel, Finland, and Japan spend more public funds on research and development as a percent of gross national product than the U.S. Following the U.S. on this list is South Korea, Switzerland, Germany, Iceland, France, Denmark, Netherlands, Belgium, United Kingdom, and Singapore.

In the U.S., a sign of biotechnology growth in individual states is the amount of venture capital support they receive. In 2005, the top ten states in biotech venture capital were California ($1,819 mil); Massachusetts ($562 mil); New Jersey ($192 mil); North Carolina ($191 mil); Maryland ($148 mil); Pennsylvania ($133 mil); Washington ($131 mil); Connecticut ($57 mil); Texas ($53 mil); and Michigan ($31 mil).

State Incentives: Building Biotech Economies

To nurture biotech growth, many U.S. states are developing innovative financing strategies. California's $3 billion stem cell initiative is perhaps the best known, but many other states have passed life sciences incentive legislation.

  • In 2005, as part of a tobacco settlement, the state of Washington passed legislation allocating $35 million per year for bioscience research;
  • Maryland passed a bill in 2005 that provided a tax credit for individuals, corporations, and qualified venture capital firms that invest in a state-based biotech with less than 50 employees and is less than 10 years old;
  • In 2004, Kansas passed legislation that created a BioAuthority to administer funds and incentive programs. The BioAuthority will distribute $500 million over the next 10 to 12 years;
  • Pennsylvania passed legislation in 2001 providing $100 million for regional bioresearch centers as part of their tobacco settlement. This was part of Pennsylvania's larger $2 billion Biosciences Enterprise Commitment to fuel research and development, venture capital, and other early stage company investment.

Several other states have passed bio-friendly legislation, including Arizona, Arkansas, Colorado, Delaware, Georgia, Illinois, Kentucky, Michigan, Missouri, New Jersey, North Carolina, Ohio, Oklahoma, and Texas. Legislative initiatives typically support Bioscience Workforce Initiatives; Facilities Development; Business Climate Incentives; Tech Transfer Funding; Stem Cell Funding; and Venture Capital and Discovery Funds.

Dangers to the Biotech Ecosystem

Massachusetts has long had a strong life sciences ecosystem, which has contributed to the growth of the state's biotechnology industry.

Basic science researchers in the state's academic medical centers and universities attract strong federal research support. From this research, these investigators produce "disruptive" discoveries, i.e. knowledge that can change the therapeutic landscape.

The state has many talented entrepreneurs who have built biotechnology companies from licensed technology, and their expertise in developing products is respected by New England's venture capital community.

The state also enjoys strong state and federal leadership who recognize that the industry is still maturing and that policy has the ability to strengthen or weaken any part of the ecosystem, and therefore benefit or hurt all of its collective parts.

But dangers are threatening the ecosystem, particularly at the federal level. The National Institutes of Health budget doubled between 1998 and 2003. However, since 2003, increases have not kept up with inflation, which in effect has caused the budget to fall each year. The funding success rate of NIH applications has therefore fallen from 31 percent to 19 percent overall. It is not uncommon for proposals scored in the top 10 percent to go unfunded. This environment puts at risk a whole generation of young scientists seeking their first federal grant. It also puts the U.S. at a disadvantage, allowing other countries to potentially move ahead quickly in areas such as stem cell and genomic research knowledge.

Beyond the need to increase the NIH budget, two other areas threaten the ecosystem. The first is patent legislation that would weaken the value of licensed technology from academic researchers and hospitals to the biotech community. The strength of any biotech company is its patent protected technology. Venture capital funding is given to biotechnology companies in part based on the strength of their patented technology. Legislation passed in the House of Representatives earlier this year seriously weakens biotechnology patent protections, and the U.S. Senate is now considering patent legislation.

The second equally worrisome legislation surrounds follow-on biologics. The U.S. Senate has produced strong legislation that would give biotechnology companies 12 years of protection before a company's therapy could be produced by another company. The biotechnology community is seeking similar protections in legislation being drafted in the House. It takes 14 to 16 years for a company to recapture the $1.5 billion investment made in producing a new biotechnology therapy. If legislation is passed that would allow secondary companies to copy a drug sooner than 12 years, then the future of biotechnology as an industry will be weakened.

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