MassBio News

MBC Applauds Passage of SBIR Reauthorization in US House of Representatives

Wed, 30 Apr 2008 00:00:00 EDT

MBC Played Advocacy Role to Help Biotech Companies Become Eligible for Federal Grants Once Again

Download the complete text of the letter MBC sent to MA Congressional delegation on SBIR issue by clicking here.

On Wednesday, April 23, the U.S House of Representatives voted overwhelmingly in favor of legislation that would once again let MBC member companies with venture capital funding compete for federal small business grants. The final tally was 369 - 43 in favor of Small Business Innovation Research (SBIR) Reauthorization. SBIR grants had been an essential source of early stage funding until 2003, when a Small Business Administration rules change barred some companies with venture backing from program participation. In last week's decision, eight of the ten House members from Massachusetts voted in favor of the MBC position rescinding that rules change and prohibition against venture capital backed firms.

"This is a big win for MBC member companies that are in need of capital for development of new innovative medicines," commented MBC President Robert Coughlin. "This is a clear indication that our congressional leaders recognize that the SBIR program is perfectly suited to help MBC members in their pursuit of solutions for unmet medical needs, and that our members deserve to compete for SBIR funding."

The MBC has been working on SBIR since the 2003 rules change, but the issue gained fresh momentum in the last few weeks when Congresswoman Nydia Velazquez (D - NY), House Chair of the House Small Business Committee, introduced a bill that would modify the eligibility rules affecting venture capital backed small companies. If passed, HR 5819 will increase access to critical, early-stage sources of funding for small businesses, including small biotechnology firms with venture backing, thus facilitating economic growth, job creation, new breakthrough therapies for patients in need, and American economic competitiveness in the global economy.

Introduction of the Velazquez bill was well aligned with the MBC's reinvigorated federal action plan, spearheaded by Coughlin. Last month, as he and MBC staff advocated for industry positions on Capitol Hill, they were able to discuss the SBIR issue in depth with members of the Massachusetts Congressional delegation. The MBC also engaged in an intensive letter writing campaign. (See sidebar, copy of letter MBC sent to MA Congressional delegation on SBIR issue.)

Tom Mathers, President and CEO of Peptimmune, Inc., in Cambridge, noted that promising therapies for hemophilia and Alzheimer's disease developed at two companies he has headed languished because of lack of SBIR funding. Mathers, who recently joined with MBC in meeting with members of the Massachusetts Congressional delegation, hailed the vote as a boost both for companies and for patients.

"Given the established infrastructure of VC backed companies, the SBIR grants would translate immediately into job creation," said Mathers. "A Phase I SBIR grant of $400,000 to my company would provide an opportunity for us to hire 2-3 new employees immediately." Mathers continued, "The irony about this limitation is that foundations that sponsor some research will only provide grants that are in VC backed companies…this VC investment serves as validation of the technology or management within the company!"

In 2003, the Small Business Administration ruled that companies more than 51% controlled by venture capital firms were ineligible for SBIR grants under an arcane interpretation of SBA ownership rules. The rule also impacted companies whose venture capital supporters had portfolio companies whose employees combined surpassed 500, another interpretation of the "affiliate" rule that has impacted our small member companies.

Specifically, HR 5819 would allow an SBIR applicant to be majority owned by VCs, with some conditions: a VC could not own greater than 51% of the company; no single VC has majority control of the board; and, the biotech could have ownership by no more than 2 corporate VC's (with a total of 20% ownership collectively). The last condition was developed due to concerns by House Members about "large companies" participating in the program.

MBC will now shift focus to the Senate, where the Small Business Committee has yet to mark up its SBIR reauthorization bill. Senator John Kerry of Massachusetts is chair of the Senate's Small Business Committee, and MBC will continue our efforts, and work with Senator Kerry and his able staff to advocate that venture backed companies from Massachusetts need and deserve to compete for SBIR funding.

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MBC Launches New Quarterly Newsletter

Tue, 29 Apr 2008 00:00:00 EDT

Click here to download the PDF version.

Massachusetts Life Sciences Initiative Legislation Clears Senate, Moves to Conference Committee

Wed, 02 Apr 2008 00:00:00 EDT

The Massachusetts Senate passed its version of the Life Sciences Initiative bill on Thursday, March 20th. The next step for the landmark Life Sciences legislation will be a review by a joint House-Senate conference committee, followed by a final report to both legislative bodies for final vote. To review both the House and senate versions of the bill, please follow the links below. You are also invited to review a "crosswalk" prepared by the MBC, which compares the two version of the legislation, side-by-side.

View the Life Sciences House bill, H. 4554, as amended.

View the Life Sciences Senate bill, S. 2566

View MBC's section-by-section summary of the bill.

Massachusetts Biotechnology Council: Sustaining the Biotechnology Ecosystem

Mon, 31 Mar 2008 00:00:00 EDT



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.

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.

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.