In 2014, just a couple of years after I co-founded vaccine patch company Vaxess, the company received a $1 million loan from the Massachusetts Life Sciences Center (MLSC).
MLSC’s mission is to “serve as a hub of the world’s life sciences ecosystem.” The loan MLSC awarded to Vaxess was used for R&D that helped the company become what it is today — a company that has raised $80+ million in venture capital and non-dilutive funding, opened a headquarters in Cambridge and biopharma manufacturing facility in Woburn, hired dozens of people across the Bay State, and proudly paid millions of dollars of state taxes. Vaxess repaid the loan with a 10% interest, for a total of $1,5000,000.
MLSC has done extraordinary work to help biopharma companies like Vaxess start and scale their companies here in Massachusetts. Unfortunately, in recent years, programs like the ones Vaxess benefitted from are no longer accepting applications. The MLSC has also discontinued programs that directly assist startups in scaling their biomanufacturing here in Massachusetts.
As Governor Maura Healy’s “Life Sciences and Healthcare 3.0” initiative begins to take shape, there are three programs I’d urge MLSC could restart or expand in order to support this “Life Sciences 3.0” vision in 2024 and beyond:
First, the Seed Fund program offered life sciences startups investments of up to $250,000 in a convertible note, and up to $1 million structured as a capital investment. A MLSC Seed Fund investment required the recipient to have local employees as well as a local headquarters, ensuring that the startups who received these loans were contributing to the local economy.
Restarting the Seed Fund is important for a couple of reasons. It’s well-documented that early-stage biotech and biopharma startups raised much less money in 2023 than they did in 2022. If Massachusetts wants to be a leader in helping extraordinary new life science companies get off the ground, providing capital through the Seed Fund is a good starting point. Additionally, if government officials want more graduates of Massachusetts-based universities to headquarter their companies locally, providing capital options like the Seed Fund is a crucial tool.
Encouraging aspiring founders to start biotech companies in Massachusetts isn’t enough. Policymakers must also give founders a reason to stay here as they grow.
That’s why I’d also encourage the MLSC to restart two programs designed to help growing biotech companies: the Milestone Achievement Program for “grant funding to execute critical, value-creating technical milestones,” and Building Breakthroughs for “grants for capital projects that support biomanufacturing innovation.”
Particularly for life science startups developing therapies that require FDA approval, the multi-phase clinical trials process alone can take over a decade. During this time, startups need to raise significant amounts of capital for hiring employees, building out manufacturing and corporate facilities, running the trials, and more. If we want biotech companies to stay in the Bay State as they go through this process, initiatives like the Milestone Achievement Program and Building Breakthroughs should restart.
In the Healey-Driscoll Administration’s December announcement about an Economic Development Plan, they promise to “advance bold leadership in life sciences and healthcare.” As The Boston Business Journal reported, a budget for the Life Sciences and Healthcare 3.0 initiative has yet to be announced. Bold leadership will require a bold budget.
As the Administration considers how aggressive they’d like to be, it’s worth looking for inspiration in other states and countries. Indiana, which has also been selected as a Federal biotech hub, has a corporate tax rate that is 4.9% compared to Massachusetts’ 8%. Outside of the U.S., Australia’s Research and Development Tax Incentive offsets “corporate tax rate plus an 18.5% premium,” which amounts to a significant subsidy beyond what U.S.-based life sciences startups receive.
Boldly capitalizing MLSC programs will not only result in more startups deciding to stay in Massachusetts, but will pay financial dividends to the state in the form of more jobs, more taxes collected, and significant revenue rewards from equity capital and loans provided to startups.
About the Author
Livio Valenti is Vaxess’s co-founder and SVP of strategy, operations and business development. Prior to co-founding Vaxess, he worked as an economist at the United Nations, where he financed and implemented silk production programs across Asia. Valenti received a Masters in Public Policy (MPP) from Harvard Kennedy School of Government and a bachelor and masters in economics and management from Bocconi University in Milan, Italy.