MassBio released its 2021 Massachusetts Biopharma Funding Report yesterday which shows incredible investments being made in Massachusetts early and emerging biotech companies – the core of the state’s world-leading life sciences cluster. To learn more about the state of the industry and what impact this new capital could have in the coming years, we sat down with MassBio’s own Ben Bradford, Vice President of Economic Development and Workforce. Here’s what he had to say.
To start off this discussion, what are your biggest takeaways from the report?
More than anything, I am most impressed by the growing share of national VC funding and IPOs that Massachusetts biopharma companies received in 2021. These data make clear that Massachusetts’ strength lies in early-stage biotech R&D and investors want to be part of it.
This funding will give these leading companies the resources they need to make big bets on the riskiest sciences that have huge potential effects on global human health. We have seen what cutting edge technology can do with the emergence of mRNA technologies in the development of a COVID-19 vaccine. Additional funding to Massachusetts companies will only further the development of therapies for a broad range of patient populations around the world.
Do you expect this record amount of funding and industry investment to continue?
The venture firms investing in the life sciences are very well capitalized at the moment, and 2022 has already seen some significant VC rounds and a number of IPOs for Massachusetts companies. In the short term I think it is fair to expect another strong year. In the long term, I don’t think we can reasonably predict record breaking years in perpetuity. The strong IPO market has continued to make VC funding of biotech a good investment due to relatively quick and strong exits. The potential for an interest rate adjustment in 2022 might create a scenario with fewer new biotech IPOs and, in turn, less interest in biotech venture investment.
What if that scenario comes to fruition?
A negative change in public valuations of biotech companies is concerning, but it could increase M&A activity in the industry. Established biopharma companies have record amounts of funds available to pursue acquisitions as their significant financial resources have gone largely unused through the strong IPO market of the last few years.
What does an increase in M&A mean for the industry?
Established biopharma undeniably has greater resources to advance drugs through the clinical trial and regulatory processes. The acquisition of innovative companies and technologies by these companies has the potential to get these drugs to patients much faster than otherwise.
Any final thoughts you’d like to share?
Investment in companies outside of Boston and Cambridge continues to gain momentum. While this is great for the rest of Massachusetts, I think the best is yet to come. Anecdotally, a large round of financing is often closely linked to a real estate transaction. The lack of lab vacancies in Boston and Cambridge is well documented. If the trend of companies expanding their footprint shortly following an influx of capital is to continue, these companies currently in Boston and Cambridge will need to get comfortable with the idea of locating in any number of the other communities that are ready to support their growth if they want to remain in the number one life sciences ecosystem in the world.