MassBio: Massachusetts dominates IPO market, VC funding in 2017
- The perpetual competition between Massachusetts and California to be crowned the No. 1 state for biotech continues for yet another year, as the Massachusetts Biotechnology Council — better known as MassBio —released its 2018 industry snapshot Wednesday.
- The report found Massachusetts-based biotechs dominated the initial public offering and venture capital markets in 2017. They made up 48% of all U.S.-based biotech IPOs and raked in $3.1 billion worth of VC money, or 37% of all biopharma VC funding.
- But even the MassBio analysis found several areas in employment and funding where California led the way, including employment in R&D and manufacturing as well as National Institutes of Health funding.
In recent years, a number of states and cities have attempted to jump in and present themselves as the next hot hub for biotech.
New York Gov. Andrew Cuomo, for example, announced a $650 million program to start a life sciences cluster in December 2016, which was followed by Pfizer signing a lease in New York City earlier this year.
Houston also has aspirations of becoming the "third coast" for biotech, while the New Jersey Biotechnology Task Force convened in December 2017 to concoct a plan to attract and retain biotech companies.
Still, Massachusetts and California remain the favored spots for biotech. A few statistical highlights from MassBio's report illustrate the two states' joint dominance. They include:
- The two states employed roughly as many workers in biotech R&D (74,971) as the next top eight states combined (74,628).
- Their combined NIH funding of $6.66 billion beat the next top three states of New York, Pennsylvania and Maryland combined.
- For pharma manufacturing, Massachusetts increased its workforce by 5% since 2008 and California grew by 21%, while the U.S. workforce as a whole shrank by 8% in that same time span.
Unsurprisingly, the MassBio report touted various state-specific brags. For instance, 12 Massachusetts biotechs went public in 2017, making up 48% of all U.S. biotech IPOs. In the first half of 2018, 15 more companies made the leap to public markets, with Rubius Therapeutics leading the way by raising $277 million. And while Moderna Therapeutics remains private, it raised $500 million in VC earlier this year, fetching a valuation of nearly $7 billion.
Also noteworthy: Cancer was the largest therapeutic area, comprising 35% of the Massachusetts drug pipeline of 2,116 total candidates. Neurology and infections were the second and third largest therapeutic areas, accounting for 11% and 9% of the state's biotech drug pipeline, respectively.
On employment, the top five biggest Massachusetts-based pharma employers were Sanofi, Shire, Biogen, Novartis and Pfizer.
But California held its own advantages over the Bay State that even MassBio couldn't ignore. California received $1.2 billion more in NIH funding and out-employed Massachusetts by more than 5-to-1 in biopharma manufacturing gigs in 2017.
Most notably, California took the lead in biotech R&D employment, a title Massachusetts held the previous two years. Posting 15% growth from 2016 to 2017, California had 39,203 R&D workers to Massachusetts' 35,768 for last year.
Perhaps those changes explain why MassBio's CEO Robert Coughlin stopped short of calling the state the No. 1 biotech cluster in the world, as he did in a statement in last year's report.
"Massachusetts biopharmas continue to lead the industry in tackling the toughest unmet medical needs, creating a new wave of breakthrough therapies that treat the underlying cause of disease, not just the symptoms, and some that people are even calling cures," Coughlin said in a statement. "Cumulatively, it's creating unbelievable opportunities to change the course of disease and improve the lives of patients, and investors want to be a part of this."
The Golden State will have its own response to MassBio, as the California Life Sciences Association typically puts out its own annual report in the first weeks of December.
Follow Andrew Dunn on Twitter