The $100M Club: Where the Major League Life Sciences Companies Are

10/14/13Follow @xconomy

[Updated: 1:15 pm PT 11/10/13] People love to rank U.S. biotech clusters. Most of these reports are full of data on venture financing, patents, jobs, and NIH funding. But many are riddled with flawed and biased methodology, and are usually designed to push a political agenda.

These rankings, which many people take at face value, have been irritating me for a long time. So last week, I decided to ask a few different questions in order to compare the relative strength of biotech hubs we cover at Xconomy.

How many life sciences companies (drugs/devices/diagnostics/tools) in our regions have at least $100 million in cash and short-term investments to pursue their ambitions? How many members of the “$100 million club” did each of these regions boast 10 years ago? What might that tell us about which regions are gaining strength, or fading?

I chose this question for a simple reason. There are lots of biotech companies with cool technology, big dreams, and smart people. But few ever secure the big bucks necessary to truly execute on their plans as independent companies.

I chose $100 million in cash as the cutoff, partly because it’s a nice round number, and partly because after a dozen years of writing about biotech, I can’t remember a company with less making much of a difference with an FDA-approved product. Companies good enough to join the “$100 million club” are good enough to secure significant backing from Wall Street, from partners, or they are solid enough to generate real ongoing cash flow. They have a fighting chance of advancing research and helping patients.

These companies with $100 million in the bank are sometimes thought of as “anchor tenants” in their regions. They are independent, with local executive management. They often have strong leadership, and a stimulating work environment that draws future entrepreneurs. They sometimes set a good example for startups, showing them what success looks like. They also have enough money to support a regional network of skilled service providers that all companies in the region depend on. They aren’t playing AA minor league ball anymore—they are in the major leagues.

A brief word on methods: To put together the chart below, I reviewed a variety of sources of company names. I leaned heavily on the membership list of companies in the Biotechnology Industry Organization, and compared it with a list of the trade group’s members a decade ago. Whenever I saw a public company from one of the Xconomy regions, I checked its quarterly reports filed with the Securities and Exchange Commission. I searched through filings for the period that ended June 30, 2003, and June 30, 2013. A few newcomers have joined the $100 million club the last couple months, because they did IPOs, so I added them to the list to make it as current as possible. A couple private companies are included because we know they have more than $100 million based on our reporting. None of the Big Pharma companies that are headquartered outside our regions are included, even when they have big research branches in our areas—as Roche does in South San Francisco and Sanofi does in Cambridge, MA, for example.

What I found surprised and depressed me. I live in Seattle, and it’s been painful to watch the Seattle biotech cluster lose almost all of its exciting, newsworthy, rich biotech companies over the past decade. It’s the only region that’s taken a major step backwards in this analysis, as Seattle had five members of the “$100 million club” a decade ago and just two today (with one barely hanging on). If Dendreon continues its slide, then Seattle Genetics will be the only member of the $100 million club left standing. Local officials won’t admit in public that there’s a problem, and as far I can tell, they still seem to think if they repeat everything’s great, people will believe it. But they ought to be paying attention to this disturbing trend. If things are so great, then why are skilled biotech workers finding it so tough to find jobs here? Why aren’t more exciting companies getting started?

Boston is a completely different story. Even though I’ve been watching it gain momentum for years, I was surprised at how much it dominated San Francisco on this score. The Boston region is by far the No. 1 biotech cluster by this measure, home to 37 members of the $100 million club. Even more surprising is the powerful trend in its favor—Boston has three times as many financially strong, independent biotech companies as it had a decade ago. That’s true even after Genzyme was acquired by Sanofi, and no longer counts as a local, independent company.

The San Francisco Bay Area comes up in second place, with 26 members of the $100 million club in life sciences. Genentech, acquired by Roche in 2009, no longer makes the list because it’s part of a Switzerland-based company. Onyx Pharmaceuticals would be here, but it recently was acquired by Amgen. BayBio president Gail Maderis notes that a few local companies are close to having that much cash on hand (Cepheid, Five Prime Therapeutics, KaloBios) to name a few. Affymetrix has also been thriving lately and is using its increasing cash flow to grow the business, Maderis says.

I asked Paul Hastings, the CEO of Redwood City, CA-based OncoMed Pharmaceuticals and a BayBio board member, if he was concerned about how many more $100 million companies reside in Boston.

“No, I’m not,” Hastings said via email. “The biotech wave is a cyclical one and the industry as a whole is strong with Boston doing a well-deserved ‘great’. Boston, New York, California and all biotech clusters work together to drive this success. I am happy for my friends I’m Boston and determined to keep San Francisco and all of California front and center as well.”

As always, I welcome comments and insights from readers around the Xconomy network. If I’ve overlooked any companies headquartered in your region with $100 million in cash and short-term investments—and I’m sure I have missed a few—please let me know and I’ll update the list.

2003 2013
San Francisco Genentech Gilead Sciences
Gilead Sciences BioMarin Pharmaceutical
Abgenix Medivation
Affymetrix Exelixis
BioMarin Pharmaceutical Pharmacyclics
Cerus Genomic Health
Chiron InterMune
CV Therapeutics ChemoCentryx
Exelixis OncoMed Pharmaceuticals
Incyte Hyperion Therapeutics
Nektar Therapeutics Portola Pharmaceuticals
InterMune Nektar Therapeutics
Tularik Pacific Biosciences
Varian Medical Systems Rigel Pharmaceuticals
Applied Biosystems Theravance
Celera Genomics Vivus
Agilent Technologies Intuitive Surgical
Genencor International Jazz Pharmaceuticals
Maxygen Astex Pharmaceuticals
Varian Medical Systems
Bio-Rad Laboratories
Thoratec
Agilent Technologies
Impax Laboratories
Accuray
Thoratec
Total: 26
  2003 2013
Boston Biogen Biogen Idec
Genzyme Boston Scientific
Boston Scientific Thermo Fisher Scientific
Thermo Fisher Scientific PerkinElmer
PerkinElmer Alnylam Pharmaceuticals
Alkermes Ariad Pharmaceuticals
Millennium Pharmaceuticals Alkermes
Charles River Labs Sarepta Therapeutics
ImmunoGen Ironwood Pharmaceuticals
Transkaryotic Therapies Agios Pharmaceuticals
Vertex Pharmaceuticals AVEO Oncology
Waters Cubist Pharmaceuticals
Moderna Therapeutics
Bluebird Bio
Epizyme
Foundation Medicine
Tesaro
Acceleron Pharma
Infinity Pharmaceuticals
ImmunoGen
Aegerion Pharmaceuticals
AMAG Pharmaceuticals
Celldex Therapeutics
Synageva Biopharma
Idenix Pharmaceuticals
Momenta Pharmaceuticals
Bruker
Charles River Labs
Hologic
Acetylon Pharmaceuticals
Intarcia Therapeutics
Alere
Vertex Pharmaceuticals
Waters
Verastem
Insulet
Thoratec
Total: 37
2003 2013
Seattle Icos Seattle Genetics
Corixa Dendreon
Dendreon
Cell Therapeutics
ZymoGenetics
Total:2
2003 2013
San Diego Amylin Pharmaceuticals Illumina
Isis Pharmaceuticals Isis Pharmaceuticals
Arena Pharmaceuticals Arena Pharmaceuticals
Idec Pharmaceuticals Sequenom
Neurocrine Biosciences Santarus
ResMed Acadia Pharmaceuticals
Neurocrine Biosciences
Carefusion
Volcano
ResMed
NuVasive
Acadia Pharmaceuticals
Total: 12
2003 2013
New York/New Jersey Pfizer Pfizer
Merck Merck
Johnson & Johnson Johnson & Johnson
Bristol-Myers Squibb Bristol-Myers Squibb
Celgene Celgene
C.R. Bard C.R. Bard
Becton Dickinson Becton Dickinson
Regeneron Pharmaceuticals Regeneron Pharmaceuticals
NPS Pharmaceuticals Acorda Therapeutics
The Medicines Company The Medicines Company
OSI Pharmaceuticals NPS Pharmaceuticals
ImClone Systems Ophthotech
Medarex PTC Therapeutics
Schering-Plough Intercept Pharmaceuticals
Wyeth Forest Laboratories
Forest Laboratories
Total:15
2003 2013
Texas Tanox Lexicon Pharmaceuticals
Cyberonics
2003 2013
Boulder/Denver, CO Array Biopharma
Clovis Oncology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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  • Stan Fleming, Forward Ventures

    Where is Research Triangle?

    • Joshua Hines

      North Carolina, near Duke and Chapel Hill

      • Stan Fleming, Forward Ventures

        Funny, you wouldn’t know it by looking at Luke’s list.

  • Patrick

    @Luke, could you do the same research for other hubs around the world?

  • cvrichard

    Thanks for the article, Luke. Here in San Diego, several possible $100M club members had been acquired due to their success over the years. Some still have major presence here (GenProbe for example), others were moved out (Idec). On the other hand, several $100M club members, although not headquartered in San Diego, have major facilities in SD (major pharmas, Vertex, Celgene). So things are a bit complicated. But you do get my sympathy about Seattle. :)

    Richard

  • http://www.xconomy.com/ Luke Timmerman

    Stan & Patrick — I only did this analysis for regions in the Xconomy network. If we had bureaus in the other places, I’d be sure to include them as well.

  • http://www.xconomy.com/ Luke Timmerman

    Richard — I know there are deep-pocketed companies with R&D facilities in all of these hubs, and their impact is tougher to measure with public records. Frankly, if I started to add up all the regional R&D branches of Big Pharma companies, then I’d suspect Boston is only going to extend its lead over SF and SD. Eli Lilly is the only major pharma company I’m aware of that doesn’t have a big presence in Boston.

    Maybe I should do a follow-up column on which biotech clusters have the greatest concentration of pharma R&D branches. I’m not sure that would be as interesting, though, because these Big Pharma companies have shown they are often willing to pack up and leave these regions the minute they get some pressure from Wall Street to cut costs. This is why I put more stock in the ‘anchor tenants’ because they have deeper roots in their local communities, and, to my mind, they make a bigger impact.

  • Pengguang Wu

    It would be nice to have their burning rates as well for some of the smaller players in the table.

  • cvrichard

    > Big Pharma companies have shown they are often willing to pack up and leave these regions the minute they get some pressure from Wall Street to cut costs…

    True. What about leaving ‘big pharmas’ out? That will eliminate many entries in the New York area. But then, you know they are not going to leave New York. Once you think about it, your criteria actually make a lot of sense. This could be a good topic for discussion when we catch up during JPM conference.

  • Steve Cepa

    Chicago has Abbott, AbbVie, Baxter, Hospira, & Takata which should qualify.

  • http://www.xconomy.com/ Luke Timmerman

    Steve — this analysis only applies to regions in the Xconomy network. Chicago isn’t in the network, so it’s not included.

    • Paul Burton

      Why isn’t Chicago in the Xconomy network exactly? Xconomy: realm of business and innovation characterized by exponential technological growth and responsible for an increasing share of productivity and overall economic growth.

  • Joe

    Bind Therapeutics in Boston?

  • http://www.xconomy.com/ Luke Timmerman

    Bind had $21.3m in cash as of June 30, 2013, and raised $70.5m gross proceeds in its IPO in September. Not enough to enter the $100m club.

  • Ben Ginseng

    How come you don’t have Millenium/Takeda listed in the Boston region for 2013?

  • Sam

    How about ENTA?

  • Daen de Leon

    Excellent article, Luke. I understand your rationale for setting the $100 mn limit, but I also wonder what the landscape looks like for smaller companies with, say, $50 million+ on hand. It’s interesting how few genetic testing companies or molecular diagnostics companies there are on the list. Also, I was surprised not to see Intrexon there — they had their IPO in August and raised in excess of $100 mn.

  • http://www.xconomy.com/ Luke Timmerman

    Ben — Takeda Pharmaceuticals is based in Japan. Millennium is a branch of that company, and therefore doesn’t count in this analysis for Boston, just like how Genentech doesn’t count for San Francisco because it’s part of Switzerland-based Roche.

    Sam — Enanta Pharmaceuticals had about $95 million in cash and investments on June 30, meaning it didn’t make the cut for Boston companies.

    Daen — Intrexon doesn’t make the list because it’s based in Maryland, and that isn’t part of the Xconomy network. This analysis only includes companies within the 8 regions where Xconomy operates.

  • NT

    Really interesting article. Also New England Biolabs? Life Technologies, or counted w/Thermo now?

  • Josiah Seale

    Luke — Millennium was acquired by Takeda in 2008. This is why it is on the 2003 list for Boston but is not on the 2013 list.

  • Sam

    ENTA had $114M as of 6/30/13 according to their 10Q.

  • Rob Kent

    Looks like yet another “Boston Booster” article to me. Genzyme makes the list, but Onyx doesn’t.Charles River a CRO makes the list etc. I too am neutral English living in San Diego and my observation is still that terms of vibrancy and innovation with the support that is required the Bay Area still dwarfs every other Hub.

  • Carlos Danger

    To play devil’s advocate for a second…I would argue that “vibrancy” could be measured by the number of small-cap or pre-IPO companies with <100M (you know, the ones "anchor tenants" scoop up in order to supplement and/or rescue their own R&D departments). The start-up environment and number of new companies forming in a given area may be more telling than the number of large companies in the area. Maybe a subject for another article? Unfortunately, Seattle fails by both measures. Having worked here since ~2001, the biotech market has really taken a dive.

  • http://www.xconomy.com/ Luke Timmerman

    Sam — this analysis only counts cash and short-term investments on a company’s balance sheet. Enanta falls short by that measure. You’re including long-term investments, which aren’t as liquid.

    Rob — this isn’t a Boston booster article. Genzyme only counted in 2003, and it was taken off the list in 2013. That method was consistently applied across all regions.

    Carlos — I have some other ideas for digging into ‘vibrancy’ of the hubs. Stay tuned

  • shreev

    Curious to know if this trend reflect Investor behavior? Biotech investors focusing on companies or technologies coming from Boston while majority of those in the west are interested to invest more in healthIT?

  • Jim

    Luke, thank you for this enlightening article. Being in the Seattle region it sheds a lot of light on why everyone I know is an unemployed scientist. It’s a total disaster out there in the job world and incredibly depressing for anyone who ever thought science was a reasonable career choice.

    Living in Seattle in this day and age will jolt you out of science one way or another. It’s very sad for Seattle which could be a top contender to Boston and San Francisco, especially with its strength in IT companies.

  • Boston Joe

    Luke,
    Great article, and I think I heard an excellent interview of your thoughts on Puget Sound life sciences on NPR a few weeks ago.
    This is a great analysis since it focuses on mid-sized organizations that are locally-owned. These are typically the types of places most of my colleagues and myself love to work for (large enough for stabilty and good compensation, small enough for innovation, growth, and excitement).
    I worked in the Boston scene for 13 years and then moved to Seattle for a great new oppurtunity and to enjoy this wonderful city ~3 y ago. You are exactly right though- the pharma industry here is completely flat and the job market looks depressing. I soon may be sadly looking back to the Boston Metro area if I lose this job. It is too bad since this is such an awesome city to live in and I don’t want to leave. If you are in IT (software engineering, data science, etc.) you have it made here. I am considering working in commodity-type manufacturing industries just so I don’t have to leave.
    The politicians in WA state don’t get it- look how they have handled Boeing. For one, they won’t learn from MA, CA, and NC on how to pull in the big biomanufacturing facilities that rarely shut down and provide a broad spectrum of jobs.

  • Razr X

    What’s striking about the Seattle market is how little effort there is from companies to help out local scientists. It seems that there are hundreds who are unemployed or underemployed and yet the companies do not seem to interview them and are more willing to further saturate the market by relocating scientists from other regions. I’m not sure why there seems to be an attitude of once you’re out of a job you can’t find the next one in science. Why do the current participant perpetuate this nightmare scenario? Don’t they recognize it’s only a matter of time until they’re in the same boat? They are quite selfish, foolish and shortsighted if you ask me.

    Science is such a perilous field with so many hurdles to enter and yet offers probably the least security, low pay, terrible opportunities, a nomadic lifestyle (assuming you move from hub to hub in search of a new job). It is a terrible career choice and I have made sure not to let my children repeat my mistake of pursuing a science profession.

    I do not understand why our administration harps on the lack of STEM students, when the reality is the fields are already saturated. The only thing that makes sense is that the corporations are pursuing this in order to saturate the labor market and drive down salaries even further and ensure a ‘slave’ employee base that can be more exploited than it already is.

    Whatever you do (if you’re an aspiring scientist in college) is to change your degree immediately and do something else with your talent (go into computer science). Believe me when I say you are in for a life of misery and unhappiness if you choose science as your chosen career path. And this is coming from a Ph.D. scientist from a top big 10 science program and is at mid-career (not suffering from age bias yet).