The $100M Club: Where the Major League Life Sciences Companies Are
[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.
|San Francisco||Genentech||Gilead Sciences|
|Gilead Sciences||BioMarin Pharmaceutical|
|Nektar Therapeutics||Portola Pharmaceuticals|
|Varian Medical Systems||Rigel Pharmaceuticals|
|Agilent Technologies||Intuitive Surgical|
|Genencor International||Jazz Pharmaceuticals|
|Varian Medical Systems|
|Boston Scientific||Thermo Fisher Scientific|
|Thermo Fisher Scientific||PerkinElmer|
|Charles River Labs||Sarepta Therapeutics|
|Transkaryotic Therapies||Agios Pharmaceuticals|
|Vertex Pharmaceuticals||AVEO Oncology|
|Charles River Labs|
|San Diego||Amylin Pharmaceuticals||Illumina|
|Isis Pharmaceuticals||Isis Pharmaceuticals|
|Arena Pharmaceuticals||Arena Pharmaceuticals|
|New York/New Jersey||Pfizer||Pfizer|
|Johnson & Johnson||Johnson & Johnson|
|Bristol-Myers Squibb||Bristol-Myers Squibb|
|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|
|Boulder/Denver, CO||Array Biopharma|