The Year In New York Biotech—Still Trying to Make It Here
It’s been a year and a half since Xconomy added New York to the cities it covers. I came on as New York Editor in October, taking over from Arlene Weintraub, who pioneered coverage here, knowing that the city is a rich source of tech stories and more than deserving of Xconomy’s focus. It might seem strange, though, that both Arlene and I have spent most of our careers covering life sciences—not the industry that immediately jumps to mind when people think New York-born startups.
But while my colleague Joao-Pierre S. Ruth is doing a fabulous job covering Silicon Alley and all its offshoots (watch for his wrap-up of NY’s tech world next week), I’m finding lots of stories about the emerging group of biotech, medical devices, and health IT firms putting down roots in the New York region . Perhaps not in the city, with its sky-high rents, but certainly in nearby New Jersey and the Westchester suburbs.
My first story for Xconomy was a summary of our informative forum, Reinventing Biotech for the Big Apple, held in Manhattan on October 4. I wrote that “a core group of investors, entrepreneurs, and scientists, with the support of Mayor Michael Bloomberg, are working to turn [Brooklyn], along with two sites in Manhattan, into a New York-centric biotech center that could rival those in California and Massachusetts.”
New York is the world’s leading financial and philanthropic center, with more than a dozen world-class research institutions, and the region is home to the headquarters of Pfizer (NYSE: PFE), Merck (NYSE: MRK), Bristol-Myers Squibb (NYSE: BMY), and Johnson & Johnson (NYSE: JNJ), so it certainly has the basics to build a strong life sciences sector. But it still needs a bigger venture capital community, and a critical mass of startups that beget startups. As Kadmon CEO Sam Waksal, New York’s best known biotech entrepreneur, told the forum, “There is great science here, it’s a great place to do business,” but there is the ongoing problem of “access to land and labs.”
Still, according to a 2011 report from the Business Council of New York, the state of New York is second only to California in the number of clinical trials conducted, and its academic institutions spend some $2.7 billion a year on biological research and development, second only to California. So let’s look back and see how those assets played out in 2012, month by month.
On January 26 Summit, NJ-based Celgene (NASDAQ: CELG), the most prominent biotech in the region, announced it was buying a startup—but in Massachusetts. Celgene agreed to pay $350 million, plus up to $575 million in milestone payments, for Avila Therapeutics, based in Bedford, MA. That’s three for three for the Boston area. In October 2011 Celgene added $20 million to a partnership with Agios Pharmaceutical, in Cambridge, MA, to which it had already committed $130 million, and in December 2011 Celgene participated in a $30 million funding of Acceleron, also in Cambridge. OK, so not the greatest vote of confidence in New York.
KeyView Partners, a new growth equity firm, announced that was opening its doors in New York to fund medical technology startups. No word yet on any deals. Celgene, meanwhile, made a $15 million equity investment in Acetylon—based in Boston. Oh well, moving on.
MolecularHealth is Swiss, but in March the eight-year-old firm set up a commercial hub in New York to go after the U.S. market for its two software platforms designed to translate massive amounts of genomic data into better treatment plans for patients. It’s one of a wave of health IT companies that are making New York their home.
Continuing the health IT trend, the New York eHealth Collaborative announced in April that it is creating a new incubator, called the New York Digital Health Accelerator, to make New York “a hub for the emerging digital health technology industry.” Meanwhile Celgene made yet another investment, this time $90 million upfront in Epizyme, based, where else, in Cambridge.
Little of note happened in the NY life sciences world in May, but Arlene did write about a new medical technology startup, MedXCom, in Bedminster, NJ, with a smartphone app that doctors can use to talk to patients about their health problems without violating federal privacy regulations. Celgene didn’t find anything in Cambridge it liked this month, I suppose that counts as a point for New York.
New York’s big pharma companies may not be such a boon to the region’s emergence as a startup mecca. This month New York-based Bristol-Myers Squibb agreed to buy San Diego’s Amylin Pharmaceuticals for $5.3 billion; Merck, in Whitehouse Station, NJ, formed a partnership with Ambryx, also in San Diego, paying the California startup $15 million in upfront payments; and Swiss pharma giant Roche sent shockwaves through New Jersey when it announced it is closing its 80-year-old research site in Nutley, slashing 1,000 jobs in the process.
MedStartr opened its doors in New York this month. It’s a Kickstarter-like crowdfunding enterprise that wants to put together entrepreneurs with backers for healthcare technologies and services. The site launched with six projects, including MedStartr itself, chosen from some 75 entrepreneurs who sent in applications. So the health IT trend continues to build. Meanwhile, Celgene did not find anyone in Massachusetts to do a deal with again this month. Another trend?
Once again, a New York pharma company goes out of state. Pfizer, the world’s largest drugmaker, agreed to collaborate with Nodality, based in South San Francisco, CA, to come up with better drugs for autoimmune diseases.
Making up for some of the pain inflicted when it closed down Nutley, Roche announced in September that it will place its new Translational Clinical Research Center at the Alexandria Center for Life Science in Manhattan. The center will conduct early stage drug development. A Roche spokeswoman said its placement was a very close race between New York and New Jersey, but New York won because the pharma company already has nine existing collaborations in the city with various institutions.
In a milestone for the region’s biotech industry, NPS Pharmaceuticals (NASDAQ: NPSP), in Bedminster, NJ, got a unanimous vote of approval from an FDA panel of outside experts for its drug for rare short bowel disease. NPS is finally close to getting its first drug approved, 26 years after opening its doors. Meanwhile, a new medical device company based in Manhattan, Cibiem, was launched with $10 million by the New York incubator Coridea. Big Pharma was still not interested in its own back yard, however: Pfizer agreed to buy NextWave Pharmaceuticals of Cupertino, CA, for $700 million, while Celgene went shopping in Seattle, investing $35 million in that city’s VentiRx to develop a cancer drug.
As the year wound down Pfizer agreed to invest $8 million in Rhythm, which is developing drugs for obesity and diabetes. Rhythm is in Boston, so at least that’s the East Coast. But Forest Labs (NYSE: FRX), also in New York, traveled to Emeryville, CA, to strike deal to pay Adamas Pharmaceuticals up to $160 million to develop a pill combining two Alzheimer’s drugs, so the West Coast continues to score big with NY’s deep-pocketed pharmas.
On Dec. 21 NPS got the word that the FDA approved it drug, teduglutide, turning NPS from a discovery shop into a commercial enterprise for the first time. That was offset by bad news for another one of the region’s biotechs that has been long on promise, Amicus Therapeutics (NASDAQ: FOLD) in Cranbury, NJ. The company’s lead drug, an experimental treatment for Fabry disease, failed a Phase III clinical trial and the stock promptly plummeted by more than half. And Celgene was back in South San Francisco, striking a drug development agreement that could be worth as much as $500 million with Sutro Biopharma.
So where does 2012 leave New York’s world of biotech? Clearly, health IT is gaining ground here, which makes sense since New York is already a hotbed of tech startups, and the many top-flight hospitals in the region provides a large pool of potential early adopters. Unlike the Boston area, however, the region’s biopharma giants do not seem to be playing a role in developing a critical mass of startups within walking, or even driving, distance, which scientists and their benefactors can wander between.
It will be interesting to see where Pfizer and the like decide to do deals next year—maybe Celgene will decide it’s racked up enough frequent flyer miles and cast an eye on its neighbors. Longer term, Roche’s decision to do translational research in New York City at least brings commercial drug development to the heart of the city, and maybe some scientists with an idea might start congregating in nearby diners. I’m looking forward to watching it all unfold. Now let’s have Alicia take us out with this thought:
New York, concrete jungle where dreams are made of
There’s nothin’ you can’t do
Now you’re in New York
These streets will make you feel brand new
Big lights will inspire you
Let’s hear it for New York, New York, New York