[Updated, 6:25 a.m. ET, see below] New York City and state governments have finally put big dollars behind local development of the life sciences industry. But lots of cash is no guarantee of success, as panelists kicking off the annual NewYorkBio conference made clear Tuesday.
“The question is, where are we as an industry, and are we about to move in some greater direction, [or] are we at a plateau?” questioned Acorda Therapeutics general counsel and corporate secretary Jane Wasman, who moderated the discussion.
New York City has all the ingredients for biotech success, with a dense, mixed population; a network of academic and research centers; plenty of cash; and the nearby presence of large pharmaceutical companies. The city, however, has been unable to capitalize for years, instead watching its research funneled into companies in other cities—most notably the big biotech hubs of Boston and San Francisco, CA.
Changing the course of New York biotech has been a saga that dates back to the 1990s. As Xconomy has detailed, progress has been made in recent years with collaborative initiatives, government programs, new venture firms, and more lab space for startups.
While optimistic about the momentum that’s been generated, some still express frustration. Lux Capital partner Adam Goulburn, for instance, says the real estate “bottleneck” continues to make it difficult for biotech startups to stay in New York. “The scientific, academic talent is here, but my mind immediately goes to, well where am I going to put this company? And there’s no answer for that yet,” he said.
One possible long-term solution lies north of New York City. Could Regeneron Pharmaceuticals (NASDAQ: REGN), perhaps New York’s biggest biotech success story, be the anchor of a hub for biotechs looking to grow, and willing to do it in the suburbs? Rockefeller University president Rick Lifton noted during the panel discussion that forming an “ecosystem around Regeneron” might be a good way to capitalize on an untapped resource and draw talent outside of Manhattan. “This is one of the great opportunities to actually build upon strength in this area,” Lifton said.
Lifton added, however, that space close to the city’s research institutions is needed first. It’s critical for academics who are interested in starting companies but want to maintain their day jobs. Without it, New York’s slow grind continues. Nadim Shohdy, the assistant dean of NYU Langone Medical Center’s office of therapeutics alliances, said there appears to be a “lull in the growth of the ecosystem.” After a flurry of new startups in late 2015 and early 2016, announcements about new companies have ground to a halt.
“Initiatives are well and good,” Shohdy said, citing the $1.15 billion New York city and state governments have committed to biotech in the past year. “But at the end of the day, the birth of more and more startups, of all shapes and sizes, is the main yardstick to measure success.”
[Updated with River Vision deal] Good outcomes for those startups is an important measure too. That’s why it was noteworthy for New York when, earlier this week, River Vision Development Corp., a local startup formed by Narrow River Management in 2012, was sold for $145 million, a big win for its investors.
Some other investments, however, are slow to develop. Another question heard frequently today, for example: What is going on with the New York City Economic Development Corp.’s $150 million biotech fund?
The NYCEDC, a quasi-governmental agency, announced the fund, meant to back life sciences companies in New York City, four years ago. In March 2015 it said the cash would be managed by two early-stage biotech investment heavyweights, Flagship Ventures and Arch Venture Partners. But the fund has yet to announce any investments. Other newcomers such as Versant Ventures and Seattle-based Accelerator Corp. have each started multiple companies.
When Xconomy asked why the fund has yet to put its money to work, NYCEDC spokesman Ryan Birchmeier said the fund and its partners have been “establishing a presence in New York City and thoughtfully developing opportunities for ventures.”
The fund is looking to make its first investments by the end of 2017. Those investments will “compliment the work” of LifeSci NYC, the wide-ranging $500 million plan to back biotech in New York City. That initiative will also launch a separate set of seed funding programs for startups later this year, Birchmeier said.
Despite the lack of big headlines in 2017, however, sources asserted that much is going on behind the scenes. Versant partner Carlo Rizzuto says his firm has two New York startups in stealth mode that should emerge later this year. Maria Gotsch, president and CEO of the Partnership Fund for New York City, says a few of her fund’s companies are starting to raise cash.
A few seed funds are also in the works to help with what Gotsch calls a “gap” in early-stage funding for startups. Gotsch’s firm is in the process of raising a new fund and looking for a team to run it. The Accelerate NY Seed Fund was just established with a $3 million award from Empire State Development. “These are going to help a lot,” says Nicole McKnight, the director of the New York division of the biotech incubator network BioLabs.
Gotsch notes that more space is opening, too. The New York Stem Cell Foundation just opened a new lab and possible incubator space on the West Side of Manhattan. Johnson & Johnson will open a JLabs incubator in the New York Genome Center next year, and LaunchLabs, a startup incubator from Alexandria Real Estate Equities, will open next month. An announcement about another incubator is expected “imminently,” according to Gotsch.
“Stay tuned,” she says.