Peter Abair
After a record 2014, in which Massachusetts biotechs set records in amount of venture capital received and number of IPOs, the local industry remains red-hot in 2015. Through July, 33 Massachusetts biotechs had received $889 million in VC financing and nine biotechs hit the publicly traded markets, all with NASDAQ listings, to the tune of $660 million in initial offerings.
The continued strong performance of the state’s biopharma industry in the private and public financial markets bodes well for the near term, at very least. It is a very far cry from the financially troubling days of 2009 and 2010, when a tremendous industry concern was the high number of research-based companies with only three to six months of cash on hand. Today, more common concerns are where to find workers and new laboratory space.
There have been significant life sciences real estate deals struck in the area over the past year, from GE Healthcare Life Sciences and Quest Diagnostics in Marlborough to Baxalta and Pfizer in Cambridge. These are all lease deals and expansions measured in the hundreds of thousands of square feet. While these projects have grabbed headlines, as interesting is the movement of companies on those recent IPO and venture financing lists.
I’m not giving up any trade secrets in suggesting that biopharmas which are beneficiaries of recent VC financings or successful IPOs are also prime candidates for new or expanded lab and office spaces. Close to half of the 18 biotechs with IPOs in 2014 either expanded their spaces or moved to larger spaces soon after. Dicerna raised $90 million with its IPO in January 2014 and moved from Watertown to a larger space at Alewife just a year later. Akebia Therapeutics more than doubled its space at 245 First St. in Cambridge after its March 2014 IPO. T2 Biosystems expanded at Hartwell Avenue in Lexington after its August 2014 IPO and Tokai Pharmaceuticals moved out of its Cambridge incubator to 255 State St. in Boston after its September IPO.
More Movement In 2015
In 2015, such moves continue, with Inotek Pharmaceuticals expanding at its space in Lexington after a February IPO and Blueprint Medicines moving a few blocks into significantly larger space on Sidney Street in Cambridge – even in advance of its successful April IPO.
So, while larger projects often make a headline, these smaller projects are making some significant waves of their own. It speaks to the vitality of the industry but also the capacity of the commercial lab and office space market to accommodate such traffic. That capacity is strained in areas, certainly in Kendall Square, which has seen a $10 per square foot rise in lab rents since late 2012 and an even greater spike in office rents. The din is rising that there is simply not space for emerging biotechs and, for even those at mid-stage, pricing in the most-sought-after Kendall Square core is prohibitive.
Surely, it is a good time to be a lab owner-operator in Cambridge. In fact, times have never been better. For those small and mid-stage companies looking for space, however, there are options – just as there always have been. We’ve noted the inner- and outer-suburb opportunities in the past, but if biopharma companies need proof that life exists beyond Binney and Albany streets, take another look at the VC and IPO lists.
Of the 33 biotechs receiving venture capital thus in 2015, 21 do have homes in Cambridge. Indeed, 840 Memorial Drive is the “2015 VC-winner,” housing three companies that were VC-backed – Mersana Therapeutics, Pronutria Biosciences and Dimension Therapeutics. But 11 on the VC list are beyond Cambridge, including three in Lexington (99 Hayden Ave. houses VC recipients Pulmatrix and Macrolide Pharmaceuticals).
The IPO list is better news for the ’burbs. Six of the nine Massachusetts biopharmas that became publicly traded in 2015 have addresses outside of Cambridge – in Boston, Waltham, Lexington, Burlington, Canton and Billerica.
The hot streak continues. The industry grows. Kendall Square remains the most dynamic setting for the industry in the world. And, a new generation of companies rises in and beyond the shadows of the world’s biggest industry players in a lab market broad and deep enough throughout Eastern Massachusetts to sustain growth for years to come.
