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Go West? Top Mass. Life-Sci Leaders Pitch Bay State's Bounty to West Coast's Drought


Visiting the nation's top life-sciences cluster as part of a four-day, three-state West Coast trade trip, Massachusetts' top life-sci official last week joined the state's governor and other state leaders in rolling out a campaign to recruit bioscience and other tech businesses to the Bay State.

One pitch: Contrasting Massachusetts' $1 billion, 10-year life-sci initiative with California's general budget woes.

Susan Windham-Bannister, president and CEO of the Massachusetts Life Sciences Center, told BioRegion News that officials from her state have begun talks with "several" undisclosed California biotechnology businesses considering expanding their operations or relocating altogether to Massachusetts.

The talks, she said, are a result of the four-day trade trip that saw the officials swing through Washington state, Oregon, and California, where they met with California life-sci leaders in a roundtable talk held at the South San Francisco headquarters of the region's largest biotech business, Genentech.

The companies and individuals in talks with Massachusetts officials, she said, include "a bioinformatics company that would like to start a major initiative in the commonwealth," as well as "a VC that has expressed an interest in moving a company from [California] to Massachusetts; they wanted to know what the center could offer that would be supportive."

In those talks, as with the trade trip visit last week, Massachusetts will not only play up its strengths as a life-sci cluster, but what it perceives as California's shortcomings — especially its messy fiscal situation, Windham-Bannister said.

"The impression we've gotten from the comments at this roundtable at Genentech is that California is going to really be struggling just to pay some basic bills," Windham-Bannister said in an interview Feb. 4, held minutes after the roundtable talk, which the state co-organized with the life-sci industry group for the Bay Area and northern California, BayBio.

"And I think there is real concern about whether the state will be able to stay the course with its commitment," she added. "And I think they were very pleased, and I think very impressed, to hear that in Massachusetts, the administration – the governor is very committed to staying the course. He mentioned that and included that in many of his comments out here."

California Gov. Arnold Schwarzenegger and legislators from the Golden State are scrambling, so far without success, to plug a $42 billion budget shortfall blamed largely on the ongoing worldwide financial crisis. Schwarzenegger has frozen $3.8 billion in spending for 5,300 infrastructure construction projects, and ordered the furlough of state workers two days per month; the first unpaid day off for 200,000 employees took place Feb. 6. Standard & Poor's, the credit-rating body, has downgraded California's credit from A+ to A, the worst rating of any state in the US.

The budget shortfall has prompted California Treasurer Bill Lockyer to cancel planned sales of state bonds, and even consider private placements of the bonds, reasoning that the ongoing economic upheaval has frozen out would-be borrowers from the market.

California has looked to borrowing as its primary avenue for funding the $3 billion stem-cell research and facility projects overseen by the California Institute for Regenerative Medicine.

In response, the chairman of CIRM's governing board, Robert Klein, has said publicly he would attempt to sell to private investors the state bonds needed to finance agency operations. John Robson, CIRM's vice president of operations, said during a presentation late last month to the governing Independent Citizens Oversight Committee that CIRM's cash on hand will plunge from the $158 million it reported on Jan. 1 to a projected $39 million by July 1.

That surplus would turn into a shortfall of $133.6 million by the end of 2010 if sales of state bonds remain frozen by then and only ongoing programs are funded. The deficit would zoom to $377 million if CIRM goes ahead with anticipated new programs in addition to existing ones, Robson told the ICOC, according to reports from nonprofit group Consumer Watchdog and the California Stem Cell Report.

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Money woes are the latest hurdle for California's stem-cell effort, which won voter approval through the Proposition 71 ballot question in 2004, only to spend nearly three years in state courts fighting off challenges from opponents. Since then, according to its web site, CIRM has awarded a total 279 grants totaling more than $693 million – most of it research funding, but also including $271 million in funding for facilities – all aimed at elevating California to the nation's number-one state for regenerative medicine research.

California life-sci leaders at the roundtable "were very candid in telling us about the challenges that California has had getting its whole initiative going, all of the bureaucracy, the overlays on the program," Windham-Bannister said. "They were very impressed to see that in Massachusetts, the legislature delivered on a piece of legislation that provides the center with a far-reaching capability, a lot of flexibility in meeting our needs, and this is the way we're going about doing our business."

That legislation is the Massachusetts Life Sciences Act, which set aside $1 billion over 10 years for various life-sci cluster building efforts.

Yet Massachusetts and its Life-Sci Act are not immune to budget problems. Last October, Patrick and legislative leaders approved a package of spending cuts that included a $10 million reduction in the "investment fund" used for subsidizing expanding life-sci companies, and for paying administrative costs for the life-sci center. The Life Sciences Act set a $25 million annual maximum for the investment fund.

And for fiscal year 2010, which starts July 1, Patrick's proposed budget would increase the investment fund, but only to $20 million [BRN, Feb. 2].

The California life-sci leaders who met the Massachusetts delegation "were extremely complimentary" of Massachusetts Gov. Patrick," Windham-Bannister said. "They just said to him that he really is the top governor in terms of his support of life sciences. They've been following [Massachusetts], and they know that he's really staying the course in terms of his commitment to life sciences."

Asked about the risk of aggressively poaching biotech, pharma, and medical-device businesses from California, Windham-Bannister replied: "The way that we've positioned our visit out here is to say, 'Look, let's just be honest about it. Massachusetts and California are the giants. As we go in terms of our life sciences, so will go life sciences in the country, and the US' premier position in the life sciences.

"You know how you have competitions that are friendly competitions, and they're actually necessary, like [Roger] Federer and [Rafael] Nadal?" Windham-Bannister said, citing the rivalry between the world's top two tennis pros. "They need the competition to keep each other great."

On the friendly side, Windham-Bannister said, Massachusetts aims to create "bi-coastal collaborations" between its life-sci companies, universities, and research institutions, and their counterparts in the Bay Area and elsewhere on the West Coast.

Such partnerships are more possible there than other pairs of life-sci clusters, she said, because so many California life-sci professionals started out in Massachusetts universities and research institutions – a factor she said helped explain their interest in the Bay State's life-sciences community.

California life-sci leaders are expected to visit Massachusetts "in the next couple of months" for a reciprocal trade trip, Windham-Bannister said. There may also be a reciprocal presence in Massachusetts for West Coast life-sci employers as a result, though details have yet to be worked out.

Additional contact with California life-sci employers and researchers could come, Windham-Bannister said, if Massachusetts can persuade them to serve as sponsors for the Life Science Center's new corporate consortium program. That program, launched with $500,000 over two years from Johnson & Johnson that will be matched by the center [BRN, Dec. 22, 2008], is designed to provide matching funds for the center's Life Sciences Accelerator program, and other activities.

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The Massachusetts trade delegation visited a second, undisclosed, life-sciences company – "one of the big biotech companies" – that has expressed interest in joining the corporate consortium, Windham-Bannister added.

Windham-Bannister was among Massachusetts officials who met with Bay Area biotech, pharma, and medical-device leaders at Genentech. Representatives of giants such as Amgen, Pfizer, and Bayer HealthCare attended, as did executives of several smaller companies.

She said some concern had been expressed about the future of Genentech, the pioneer biotechnology company now facing a hostile takeover bid by Swiss pharma giant Roche, which owns 56 percent of Genentech's shares.

"It came up peripherally, but we didn't spend a lot of time on it," Windham-Bannister. "There was great interest in the Life Sciences Initiative. They were certainly aware of the initiative. What they didn't know was the way that we're putting the initiative in place, which they found very creative and just resonates tremendously with the way they do business.

"They didn't know all the specific programs that we put in place," she added. "They didn't know what the priorities were that we at the center have settled on, based on our conversations with our own life sciences companies in the commonwealth. And they didn't know that we were using this highly leveraged approach."

"While we've been here, we've also had a chance to meet with the VCs of the Bay Area that focus on the life sciences, and to explain to them what we're doing. They are very interested, and excited about this matching and co-leveraging of public and private dollars that we've been doing" at the Massachusetts Life Sciences center, Windham-Bannister said.

Among VCs, she said, was one involved in raising funding for RainDance Technologies, a developer of a microdroplet-based technology designed to allow easier isolation of specific regions of the genome for sequencing. In May 2008, RainDance completed a move to Lexington, Mass., from Guilford, Conn.

"One of the VCs told me they had a company that wanted to move from the Bay Area to Massachusetts. And they were very intrigued to hear, not about our programs, but about the fact they might have a way to leverage off their investments. It has been a very good trip," Windham-Bannister added.

BayBio CEO Matthew Gardner did not return calls from BRN seeking perspective on the Massachusetts visit.

Life sciences is one of several technology industries Massachusetts hopes to have strengthened through the trade trip, whose cost was not immediately available. Massachusetts officials also met executives from Cisco Systems, Facebook, Google, Hewlett-Packard, Microsoft, and Sun Microsystems.

Those visits were meant to underscore a new economic-development message by Patrick — that the Bay State will move to enhance its information technology cluster with the same mix of tax breaks, other incentives, and outreach to CEOs his administration has carried out in the life sciences. On Jan. 27, Partrick announced that the University of Massachusetts' Donahue Institute's Economic and Public Policy Research Group will conduct a study of the IT industry's economic contributions in Massachusetts for a consortium of state-based businesses and industry associations. "The report will explore opportunities for the local IT industry and investigate major obstacles to growth and expansion in Massachusetts," according to the announcement.

Joining Patrick and Windham-Bannister on the trip were the life-sci center's chief of staff, Melissa Walsh; UMass President Jack Wilson; and Greg Bialecki, who this month became Patrick's secretary of housing and economic development, succeeding Daniel O'Connell [See BioRegion Newsmakers, this issue].

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