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Mass. Governor Expected to Sign $1B Life-Sci Bill Into Law This Week

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Massachusetts Gov. Deval Patrick early this week is expected to sign into law the act that will shower the state’s life-science industry with $1 billion in funding over 10 years, according to a Massachusetts lawmaker.
 
Lawmakers last week quickly passed the final version of the bill, An Act Providing for the Investment in and Expansion of the Life Sciences Industry in the Commonwealth, which will set aside $500 million in capital investments for construction and improvement projects; $250 million in tax credits for life-science companies in return for new jobs in the state; and $250 million for direct grants for researchers, including seed money to address federal funding shortfalls.
 
Much of the windfall will be distributed and overseen by the Massachusetts Life Sciences Center, the state agency charged with carrying out the bill. The center will receive $25 million in each of the next 10 years to fund its programs and administrative costs. However, the bill caps administrative costs at $3.75 million a year for 10 years.
 
As a concession, the state House gave up one program it championed last year, the creation of five regional life science centers statewide. These so-called Technology and Innovation Centers were to be newly created outposts to be staffed by a total dozen employees, with a total $30 million available toward lab space build-out projects they identified.
 
The measure also includes $299.5 million in earmarks allowing the state to fund infrastructure for a variety of projects. More than three-quarters of the earmarked money, around $236.4 million, will go to the University of Massachusetts system.
 
The UMass projects include:
  • $95 million to fund a life sciences research complex planned for the UMass campus in Amherst;
  • $90 million toward a new $265 million “Advanced Therapeutics Cluster” on the campus of UMass Medical School in Worcester. The cluster would be named for Albert Sherman, the med school’s vice chancellor, and house a center for research in RNA interference intended to continue the work of Craig Mello, winner of the 2006 Nobel Prize in medicine, as well as a Stem Cell Bank and Registry;
  • $11.4 million toward acquisition by UMass Dartmouth of the Advanced Technology Manufacturing Center in Fall River from a quasi-public agency. UMD, which already occupies half of ATMC’s building, is expected to use the building as an incubator for life sciences startups;
  • $10 million for UMass Boston for a planned Center for Personalized Cancer Therapy, a collaboration of UMass Boston and the Dana Farber Harvard Cancer Center. Kirwan and UMass would choose a location from three options: New Bedford, Taunton, or Falmouth. UMass has considered splitting the funding for projects in two locations, which would allow it to develop the regional incubation center in New Bedford it has planned in collaboration with Bristol Community College, as well as build a new life sciences center long planned for Taunton at the former Paul A. Dever State School;
  • $10 million toward a marine stem cell collaboration between UMass Dartmouth, the Marine Biology Laboratory at Woods Hole, and the Regional Technology Development Corp;
  • $10 million to develop a Massachusetts Medical Device Development Center, also called M2D2, at UMass Lowell; and
  • $10 million for a new nano- and biomanufacturing facility, also at UMass Lowell.
The level of funding for M2D2 marked a win for the House over the Senate, which would have given the project just $5 million, with the expectation it could make up the difference through private funding.
 
“With the money we invest within our borders, not only will we create new jobs but we may find cures for innumerable diseases, treatments for rare disorders, or perhaps discover ways to prevent certain diseases altogether,” state Rep. Daniel Bosley (D-North Adams) told BioRegion News last week. “We tried to put as much as we could into public institutions that would have an opportunity to provide services and grow businesses.”
 
Bosley, who chairs the legislature’s Joint Committee on Economic Development and Emerging Technologies, was instrumental in writing the state House’s version of the bill last year, shepherding it through his chamber, and coaxing conference committee members to agree a single bill.
 

“It’s going to be a while before we can really see the impact” of the bill.

“We feel if we can educate and train our students then we have the same opportunity for either employment, or for shifting some companies into the Berkshire County area,” Bosley said. “It’s a chicken-or-egg thing. People said, ‘You don’t have a science curriculum, so why would we give you a building? And we’re saying [that] we don’t have a science curriculum because we don’t have a building.”
 
Click here to read the full text of the bill, or here for a summary of the bill’s significant provisions compiled by the state’s life sciences industry group, the Massachusetts Biotechnology Organization. to read the full text of the bill, or for a summary of the bill’s significant provisions compiled by the state’s life sciences industry group, the Massachusetts Biotechnology Organization.
 
Patrick is expected to sign the initiative into law this week in San Diego during the Biotechnology International Organization’s 2008 International Convention, which runs June 17-20. Patrick used last year’s BIO conference, held in Boston, to announce the legislation [BRN, May 14, 2007].
 
The final version of the bill, which cruised through the Senate by a 31-7 vote and through the House by a 142-15 vote, was hammered out by a conference committee of six lawmakers formed in April, following the passage of differing versions of the bill by the state House of Representatives and state Senate [BRN, March 31].
 
The bill allows the Massachusetts Life Sciences Center to give tax breaks and other economic incentives to “certified” life-science companies, which would have to fulfill promises of job creation and tax generation over a given length of time, made case-by-case, and to diversify their workforces. The center would also decide which companies would receive certification, as the House sought; the Senate would have made the center recommend a decision to the state’s top economic development official, Daniel O’Connell, the state’s secretary of housing and economic development.
 
Two other institutions stand to gain from the bill: Tufts University will receive $9.5 million toward construction and capital improvements of the New England Regional Biosafety Laboratory, currently being built for the university’s Cummings School of Veterinary Medicine [BRN, May 7, 2007]. The biosafety lab is slated for completion in 2009.
 
Small-business and educational programs account for another $16.1 million in earmarks. The costliest program, at $10 million, creates and pays for the Massachusetts Small Business Matching Grant Fund. The fund is designed to assist seed-stage businesses that combine life sciences with other technologies. The life sciences center would decide who gets funding, following a recommendation from the Smaller Business Administration of New England.
 
“A lot of those are looking for Small Business Innovation Research grants on the federal level, and sometimes it just takes a little money on our part as a matching grant to allow them to get new equipment that would allow them to participate [in the federal program] by kicking their technology up a notch,” Bosley said.
 
Other new programs are intended to promote bioeducation:
  • $5 million to create and pay for the Massachusetts Life Sciences Education Fund, which would award grants to vocational and technical schools for purchasing or leasing equipment to train students in life sciences research and technology, with approval by a majority of the life sciences center board; and
  • $1.1 million to buy and convert three vehicles into “mobile science laboratories” to support biotech education initiatives of the Massachusetts Academy for Life Sciences.
The life-sci education fund is among several new research and educational funding programs to be overseen by the Massachusetts Life Sciences Center. Other programs include:
  • The Dr. Craig C. Mello Small Business Equity Investment Fund. Named for the Nobel laureate based at UMass Worcester, the fund will award up to $250,000 to small life sciences businesses with the goals of stimulating private investment and covering gaps in federal research funding. In return for the money, the life sciences center would take an equity position.
  • Dr. Judah Folkman Higher Education Grant Fund. Named for the pioneer cancer researcher who died Jan. 14 at age 74, the fund would award up to $15,000 a year in living expenses for graduate-level and doctoral students and post-doctoral fellows studying or employed at a college, university, independent research institution, or an academic medical center in Massachusetts. Awardees cannot have incomes more than 300 percent above the federal poverty level. Folkman was a professor of cell biology at Harvard Medical School and director of the vascular biology department at Children’s Hospital in Boston.
These programs can be funded by the life-sciences center at whatever level it wants within the funding it receives from the state, Bosley said. “They’re going to have to pick and choose.”
 
In addition, four earmarks in the bill totaling $37.5 million would aid private projects, two of which are overseen by corporate giants promising to create hundreds of new jobs in return:
  • Genzyme — $12.9 million toward water and sewer system improvements for the town of Framingham. The work would enable the biotech giant to carry out a $250 million, two-year expansion of its town facilities. Genzyme would add 400 to 600 workers to its Framingham workforce of 1,600 as a result of the expansion, which will include new office space and a new cell culture manufacturing facility and purification plant;
  • Wyeth BioPharma – $12.6 million toward construction of a new exit off Interstate 93 at Lowell Junction, which straddles portions of Andover, Tewksbury, and Wilmington. The project is intended to facilitate a long-discussed expansion of the company’s manufacturing plant in Andover, projected to add at least 100 jobs. It will also help the company develop 700 nearby acres of unbuilt land;
  • $6.5 million toward a life science incubator building at William Stanley Business Park in Pittsfield, Mass.; and
  • $5.5 million toward a lease with Bay State Medical Center for the Pioneer Valley Life Sciences Institute in Springfield, Mass.
Under the final bill, the life sciences center and its new advisory board would bestow the tech-innovation designation on five existing facilities, one each in western Massachusetts, central Massachusetts, northeastern Massachusetts, southeastern Massachusetts, and metropolitan Boston.
 
“This ATMC center that we’re purchasing would be a natural center, I think. There’s a natural center in Worcester that is very successful. In western Massachusetts, it could be the Pioneer Valley Life Science Institute. And certainly in Boston, the regional center would probably be the life sciences center itself,” Bosley said.
 
These facilities would be charged with encouraging collaboration between life-science organizations; contributing to a statewide life-science database; carrying out regional workforce programs; providing business practice know-how to scientists seeking to commercialize their technologies; fostering public and private investment; and identifying properties and municipalities or regions with the potential for redevelopment as life-science clusters.
 
Both the House and Senate compromised on how to oversee the Massachusetts Life Sciences Center, creating its second governance structure since the agency was created in July 2006. The bill calls for a seven-member board almost identical to the one Patrick sought in his original bill, up from the current five members.
 
The seven would consist of O’Connell; Leslie Kirwan, the state’s secretary of administration and finance; Jack Wilson, the president of UMass; a physician licensed to practice medicine in the commonwealth and affiliated with an academic medical center; a CEO of a Massachusetts-based life sciences corporation that is a member of the board of directors of the Massachusetts Biotechnology Council; a researcher “involved in the commercialization of biotechnology, pharmaceuticals or medical diagnostic products;” and a professional with “significant financial experience in the life-sciences sector.”
 
The financial board member was envisioned by Patrick to be a venture capitalist, but the Legislature broadened the criteria for the seat. Members would serve five-year terms after serving staggered shorter terms upon appointment by Patrick; one director would serve a single year, another two, another three, and another four years.
 

The new board would be co-chaired by O’Connell — who now chairs the current board — and Kirwan, or their designees. In addition to O’Connell and Wilson, the current board includes Jay Gonzalez, the state’s undersecretary of administration and finance; Marc Beer, president and CEO of ViaCell; and Micheline Mathews-Roth, a professor of medicine at Harvard Medical School, and an associate physician at Brigham and Women's Hospital.

 

Advising the life-sciences center would be a new 18-member advisory board to be appointed by Patrick. That board will consist of 10 members of the Massachusetts Life Sciences Collaborative, two of them from small businesses; five chancellors of the UMass system; and three patient advocates. Suzanne Bump, the state’s secretary of labor and workforce development, and the heads of the to-be-named regional centers would all serve as non-voting members.
 
“We want some people who are experts in funding. We want some people who are experts in life sciences and pharma. It’s important to have people with medical device expertise or agricultural pharma expertise also,” Bosley said. “By creating a larger board, it gives us more diversity of strengths. We need people who will look at this in new and interesting ways.”
 
The advisory board is a compromise between the Senate, which envisioned a 23-member advisory board; and the House, which sought instead a 10-member Capital Advisory Board. Both chambers envisioned boards that combined business, academic, and government leaders.
 
The final bill also added two new tax credits to the seven proposed by Patrick in his original bill: one for clinical trials and one for carrying over net operating losses up to 15 years. However, all tax credits are capped at 90 percent, a proposal first advanced by the Senate and adopted by the conference committee.
 
“We think that will stretch out the money more, and we still think it’s a big bang for your buck,” Bosley said.
 
He said the new clinical trial and net operating loss tax credits were the most-suggested and second-most suggested tax credits, respectively, by businesses when officials last year barnstormed the state on a “listening tour” to solicit business input on the bill.
 
The new clinical trial tax credit expands a credit created in 2006 for the cost of federal testing of medical device programs. “It has led to a dramatic increase in medical device startups here in Massachusetts,” Bosley said.
 
Another provision of the bill seeks to spur new business creation by bundling startups for offer to private investors following peer review: “There’s more of a chance that investors will see a return on their investment by taking the companies with the most potential and putting them into a market bundled, so if you hit some and you miss some, you still recapture your money,” Bosley said.
 
One Year in the Making
 
The final bill caps nearly a year of review by state legislators after Patrick submitted the original version of the bill last summer. The lawmakers largely sided with Patrick and life sciences leaders, who contended that Massachusetts needs to offer generous state economic subsidies to keep the Bay State competitive for biopharma and medical device employers and their jobs in response to growing competition by other states and countries. ]. The lawmakers largely sided with Patrick and life sciences leaders, who contended that Massachusetts needs to offer generous state economic subsidies to keep the Bay State competitive for biopharma and medical device employers and their jobs in response to growing competition by other states and countries.
 
Patrick and bio bill supporters projected the measure would generate 250,000 new jobs over the next decade, and expand the top-tier life sciences cluster from Boston and Cambridge, Mass., and their nearby suburbs, to nearly all regions of the state. They also cited three studies by industry groups and other organizations that concluded the state’s life-science competitiveness had eroded earlier this decade.
 
That argument has not, however, won over some lawmakers and policy groups, whose chief critique was that rather than targeting a single industry for funding, Massachusetts should instead adopt policies that reduce taxes and regulatory red tape for all businesses. They also suggested that the effects of the bill could be short-lived by citing the state’s embrace of the information technology industry in the 1980s only to see companies outsource jobs overseas and leave the state a decade later.
 
Jim Stergios, executive director of the Pioneer Institute, a free-market think tank based in Boston, told BRN last week his group remained opposed to the bill for those reasons and for the potential for conflicts of interest by members of the new advisory board, specifically its three patient advocates and its five UMass administrators.
 
“I think anybody who looks at this objectively will see these are people who perhaps would have an interest in which grants went to whom,” Stergios said. “On the patient-advocate side, someone advocating for increased funding to deal with a specific disease … would be advocating for certain grants to go out to certain people who’d deal with those illnesses. [Based] on the past [research] of the UMass members, these are folks who may receive funding. Either they’ll have to recuse themselves on specific votes, or they may be able to give some push in the direction of a specific project or another. That is of great concern to us.”
 
Stergios cited California, where patient advocates and heads of institutes that receive funding sit on the board overseeing the state’s stem-cell agency. That issue triggered an audit of the California Institute for Regenerative Medicine concluded last month by Controller John Chiang, who largely cleared the agency. However, Chiang has said he supports a bill that may result in another examination of the issue. [See Around the Regions, this issue].
 
Stergios also said Massachusetts should use the bill to require the life-science center to create objective measures to decide which research merited the most funding; and retain experts from outside the state in making funding and program decisions: “That will bring more objectivity to the decision-making as to how we spend those dollars.”
 
One of the three studies cited by bio bill supporters was updated last week. Volume 2 of Super Cluster: Ideas, Perspectives, and Trends Shaping the Global Impact of the Massachusetts Life Sciences Industry, concluded that the Bay State’s rate of industry job growth was competitive with California, yet in 2006 only generated half as many jobs as the Golden State [See report, this issue].
 
Jim Connolly, Northeast life sciences leader with PricewaterhouseCoopers and a member of the report advisory team, told BRN last week that only time will tell whether the bill will fulfill its promise of keeping Massachusetts a top-tier biocluster.
 
“This bill is certainly a step in the right direction, and a far cry from where we were a year ago,” Connolly said. “It certainly shows that the legislators are getting the importance of the sector to the state economy. But it’s going to be a while before we can really see the impact of it.”
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