Then and Now: What’s Changed—and What Hasn’t—in Some Early Biopharma Hotbeds
18 Jan 2024
Acquisition
Pictured: Screen of a 1980s-style computer showing a map of Southern California’s biopharma companies/Nicole Bean for BioSpace
As BioVentures Medtech Funds co-founder and managing partner Marc Goldberg remembers it, Cambridge, Massachusetts’ leaders never set out to foster a biotech powerhouse. Quite the opposite, in fact: he credits the city council with unintentionally drawing early genetic engineering companies to Cambridge, catalyzing the development of what would become one of biotech’s most prolific hubs of activity.In the late 1970s and early 1980s, Cambridge’s city council moved to impose regulations on genetic engineering that council members thought would dissuade biopharma companies from setting up shop in the region, said Goldberg, who in the 1980s worked at Genetics Institute, Inc. in Cambridge. But instead of deterring industry activity, he continued, the local regulations appealed to companies, which saw a reduced risk compared to a city that had no laws around genetic engineering and might therefore do anything in the future. In addition, Cambridge’s regulations were based on what the National Institutes of Health required of academic labs that receive its grants and could evolve with the agency’s guidelines, Goldberg added.
In 1989, BioSpace published its first Hotbed Map for Biotech Bay featuring companies in the San Francisco area. Others soon followed, including maps focused on the Boston area (Genetown) and southern California (Biotech Beach). Thirty-five years after the first map was created, BioSpace spoke to key players about their experiences helping to build early regional hotbeds.
Pictured: The 2024 Biotech Bay Hotbed Map, featuring San Francisco and northern California
Biotech Takes Off
One factor widely credited with adding rocket fuel to the U.S. biotech industry is the Bayh-Dole Act of 1980. The act gave universities and other recipients of federal grants the ability to patent and license discoveries made using public funds.
Another contributor to the boom of that decade was “the beginnings of a robust venture capital scene,” Goldberg told BioSpace. “More people were getting into it, and there were more options.”
The nascent industry required new ways of communicating with investors, Goldberg recalled. “For the first time, companies were going public that didn’t have current revenues, and weren’t going to have revenues for several years. How did you think about them? . . . How do you value them? How do you talk to Wall Street about them? All of those things were things that had to be developed and are now taken for granted.”
Jim Sherblom, who first became involved in biotech when he joined Genzyme as its chief financial officer in 1983, said the industry was starting from scratch in other ways as well. “When we started biotech, it wasn’t clear how you would build an industry, how you create an industry. But smart people were willing to work really hard and work together well.”
Genetown’s Early Days
Different regions developed distinct industry personas, Sherblom told BioSpace. “Boston biotech versus the San Francisco biotech took on very different cultural aspects, where we were much more collaborative and working together through the Mass Biotech Council,” which was launched in 1985 to represent all six of the state’s biotech companies.
Both Sherblom and Goldberg were among MassBio’s co-founders. Sherblom said the organization’s activities included putting together model regulations around biotech and procedures for administering companies. Another important function, Goldberg said, was educating the public and policymakers about what biotech (namely, genetic engineering) was—and wasn’t.
“People didn’t know what this technology was,” he explained. “And this was a time in which new technology often was frightening.”
Pictured: The 2024 Genetown Hotbed Map, featuring Boston and Cambridge, Massachusetts
While the technology didn’t lead to the terrifying new organisms invoked in some press coverage around that period, there were some practices that wouldn’t fly by today’s standards. Sherblom recalls getting a call from an engineer at a computer company downstairs from one of Genzyme’s labs about “red goop” dripping down from the ceiling. The company was extracting a protein from human placentas to use as a potential treatment for Gaucher disease, a genetic condition, and a line had disconnected, dumping partially processed blood product into the floor below. There were no untoward consequences apart from the mess, but “That can’t happen today because things are much better in terms of regulatory systems, in terms of the cleanrooms,” Sherblom said. He called the 1980s “the period of cowboy biotechnology.”
Early biotechs distinguished themselves from big drug companies in that they were less likely to drop a candidate after a negative result, Sherblom noted. When Genzyme first began testing its placental material in Gaucher patients, three out of the first four patients showed no response, he said. But the company didn’t give up. Researchers investigated and found that an unintentional thawing of the material—the night before Genzyme was to treat its first Gaucher patient with the placental material, the power went out in the lab—was the reason the one patient who had responded did so well. Sherblom called it a “miraculous cure”—the protein cleared the lipid buildup that causes the disease’s symptoms. Apparently, the thawing had enabled sugars on the protein to cleave, which in turn led to the uptake of the protein in key organs.
“Nobody had done that research before that, and it really opened up a whole new field of glycosylation as ways to make better therapeutics,” Sherblom said.
The Dawn of Biotech Beach
In the beginning of the San Diego hotbed, there was Hybritech, a company founded by two former University of California, San Diego researchers in the late 1970s. Among its successes was developing the technology behind the PSA test for prostate cancer. And when the company was acquired by Eli Lilly for $450 million in 1986, it jumpstarted the growth of the local industry, said Joe Panetta, who worked at San Diego biotech Mycogen beginning in 1988.
“A lot of the folks at Hybritech came out of Hybritech [with] both significant financial reward for that effort and with the desire to go and start companies of their own,” Panetta told BioSpace. “So it kind of became organic growth.” To this day, he said, many of the area’s thousands of biotechs can trace their lineages back to people who worked at Hybritech.
Another factor Panetta credited for the area’s growth is the local research institutions, which he said are heavily focused on cancer. “That created a very strong base of . . . cancer therapy companies here in San Diego.”
Among the key events that put San Diego’s biotech industry on the national map, Panetta said, were Johnson & Johnson’s move to set up a research facility in the area in the early 1990s and San Diego’s hosting of the BIO International Convention in 2001.
Panetta, who has led the trade association Biocom California since 1999, emphasized that the industry in San Diego extends beyond therapeutics. “Not only do we have the life science company presence here, but we’ve got the life science tools, sequencing and production of reagents and other types of tools that companies need to succeed,” he said.
Pictured: The 2024 Biotech Beach Hotbed Map, featuring San Diego and southern California
In some ways, Panetta said, not much has changed as San Diego biotech has expanded from a few dozen companies in the late 1980s to its current size. Even today, biopharma companies are all within five miles of each other, which facilitates a sense of community, he said. “One thing that hasn’t changed at all is that there’s a very tightly knit life science community of people who know each other and collaborate with each other, and have worked with each other.”
Shared goals also help contribute to that community feel, he added. “I think the most important thing is that the people who work in biotech have a passion for making a difference in a way that is radical and will change people’s lives.”
Goldberg also emphasized this mission-driven element of the industry. “I’ve been very fortunate to be part of an industry that has truly changed the world,” Goldberg said. “And to be surrounded by people who are both incredibly bright and also understand . . . the good social implications of what they’re doing. . . . So it’s been a really wonderful place to spend 40 years.”
An Expanding Footprint
Over the three and a half decades since the Hotbed Maps’ inception, the biopharma industry has grown beyond Genetown and California, with hotbeds peppering both coasts, the Midwest and Texas. But in many ways, biotech remains a fresh industry, and we’ll likely see new hotbeds—along with newly hot areas of research—continue to emerge over the coming decades.
Pictured: The 2024 Pharm Country Hotbed Map, featuring Connecticut, New York, New Jersey, Pennsylvania and Rhode Island
Pictured: The 2024 BioCapital Hotbed Map, featuring Delaware, Maryland, Virginia and Washington, D.C.
Pictured: The 2024 Bio NC Hotbed Map, featuring Research Triangle Park and North Carolina
Pictured: The 2024 BioForest Hotbed Map, featuring Washington & Oregon
Pictured: The 2024 BioMidwest Hotbed Map, featuring Illinois, Indiana, Iowa, Michigan, Minnesota, Missouri, Nebraska, Ohio & Wisconsin
Pictured: The 2024 Lone Star Bio Hotbed Map, featuring Texas
Shawna Williams is a freelance writer and editor based in New York City. She can be reached at shawna.williams@biospace.com or on LinkedIn.
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