Recently, members of our team sat down with Bob Coughlin to discuss the life science industry in Massachusetts. Read part three of our conversation which covered real estate, life science clusters, and location.
Q: After booming during COVID, the biotech industry writ large has struggled financially over the past year. How concerned should we be about the industry’s economic future?
Let’s break it down into three buckets of life science companies: First, you have small startups, second, you have mid-sized publicly traded companies, and third, you have the large commercial pharma companies, i.e., the companies that actually have drugs and they sell them to patients.
Those are the three buckets, so let’s look at the health and wellness of the three buckets right now.
Bucket number one: new companies, venture backed, still privately held, haven’t gone public. A lot of money was raised in these VC funds before the market crashed, so new company creation is still high. That’s great news. But how are they going to behave?
To get further along the business cycle is going to be more conservative, slower, and they will need to spend less money, because they’re probably not going to have an IPO in the near future. So, they’re going to have to get further along with less and then maybe do a licensing deal with a big pharma company.
These are very smart people and they’re good at business and they’re going to figure out how to get that product from the research bench to the bedside of the patient, but you have to be nimble and be able to pivot when the economy changes.
Bucket number two: mid-sized, publicly traded companies.
At one point there were more than 200 companies trading below cash, meaning they had more cash in the bank than the company’s stock was worth.
I’m not an economist, but that doesn’t really work. Those companies have been in a lot of trouble, but some of the assets are good and we’re hoping that big pharma companies continue to come in and buy those assets and keep them alive so that they don’t die on the vine. Many of those companies are being cleansed and going away, and that’s horrible.
What does that mean to the real estate community? It means for the first time in a long time, we’ve got space. There is now 1.6 million square feet of subleasable space that didn’t exist a couple years ago, and we don’t have enough companies growing to absorb it all.
So, for the first time in years, we have less demand for lab space than we have supply, which is not great for the landlords, but not bad at all for the tenants because they can initiate better deals now.
Bucket number three: large commercial pharma companies.
Those companies have an extraordinary amount of money to invest in their future pipeline. So, what we have to do, much as we did during the Great Recession, is make sure that we’re creating an atmosphere for these big pharma companies to get a front row seat.
We want to ensure they have access to the mid-sized companies that have promising future therapies, so they can do deals and those companies in the middle bucket don’t die on the vine.
Is the industry healthy right now? Absolutely not. But is it the end of the world? Absolutely not. Good science continues to get funded, and here in Massachusetts we’re trying to invent therapies that change the course of disease and in some cases cure disease. We’re the tip of the spear for gene therapy and for what’s next and that’s why we were awarded to be a hub for ARPA-H, because it’s all happening here.
Do I lose sleep at night thinking that this industry is going to go away? Absolutely not. Economic downturns create opportunity. We put ourselves on the map between 2008 and 2012 because the market was dead. People gravitate towards the good science and the talent, especially when times are tough.
Q: My last question is simple: what is the promise of the biotech industry?
November 8th was the fourth anniversary of my son taking his first dose of Trikafta.
He’s 21 years old. He was diagnosed with cystic fibrosis in utero, so he’s had this disease his entire life and he was born with an expiration date.
And it was an expiration date back then. The healthiest day of his life was the day he was born, and he got sicker every day with this disease.
He took his first dose of Trikafta when he was 18. In the four years since he’s taken the drug, he’s grown 12 inches, he’s gained 50 pounds, his lung function is back to what it was when he was 4 years old. We didn’t expect him to make it this far. We didn’t expect him to be this healthy. It’s miraculous.
But it took 18 years and $13 billion dollars to invent the drug that’s keeping him alive.
There isn’t a week that goes by where I don’t meet with brand new CF parents to tell them how good their timing is, how lucky they are, and how their baby probably won’t ever have symptoms of the disease because we have this medicine that’s available now.
And not only do we have this medicine available now. We’re working on gene therapy cures for the disease. Fifteen years ago, you couldn’t even say the word “cure.”
When you unlock these mysteries and you see what we’ve been able to do in cystic fibrosis, you understand that we can do this in sickle cell, diabetes, beta thalassemia, Rett syndrome, Duchenne, Alzheimer’s, ALS, Parkinson’s disease, and Huntington’s disease. We’re going to figure this stuff out in our lifetime. Think about what that means for the human race.
You know, I left MassBio to work in real estate, but I work in life science and health care real estate. I’m only working with hospitals and labs and biotech companies.
I don’t want to work anywhere else; I don’t want to do anything else.
Because if you can get up every day and go to work, especially not being a doctor or a scientist, and you can contribute to saving your own child’s life and so many other…
That’s the promise.