It’s been more than two years since Massachusetts Gov. Deval Patrick signed the bill for the state’s plan to invest $1 billion in its life sciences sector over a 10-year period. Susan Windham-Bannister, who started work as chief executive of the quasi-public Massachusetts Life Sciences Center around the time the bill was signed, has since been in charge of the massive initiative.
To get a read on how things are going at the Life Sciences Center, and to hear Windham-Bannister’s take on major developments at Cambridge, MA-based Genzyme (NASDAQ:GENZ) and other nooks of the state’s life sciences sector, I wandered around the Waltham, MA office park where she and center are based until two maintenance guys pointed me in the right direction. (It was a good thing, as I almost dropped in on my friends at the venture firm Advanced Technology Ventures in the same building to ask for directions. If you wonder why “Dr. Sue” set up shop here, read this piece from our Xconomy archives.)
So far, the $1 billion plan appears to be moving along nicely despite some cuts to its annual budget for its investment fund on Beacon Hill. In the program’s first two years, a total of $191 million dollars has been awarded through several programs to support the life sciences sector in the state. Those dollars have been invested alongside $710 million from companies, the National Institutes of Health, private investors, and other sources of external funding. Noting the impact of those dollars and her center’s, Windham-Bannister likes to say that her organization has already come close to reaching its magic number of $1 billion in investments in life sciences.
In pure state funding, the center has distributed the majority of its dollars to capital projects in the life sciences sector. For example, the town of Framingham got a $12.9 million grant from the center to for work on a wastewater facility, which is needed to support Genzyme’s $300 million project to build a new biotech drug plant there. The company also got $6 million in tax incentives last year to create 200 jobs in Framingham during 2010.
The center is also courting global life sciences companies to match its investments in startups. To date, the French drug giant Sanofi-Aventis (NYSE:SNY) and New Jersey-based health products powerhouse Johnson & Johnson (NYSE:JNJ) have each agreed to contribute at least $500,000 to the program. (Read on for Windham-Bannister’s answer about her expectations of Sanofi if the drugmaker follows through with its reported plans to acquire Genzyme, the state’s largest biotech company.)
In recap, the state’s $1 billion life sciences initiative consists of three main funding areas: $500 million for capital projects, $250 million in tax incentives, and $250 million for its investment fund. The latter bucket, the investment fund, relies on an annual appropriation from the state budget. The governor and the state legislature, facing major budget deficits, have knocked down the proposed $25 million annual investment fund to $15 million and $10 million in fiscal years 2009 and 2010, respectively.
When I sat down with Windham-Bannister last week, we talked about a range of important topics in the state’s life sciences industry. Hint: Carl Icahn, Genzyme, and other major players came up in our conversation several times. The following are excerpts from our conversation. (Look for Part II of this conversation, in which Windham-Bannister talks about what Ted Kennedy’s death and other major happenings in the political arena mean for the future of the life sciences sector in Massachusetts.)
Xconomy: If the reports are true, Sanofi-Aventis plans to buy Genzyme, the state’s largest biotech company, and might have to make job cuts to make the economics of the deal work out. What would you like to see happen if the Sanofi-Genzyme deal goes through?
Windham-Bannister: Obviously, I would not like to see it cost the state many jobs. My optimistic perspective is that Sanofi-Aventis has already been demonstrating in very active ways its strong commitment to expanding its presence in Massachusetts. So we’ve seen, and they have announced, that they are moving their oncology group here and other parts or operating units here in the state. They have joined our consortium program. It’s pretty clear to us that Sanofi-Aventis recognizes the value of being here, so I would like to think if this coming together of the two companies occurs, that they will find many ways to absorb the talent from Genzyme. Sanofi is giving us very strong signals that they want to expand their presence here.
X: You’ve probably been asked this before, but will $1 billion over 10 years be enough to help the state maintain and even grow its reputation as a leading center for life sciences?
W-B: I’ll put it like this. This is how I used to talk about it when I first took this job and people called me the billion-dollar CEO. A billion dollars is about what it takes to bring a pharmacologic, and certainly a biologic, to market. In many cases, and let’s talk about the economics for a minute, some companies do have the incentive to bring a product to market if they don’t think they will be able to generate at least $1 billion in revenue from that product. It’s a great commitment, a great recognition of this cluster. It is certainly enough money for us to seed, accelerate, and to attract other investments. It is absolutely quite a lot of money if it’s used wisely. As I said, it’s the reason why we’ve tried to be strategic about where we’re investing, and always trying to match dollar for dollar. Today, it is the largest state initiative. Maryland certainly is talking about $1.1 billion. You argue that California is investing more, but it’s all focused on one area, stem cell research, and it’s primarily going to academic institutions. For our state, particularly in this economy, to stay the course with this investment is really huge.
X: The Boston Globe recently described Wall Street tycoon Carl Icahn as the most influential person in Massachusetts’s biotech industry. What if any concerns do you have that Icahn, who holds major stakes in Biogen Idec and Genzyme, now has the power to impact everyday life sciences workers in the state based on how he buys and sells stocks?
W-B: I’ll flip that and say what are we at the Life Sciences Center doing to address some of those concerns. Life sciences, and it’s reflected in the duality of our mission, is about the good science and the good business. If science is never translated into products or services, they never get into the hands of caregivers or into the bodies of patients. So there’s something to be said for thinking about the good business that goes hand-in-hand with the good science. What we’re doing here at the center is making Massachusetts an attractive place for people like Carl Icahn to want to have companies. We’re investing in the pipeline of innovations, and it’s cost-effective to be in a state that is hugely innovating, because there are lots of places to go [for large drug companies] to find the next new discovery that will be the blockbuster for your company or will save you the internal development costs.
Yes, [Icahn] may be very influential, but we at the center are providing all the conditions so somebody like Carl Icahn will look at Massachusetts, and through whatever lens he is looking, it will make sense for him to seriously consider investing here, having companies locate here, or having companies grow here.
X: Which two or three companies do you feel have benefited most from the state’s life sciences initiative?
W-B: They all tell us that they have benefited. Remember that a lot of these companies are just now getting their grants. We’re really pleased that two of them [Wadsworth Medical Technologies and Pluromed] have received their FDA approvals. Pluromed has signed a major marketing agreement with Boston Scientific. So it’s not only benefited this young company, but also Boston Scientific. Boston Scientific now has access to this technology [a device used in kidney stone management] that improves their competitive position. All of the [startups we’ve funded] are now talking to venture capitalists and institutional investors about their next rounds of funding, and those conversations are really happening as a result of our investments and their relationships with this center.
(Editor’s note: In the next part of this interview with Windham-Bannister, she answers tough questions about her involvement in getting Patrick re-elected for a second term this November and how political change could impact Patrick’s $1 billion life sciences initiative.)
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