[Updated 9/19/18, 3:40 p.m. See below.] Tiny Rhode Island and its capital city Providence have always punched above their weight, for better or for worse.
Better: Little Rhody’s founder Roger Williams, fleeing religious persecution in 17th-century puritanical Massachusetts, was one of America’s first abolitionists and created the concept of the separation of church and state.
Worse: After World War II, one Providence neighborhood became the nerve center of New England organized crime and one of its mayors the ne plus ultra of civic corruption—twice elected, and twice a felon. But the same mayor, Vincent A. “Buddy” Cianci (pronounced see-ANN-see), also sparked a renaissance in Providence that, ever so fitfully, has given civic leaders hope of an economic wave propelled by life-science activity in a new downtown core.
The state, and especially its capital city, have many pieces in place to help a tech-savvy cluster take off: a revitalized downtown with exquisite architecture, thriving food and arts scenes, and a welter of academic centers, including the top-notch Rhode Island School of Design, Brown University, and the University of Rhode Island. The centerpiece is a swath of reclaimed downtown land where a freeway once ran, now dedicated to health organizations and innovation.
But while biotech has boomed in the Boston area just north and in other major clusters, Rhode Island’s biosciences community has shed 10 percent of its jobs since 2014, according to the BIO national trade organization. The state’s bioscience firms have drawn $43 million in venture investments in that period, but only $1 million in 2017.
The state prefers to focus on better numbers, compiled since 2016 and driven, it says, by some incentives on offer: matching small-business grants here, construction tax credits there. The state’s commerce department, known as CommerceRI, says it has put $29 million into the life sciences in the past 36 months, generating more than 700 new jobs. Still, the government has had to maneuver around lingering resentment over one of the biggest state-subsidy fiascoes in recent history from a previous administration (more on that below).
Governor Gina Raimondo, a former venture capitalist, fended off criticism from the left of her business-friendly agenda to win last week’s Democratic primary. She faces a previous rival, the Republican mayor of Cranston, RI, in the November election.
A local group, Rhode Island Bioscience Leaders, convinced state lawmakers in 2013 to earmark $1 million a year for small-business grants and paid internships. They’ve tried to have it doubled, to no avail. (Compare that to the $1 billion fund Massachusetts created in 2008 for its life science sector, recently renewed for another five years and $623 million.)
Under Raimondo, New England’s worst unemployment rate after the Great Recession has been tamed to match the national average. Life-science boosters want more. “The living is great, now we just need the jobs,” says Edward Bozzi, who heads the undergraduate biotech program at the University of Rhode Island and co-founded RI Bioscience Leaders. “The jobs are the key thing.”
The question, then, is what kind of jobs? Some civic leaders argue the state needs to capitalize on its academic strengths: design, engineering, and healthcare that feed a converging variety of disciplines, but not necessarily the traditional pharma-heavy R&D that has turned Boston into the world’s biotech epicenter. In a state where the recovery from the recession has been more fragile than among its neighbors, what types of jobs—and how to attract them—is a crucial question for Rhode Island’s innovation future.
So Close Yet So Far
Downtown Providence is an hour by train from Boston’s South Station. Many city residents commute to Massachusetts—more than 10 percent, according to a 2013 state report. (Statewide, the number is slightly higher at 12 percent.)
A group of Boston biotech workers who live in Rhode Island are tired of commuting. They want to pursue their work at home, and their advocacy group, RI BioHub, will soon produce a report with recommendations to boost the state’s life-science ecosystem.
The leader is Patrice Milos, a veteran of drug giant Pfizer (NYSE: PFE) and Cambridge, MA, genomics firms, who has already made the break with Boston. She founded Medley Genomics, a Brown University spinout, in Providence two years ago and has benefited from state funds—a $50,000 innovation grant for work the company is doing with a local hospital.
(Disclosure: This reporter graduated from Brown in 1991 and has no connections to any companies mentioned in this article.)
On the list of the group’s recommendations: more state incentives, a more entrepreneurial mindset among local academics, more private capital, and more laboratory space for startups. Some of those elements are coming (as we’ll see). But there’s also a civic glue that needs to develop, says Milos: “There’s a lot here, but we’re not operating as a unified ecosystem where everyone is working together.”
Add visibility to the list of needs, says Susan Windham-Bannister, the former CEO of the Massachusetts entity that oversees the state’s billion-dollar life sciences fund. Windham-Bannister is now a consultant to other local groups, including RI BioHub, looking to build a stronger life sciences presence. She has urged top state officials to go to trade meetings “so the word is out and it’s clear from the physical presence of the administration that they’re behind this.”
You’d think Rhode Island’s proximity to Boston would make for a natural extension of the bio boom of its northern neighbor. But for many, Rhode Island might as well be on a different planet.
Economic development officials tell of the state being blacked out on maps showing available biomedical lab space in the Boston region. And while the Boston area attracts more bioventure capital than any other place in the world, scarcely any trickles down to Rhode Island.
The good news: They aren’t starting from scratch, which folks pushing for more wet lab space and other bio-friendly infrastructure are eager to point out.
The state commerce department says biotech provides the same percentage of private jobs statewide, just under 1 percent, as nationwide. For the broader healthcare industry, the state percentage of total private jobs (16.1) is higher than the national average of 12.7 percent, and even higher than health-dense Massachusetts, at 15.7.
Amgen has one of the world’s largest biologics manufacturing plants in the Providence suburb of West Greenwich, with more than 600 full-time employees, and is expanding with state tax breaks. Cambridge, MA-based startup Rubius Therapeutics (NASDAQ: RUBY), fueled by recent IPO cash, is renovating a plant in Smithfield, RI, recently abandoned by Alexion Pharmaceuticals (NASDAQ: ALXN), to make a kind of drug never done before, fashioned from red blood cells. Rubius will spend $155 million on the rebuild and receive between $9 million and $12 million in state tax breaks over the next 12 years, according to a Rubius spokeswoman. The goal is to hire 150 new employees over a three-year period.
The state projects Amgen and Rubius paying back $10 million in net revenue over the next decade or so, Commerce Secretary Stefan Pryor tells Xconomy: “We’ve mobilized to attract more bioscience ventures.”
If those results come true, it would be “an excellent return” for the state, says Bryant University professor Edinaldo Tebaldi, a close follower of the state economy. He praises the state incentives in place, but says “there is still room to improve.” For example, Rhode Island could use tax credits for angel investors, says Tebaldi, as well as broader R&D tax credits to attract both tech and biotech companies.
Incentives have brought 2,300 new jobs to the state since 2016, and 742 of them (23 percent) have been in the life sciences, according to CommerceRI. (That figure factors in Alexion’s shutdown—announced only a year after a promise of expansion—which took away 250 jobs.)
Annie De Groot, CEO of Providence vaccine developer EpiVax, thinks traditional biotech can build a sizeable footprint in the state. “There are enough people doing biomedical research [at local schools],” she says, noting that it’s not just about entrepreneurs. Workforce jobs are important, too. “There needs to be enough jobs for people with tech expertise to have options, instead of looking to Boston. If one big or medium-sized company came in, they’d feel they have more opportunity.”
One local school, the University of Rhode Island, thinks it can build a biotech footprint by partnering with drug companies. Spurred by a $15 million gift from the former chair and CEO of pharmacy giant CVS Health, which is headquartered near Providence, URI now has a big neuroscience department on its Kingston, RI, campus.
The school wants to join the ranks of institutions whose labs do R&D work for the drug industry. “We want to be seen as a good partner by biotech companies,” says Peter Snyder, a neuroscientist and the school’s new vice president for research and economic development.
He already is out talking to drug companies. Part of his pitch is a planned expansion: 30,000 square feet of biomedical labs in downtown Providence that Snyder says should be open for business in five years. (A state commerce spokeswoman says the department isn’t aware of announcements related to the expansion.)
[Updated with new EpiVax headcount.] Other than Amgen’s bio-factory, there is no big-pharma footprint in the state. With 30 employees, EpiVax is one of the largest local biotechs. Even then, De Groot notes, there is already competition for space with high-tech ventures; EpiVax kept trying to expand within its old Jewelry District building, but tech companies kept taking the space. Still, it’s not like EpiVax has been exiled to the suburbs. The company is now about a mile away from downtown Providence in a gorgeously renovated historic wool mill. De Groot’s commute from home, she says, is a 15-minute bike ride.
Jostling for space isn’t a bad thing, says Bryant University economist Tebaldi: “This tension is inherent to a healthy economy that fosters innovation. In addition, this is a private business problem, thus there is no place for the local or state government to make a decision or provide inflexible guidance on how these tensions should be resolved.”
Down the East Coast, Rich Bendis is president and CEO of BioHealth Capital, a trade group trying to boost the life-science business in the Washington, DC, area.
“Before you grow a cluster, you have to know what you have to work with,” Bendis said. While biopharma’s aura of cutting-edge science and headline cures is seductive, copying Cambridge’s blueprint isn’t a smart move, says Bendis. “Ten years ago everyone wanted a biotech cluster. But focus on an area where you are differentiated.” Bendis says Rhode Island, like his own DC-area efforts, should take advantage of non-pharma expertise, like data science, engineering, and design, to ride the wave of healthcare convergence that’s underway.
Former state economic development official Saul Kaplan says Rhode Island’s “quirky nature and tiny size are its secret sauce, but also its worst enemy. If it plays the same game as everyone else it doesn’t have the scale to compete.” Instead, he says, the state should become an innovation “sandbox” where disciplines come together in unanticipated ways.
To that end, the healthcare-related (but not biopharma) players in Providence and nearby are an intriguing mix. They include the headquarters of CVS; the global medical device design firm Ximedica; a health-technology group from Johnson & Johnson (NYSE: JNJ); and the Virgin Group’s Pulse division, which moved to Providence after buying ShapeUp RI, an employee wellness program started by a Brown Medical School alum. (See table below.)
|A Sample of Health and Wellness Players in RI|
|CVS Health (headquarters)||Woonsocket|
|Johnson & Johnson (health technology group)||Providence|
|Lifespan (health provider and research)||Statewide|
|Magellan Health (pharmacy benefit manager)||Newport|
|SE Greenhouse (accelerator)||Providence|
|Slater Technology Fund (venture)||Providence|
|Virgin Pulse (employee wellness programs)||Providence|
|Ximedica (medical device design)||Providence|
Locals like Kaplan want the design community, centered around the Rhode Island School of Design, to dive more into health. RISD, as it’s known, is another example of the state punching above its weight. With fewer than 2,500 students, it’s always at or near the top of design-school rankings. Much of the school is about fine art and media. But there’s also graphic and industrial design, disciplines that feed into advances in digital technology, medical devices, and other health products that are often attuned to what some call “the silver economy,” to help an aging population grow old more gracefully, in spaces of their own choosing.
Aidan Petrie, a RISD grad who co-founded Ximedica in 1985, is pushing hard for his home state to make its mark in healthcare innovation for aging populations. “If we don’t use technology”—drug delivery, robotics, user interfaces, and more—“to change the way we interact with our mature populations, they will bankrupt us,” Petrie said.
There is some academic momentum on this front. URI’s nursing program has a gerontology focus and a lab to simulate living space for people who want to age in place.
The Lifespan hospital system and URI have a significant dementia and brain science focus. And at RISD, a handful of students every spring take Leslie Fontana’s industrial design class on aging (which URI’s Peter Snyder has co-taught in recent years, as well). The students wrap their hands with tape to mimic arthritis; they go out onto Providence’s streets with their vision obscured. Then they come back to design products.
“Our Job Is to Un-Stick Them”
Inevitably, some of those student projects do gain commercial promise. Part of the grand plan, advocates say, is to provide physical and intellectual space in Providence to convince student and faculty entrepreneurs to stay. Along with a few incubators and accelerators, the New England Medical Innovation Center (NEMIC) provides a sort of one-stop shop for mentoring potential healthcare businesses. It’s a joint effort between RISD, Lifespan, Ximedica, and others, with two years of initial funding of $350,000.
[This section has been updated with more details.] NEMIC had its opening party last week. As people filed in, Petrie, who is a NEMIC founder and managing partner, explained to Xconomy how it works. There are inventors around the state who don’t know much about markets or regulation; NEMIC has a network of experts and consultants it can tap, free of charge to the inventor, to help with guidance. One candidate for commercialization: “smart socks” developed by a URI engineer that measure a patient’s gait—now recognized by some scientists as a “sixth vital sign” that can predict falls, signal cognitive decline, and more.
“Some of these products have been around but have gotten stuck,” said Petrie. “Our job is to un-stick them.” The state’s $50,000 innovation grants would help fill holes in the business plans.
The NEMIC mentoring process does not end with a demo day, and there is no fixed support period. Some companies have been under NEMIC’s wing for more than a year, says Petrie. The goal is to put companies in front of angel investors and raise a few million dollars, said Petrie. Some of the world’s biggest tech, biotech, and corporate venture groups are just an hour away in Boston, but Petrie acknowledged there needs to be more reason for them to pay attention. “There’s money flowing everywhere. Part of [the goal] is just for Rhode Island to swim into the mainstream more,” he says.
One investment lure could come from the Republican tax reform bill. It’s highly unpopular in deep-blue Rhode Island, but it included under-the-radar federal tax breaks for economic “opportunity zones.” The state just had the maximum number of zones, 25, approved by the IRS, including parcels of Providence under redevelopment.
Don’t Forget the Wet
While local economist Tebaldi warns against government favor for one subsector or another, there’s no denying that without space for wet labs and animal facilities, biotech startups will go elsewhere, even though life science jobs are now as much about crunching data as they are about swirling beakers and dissecting tissues.
Having some biotech downtown, in fact, is good for all disciplines, argues Bill Kane, a senior vice president at BioMed Realty, based in Cambridge. (He doesn’t have any contracts to build in Rhode Island.) Even in “dry” labs dedicated to genomics and other data-centric pursuits, scientists still prefer to be near wet labs, or near a hospital where clinical studies are taking place. “I once thought I could separate the two” when building office space, Kane says, meaning separate places for the offices and the labs, “but I can’t because of the persona of the scientists.”
As data, technology, and health pursuits continue to converge, traditional tech players also become part of the life science cluster. Microsoft, Google, Amazon, and others have a significant presence in Kendall Square, for example, and are making healthcare part of their business.
In other words, Rhode Island needs the same type of ferment: innovative people in close proximity, sharing ideas and comparing plans. That’s why it’s so important to get it right in Providence.
Down by the River
For all of former mayor Buddy Cianci’s faults (and boy, were there many), he did his beloved hometown the biggest solid in the 1990s. In his second go-round at City Hall, the city daylighted the Providence River, once buried under downtown asphalt, and built elegant walkways along its banks. Cianci pushed through a tax break for artists to spur economic development. The city’s artists took it from there, turning the Riverwalk area into a summer festival, WaterFire, centered around bonfires in the middle of the river.
The revival was known as the Providence Renaissance. But the recession came, Rhode Island economic development officials wanted to do something dramatic, and one of the biggest economic development fiascos in U.S. history soon followed.
Rhode Island is very much Boston Red Sox territory; World Series hero Curt Schilling, who helped pitch the team past the hated New York Yankees in the 2004 playoffs, started a video-game company, 38 Studios, after he retired. He was a demigod in Rhode Island, and in 2010, he managed to coax $75 million in loan guarantees from the state to move tiny 38 Studios to Providence.
(How much is $75 million for one startup? A national New York Times investigation of do-nothing state subsidies between the years 2007 and 2012 set the bar for egregiousness at $100 million per company—most of them behemoths like Amazon, IBM, General Motors, and Shell, spread across many states.)
Two years later, 38 Studios declared bankruptcy, triggering investigations and lawsuits. There have been no criminal charges. The state said last year it had recouped $61 million, leaving it on the hook for $27 million more. The saga continues: Just last week, an Austrian company bought the rights to 38 Studios’ intellectual property, including its only released game, Kingdoms of Amalur.
If something like the Schilling deal had been reviewed by the Massachusetts Life Science Center, where grants and incentives are overseen by an independent board of experts, not state officials, “it wouldn’t have gotten through,” says Windham-Bannister. She has recommended Rhode Island set up something similar for its life-sciences push.
38 Studios triggered an insulting scandal that added to injury; the Great Recession hit Rhode Island particularly hard, and, while unemployment is now down to 4 percent, it has been by no means a full-bore recovery.
If there’s to be a Renaissance 2.0, the river will again be the center. Just past downtown, the state moved a freeway and opened 26 acres on either side of the Providence River before it flows into Narragansett Bay—19 acres for development, 7 for green space. It’s now called the Innovation and Design District, or in shorthand, “the 195 land,” a reference to the relocated freeway. The designation also includes Providence’s old Jewelry District, a national historic landmark also undergoing revival.
The anchor building is South Street Landing, an old power plant that now houses a chunk of Brown’s administration and a nursing education center run jointly by URI and Rhode Island College. In the depths of its late-20th century ruin the plant was known as “the Birdcage” for all the pigeons roosting in its rafters. Now, it would be a crown jewel of post-industrial revival in most cities. In Providence, it’s just one of many spectacular sites.
Also up and running in the 195 land is a new science center for Johnson & Wales University. And coming in the next couple years are residential and retail spaces, student housing, a hotel, a Cambridge Innovation Center (CIC) co-working space, Brown’s school of professional studies, a new headquarters for Johnson & Johnson’s health-tech group, and a $20 million pedestrian bridge connecting to the north side of the river and the main campuses of RISD and Brown.
Brown’s medical school moved to the neighborhood in 2011. The NEMIC mentoring center is a couple blocks away. CIC is another NEMIC backer, with expectations that new companies that emerge from NEMIC stay local by using CIC’s shared spaces. It’s a hint of the interconnectedness that Milos, the genetics CEO and former commuter, says Rhode Island desperately needs to foster. It’s also a glimpse into how density happens—and must happen, as state officials acknowledge.
“Bioscience workers and companies generally are looking not for tumbleweeds in the streets after 5pm, but baby carriages, people walking dogs, nightlife and vibrancy,” says Commerce Secretary Pryor, who lives in the Providence neighborhood.
What won’t be in the new neighborhood: a new ballpark for the top Red Sox minor-league team. Plans to build it on the 195 land were shot down in 2015. The team just announced it would move from Pawtucket, just north of Providence, to Worcester, MA.
Get Off the Hill
With its recent history of corruption, stagnation, and an embarrassing dalliance with a sports legend, the refusal to throw a fat pitch to a minor-league sports team was perhaps a sign that the state, and its capital city, are ready to play at the next level.
There are other signs, too. Brown University, of Ivy League (and ivory tower) renown, is finally getting into the entrepreneurship game. It has always kept the business community at arm’s length and admitted as much in a strategic plan earlier this summer: “In Rhode Island, universities and industry have often pursued separate goals without sufficient coordination. In interviews, community and business leaders expressed confusion about how they could partner with Brown.”
But a four-story entrepreneurship center, bankrolled by a local private-equity mogul, is under construction across from the campus bookstore, and the school has partnered with a local venture group, The Slater Fund, to create an $8 million pool of biomedical venture capital to invest in student and faculty spinouts.
“They’re stepping off the hill,” says Milos, a reference to Brown’s location in Providence’s College Hill neighborhood. The move is literal, too, with many offices now in South Street Station and new academic buildings on either side of the river.
Is there enough momentum to power through if, or when, the economy slows down again? Rhode Islanders can’t be blamed for being wary. Before the Great Recession, the riverside power plant was already under renovation and supposed to be called “Dynamo House.” The developer was Brown alumnus William Struever, whose old firm was responsible for much of Baltimore’s Inner Harbor, another post-industrial revival. Struever was once a big deal in Rhode Island, too. At the 2007 groundbreaking, he predicted the renovated Dynamo House would be “the talk of the town in a very big way.” But with the recession, he ran into big trouble in Providence (and elsewhere) and sold the unfinished project amid lawsuits over unpaid bills. He now says his old firm has honored all commitments.
Another firm finished the job. Struever still loves the site. “The setting is amazing. There’s a great opportunity to connect everything.” The trick now is to make his old prediction come true, and more: Providence’s new innovation district must become not just the talk of the town, but the center of the action.