Watch Out SF, Boston Is Turning Into Biotech’s No. 1 Cluster

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highly concentrated place in the world for life sciences innovation, in terms of bright people and bright ideas per square foot. There’s no other place in the world with biotech companies big and small, Big Pharma, world-class biomedical researchers, top clinical collaborators, thousands and thousands of talented employees, and venture capitalists all within walking distance.

When I travel to Boston, all I need is a hotel room, a subway pass, and good walking shoes to pack an amazingly efficient day of meetings with innovators. If I need to go to meet companies along Route 128, I’ll just rent a Zipcar from Kendall Square for a day. Travel to San Francisco or San Diego, and I have to rent a car (often overpriced) and spend a fair amount of time traveling around suburban office parks, sitting in traffic.

The difference in land use and transportation has helped turn Boston into a tight-knit community. When it’s easy for bench scientists, business development directors, or CEOs from different companies to talk shop or commiserate, they do. And they help each other. “When you are struggling with some kind of issue, you call up five of your friends at other companies and ask how they dealt with something like that,” says Adelene Perkins, CEO of Cambridge-based Infinity Pharmaceuticals (NASDAQ: INFI).

Adelene Perkins, CEO of Infinity Pharmaceuticals

David Schenkein, the CEO of Cambridge, MA-based Agios Pharmaceuticals, has had the experience of living in both the East and West Coast’s top biotech hubs, and he says the density of Boston translates into a competitive advantage. He joined the biotech industry in 2001 at Cambridge-based Millennium Pharmaceuticals, moved to Genentech from 2006 to 2009, and returned to Boston to run Agios. He says Genentech was an amazing place that lived up to its reputation for excellence, but it’s also geographically isolated at its campus on a hilltop in South San Francisco. That isolation doesn’t help foster the kind of company-to-company networking and cross-pollination of ideas that happens when so many people in the industry are within walking distance.

David Schenkein, CEO of Agios Pharmaceuticals

“The thing in Boston is proximity,” Schenkein says. “At least twice a week, somebody from the Broad Institute, the Whitehead Institute, or Harvard walks to our building to share some data they want to review with us, or I just walk over to their building. It makes life a whole lot easier to not have to get in your car.”

OK, you might say, getting in a car for 20-30 minutes and finding a place to park is no big deal. And people often argue that the West Coast has greater recreation/outdoor/quality-of-life opportunities that Boston can’t compete with. But the Bay Area also has some real problems with stratospheric housing costs that discourage young people getting started in their careers. Bad transportation and land use policies from decades ago tend to isolate people, keeping them walled off in their professional silos. That isolation keeps people from gaining that kind of peer-to-peer understanding that Perkins says she can get in the Boston network.

Having such a tight-knit industrial community creates a lasting competitive advantage. When people feel connected to a community, they tend to put down roots, knowing that while their company might be risky, they will easily find another job down the street without having to move their families. And they can easily diversify their skill sets in Boston by moving around a few times in their career to different kinds of organizations.

“The biggest advantage I can see building Agios in Boston rather than San Francisco or New York or Boulder is my ability to go from 15 employees to 75 employees in two years, and keep getting A-players,” Schenkein says.

Of course, once a place attracts this many smart people and gets this much critical mass, the advantage tends to create a virtuous cycle. Look at Sarepta Therapeutics (NASDAQ: SRPT). This company recently nailed an important clinical trial with a drug for Duchenne Muscular Dystrophy. It needed to recruit a bunch of new people with expertise in rare diseases. When it couldn’t get the people it said it wanted to move to its headquarters in Seattle, the company moved its headquarters to where the recruits were—Boston.

One other advantage, not to be underestimated, is Boston biotech’s edge in political status and clout. When I traveled to the Biotechnology Industry Organization’s conference in Boston in June, I was amazed that the hometown paper, the Boston Globe, considered BIO’s convention to be front-page, above-the-fold news in the Sunday paper. Flipping channels that evening in the hotel, I saw the CEO of the Massachusetts Biotechnology Council being interviewed on New England Cable News about what the Bay State can do to flex even more biotech muscle.

Coming from the West Coast, this amount of attention for biotech is eye-opening. Unless anti-industry activists raise an enormous stink about biotech, it doesn’t make mainstream news. If you live in the Bay Area, your town is dominated by Apple, Google, Facebook, etc.—and unless you work in the industry, you may never have heard of Gilead Sciences (NASDAQ: [[ticker:GILD]). San Diego has some good biotech assets, but most folks think of it first as a military town, or as a wireless infrastructure (Qualcomm) town. Seattle has Boeing, Microsoft, Amazon, Starbucks, Nordstrom, Costco, and no flagship biotech company.

In Boston, if you define healthcare loosely to include all the hospitals, biomedical research, and biotech and Big Pharma, then healthcare is the state’s undisputed No. 1 industry. As Millennium’s Dunsire said at an Xconomy event last week, there are 450,000 people working in healthcare in Massachusetts. That many people in one group creates clout. In Massachusetts, elected officials know this and want to do what they can to help biotech. Even though elected officials can’t always throw big bucks into the industry, this support can mean the difference when a company needs a permit or some smaller issue. And it provides a psychological boost to the companies who know they will be heard and not just get a cold shoulder from their elected officials.

Aveo Oncology CEO Tuan Ha-Ngoc

One last point about culture. There’s always been some cultural divide between the coasts, and I suppose people will never stop arguing about it. People on the West Coast sometimes like to trot out stereotypes about the sharp-elbowed competitors in Boston, how they can’t collaborate as well as us laid-back West Coasters. That’s just not consistent with the Boston I’ve experienced. If anything, there’s more of a tight-knit collaborative community in Boston than in San Francisco. There’s a can-do spirit, an energy in Boston that is palpable. It will endure. Boston is reaping what it has sown for decades.

“You can feel the sense of common purpose,” says Tuan Ha-Ngoc, the CEO of Cambridge-based Aveo Oncology (NASDAQ: AVEO), who started his biotech career at Genetics Institute in Boston in 1984. “We are all here, we run scientific organizations, we run hospitals, we run companies. We know the future is out there for us.”

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17 responses to “Watch Out SF, Boston Is Turning Into Biotech’s No. 1 Cluster”

  1. VDC says:

    BOS got off to a slower start than SFO decades ago. But now, as the chart in “Where biotech is better off than anywhere else” shows, BOS is over taking SFO at least in terms of the number of Series A deals.

  2. JP says:

    What about RTP, NC?

  3. KC says:

    Based on the career opportunities recruiters are calling about, I would say Boston definitely has the momentum right now.

  4. JP–I’m no expert on Research Triangle Park. We at Xconomy don’t have a bureau there. But the data from Ernst & Young and other sources ranks N. Carolina much further down the list than Boston and SF. If you were to break things into rough tiers, then I’d say SF and Boston are undoubtedly the first tier, San Diego & NY/NJ are in the second tier, and a few other places like Seattle, Philly, NC, & Texas are in the third tier.

  5. Jimbo says:

    I had a this debate on your article about Sarepta, and am assuming that this is an impetus for your article. I agree Boston is getting close, but they are not there yet. A couple of points for and against each one. Boston is much cheaper than SF, both for employee cost of living and for running a business (Positive). San Francisco has a much great quality of life (weather, outdoor activities, culture, scenic beauty) (positive).

    Personally, I have worked in biotech in both places and I think the innnovation mindset on the West Coast is better. Peopel take more chances and are not as rigid in their thought process (huge generalization, I know, but in general, my experience) . The kind of entrepeneurial teaching at Stanford and UCSF is IMHO superior to MIT and Harvard, and it is a bonus to be so close to Silicon Valley. I am a Genentech alum from 95-2005, and that was an awesome experience. Having lost Genentech to Roche has been a devastating blow to SF biotech revenue numbers and culture, but a lot of good Genentech people have also founded new biotech or given their expereinces to smaller ones.

    • Ran says:

      Now that I am much older, looking back at my past, I’d tell anyone of you younger folks starting out to look at the quality of life with a balance of Fun times over all that dog eat dog, crumbling infrastructure, nasty weather in Boston!

  6. Jimbo—I’ve been thinking about the SF vs. Boston question for a long time. But the Sarepta move, and the comments you and others made about that story, did help prompt me to think about it some more in this column.

    I agree with what you’re saying about the quality of life on the West Coast. I love it here, and always am glad to come back after traveling East. But I see it diminishing as an advantage. One star biologist I know who has lived in Seattle and SF, Eric Schadt, says that he experienced such horrific traffic going to Lake Tahoe that he realized it was easier for him to fly from SFO to Sea-Tac, rent a car, and drive to Crystal Mountain for a day of recreation.

    I still think the long-term ramifications of the Roche/Genentech deal are to be determined. While Roche has preserved most of the jobs in South SF, and Genentech has remained innovative the last few years (T-DM1, pertuzumab, vismodegib, et al), I haven’t seen a wave of big-idea startups led by ex-Genentech managers, armed with big Series A venture rounds. They may be bottled up by the lack of VC funding. If we start seeing more of those startups getting formed, and making real progress, then SF could keep this race close. But I think the transportation, land use, and political clout for biotech in Boston are massive long-term advantages.

    • Jimbo says:

      agree with your points, but would add some more.

      Most of the elite at genentech left within 1 yr of roche buyout, and many the year or 2 before . I would look at Genentech led start-up since 2006 or so, when genentech really turned into BP. A lot of innovators left in that period.
      T-DM1 and pertuzumab are not recent innovations. The innovation happens prior to and in ph 1 and 2, and these started pre-Roche.
      I don’t agree with the lake tahoe comment. I own a home there and go every other weekend during the winter. I live in SF and it has never taken me more than 4 hrs to get there (unless there is a massive storm). It usually takes 3 to 3.5. I leave after rush hour on Friday nights around 7:30. During non-winter months I cycle and mountain bike in marin every weekend. During winter, i surf in the week and go to tahoe on weekends. Not to mention world class ballet and opera. Of course, Seattle also has all of these advantages over Boston as well and is a beautiful place

      • This might be worth another column at some point—how much innovation was sparked by the Roche/Genentech takeover, both inside and outside the company. It’s definitely true that T-DM1, pertuzumab et al are examples of Genentech innovation from years ago, but that are just obviously ripening now. It will take years to get the final word on how innovative Genentech really was post-Roche takeover.

        • Ryan Bethencourt says:

          Luke I’d love to see an article that tracked what innovation may have been catalyzed by the Roche takeover (prior to the full buyout) back in 2006!
          I also think it’s worth noting/watching some of the innovation that’s slowly starting to bubble up from the SF DIY biotech scene, it’s still very much mostly amateurs but there’s a lot of potential there for a different type of innovation outside of the walls of academia.

        • Jimbo says:

          i doubt any innovation was sparked inside the company due to the takeover, but i’m sure a lot was sapped

      • KG18 says:

        Quality of life means different things to different people. For instance – some ppl actually like to experience all 4 seasons. I don’t live in Boston (only visited)… but I know there are many outdoor recreational activities you can get to in 4 hours from Boston (not to mention Nantucket or Cape Cod). You can get to the beautiful states of New Hampshire and Vermont in much less time. In 4 hours you can even get to the immense and also beautiful Adirondack Park in upstate NY. If you talk of ballet and culture – you can get to NYC (tops for culture in the U.S.) by train, bus, or car in – or less than – 4 hrs also. Montreal is not much further in the opposite direction.

  7. TZ says:

    I’m at a startup biotech here in the SF Bay Area and I have to agree with the premise of your article. This personal opinion of mine was cemented recently after trips between here and Boston over the years as well as personal correspondence with colleagues from both areas.

    A number of folks I know from the next generation of scientists (grad students, postdocs) finishing their time from Stanford and UCSF have left for Boston as simply that’s where the opportunities were in biotech and disciplines surrounding that such as life sciences consulting, business dev., etc.

    Though I do like the quality of life here a number of factors negatively impact said quality of life for someone still in the early-mid crescendo of their career. Career movement feels even more risky here than in a place where there is a density of other startup biotechs as you point out. The cost of living is skyrocketing with the tech nouveau riche further driving this up. Traffic and lack of consistent and convenient public transport is an issue hence why tech companies, and even Genentech, need to have their own commuter shuttles as a necessary perk to ease this pain point to attract talent.

    The data is clearer now but I think the writing was on the wall starting since 2010 coincident with the emergence of the tech (mobile, social) in the SF Bay Area. Silicon Valley VC firms were slow to innovate their biotech investing business models sticking with the old grow big go big with well paid management brass that resulted in quite a number of failures. Boston life sciences VC firms learned what works and what doesn’t, invest in lean teams and act as interim management so the early-stage company can rightfully focus on science, and screened for true entrepreneurs and management leaders who add value while weeding out the snake oil types. Here, instead of learning to adapt the SF Bay Area VCs in life sciences either died out or just swung the pendulum hard the other direction into tech as most VCs in this area tread both sectors.

    These VC firms still show up at conferences and make a big show and brouhaha about investing in early-stage biotech startups. The reality is when they say “early” they mean technologies in clinical trials and they are extremely risk averse in the biotech sector right now. The reason they still show up at conferences is mostly a public relations game for if and when the biotech sector gets hot again they will try to convince us that their firm stuck with biotech entrepreneurs and was rooting for us all along!

    My 2 cents from the trenches.

  8. TZ–thanks much for the thoughtful comment. While there’s a lot of energy in Boston at the moment, I agree the biotech industry overall is going through a fragile period, as people are trying to figure out ways to improve R&D and make companies more attractive from a risk/reward investment perspective. Scary times to be a scientist in the trenches.

  9. PR says:

    Loved the article Luke. I think a great follow up which I would love to read is whether this momentum fostered by the VC’s that you mention will be sustainable and good for the Biotech economy of the nation as well as Boston/Cambrige. What I am finding is that as one of your other posts reveals is that this group of VC’s run organizations lean…. very lean. In many cases the companies are run with virtual labs with new bright researchers chained in their offices managing CRO’s which are most oftenly based in China and India. They are so controlling in their power that little capital is spent or invested. It is clear that an easy exit strategy is planned right from the beginning and one must wonder if the goal is to gain the technology and sell this off, what real gain is there to the economy, if very little of permanence is built? What personal development is stiffled when a generation of new scientists are beginning their careers this way. I know of a few instances of this but it would be worth another story if you would investigate and comment on whether this is much broader and if this is one big house of cards waiting to fall.

  10. yabis2000 says:

    VC’s like warm weather, nice scenery, skiing(lake tahoe) and wine(napa).

    No contest here, Bay Area.

  11. NE-PNW VoorTrekker says:

    I find it very telling that Amgen, with their recent announcement of closing of CO and WA sites, will be expanding at their South SF and Cambridge locations. That is not the whole story though, since I am working at Helix right now. There are 660 FTE at the two WA sites, and maybe 80 contractors. Inside they are saying 200 or so will be relocated, and almost all to Cambridge. Amgen appears to want to be focused in the two main clusters, with most of that focused in Cambridge.

    Looking back at all of the jobs available on, and the constant calls of the recruiters from Boston, I get jealous of all of the job opportunities which we now lack here in Seattle. “Bay Area” is good don’t get me wrong, but I am just not seeing the same opportunities popping up, both in quantity and in quality. You can talk venture capitalism all you want but the employment opportunities are the proof in the pudding (SD always ranks high here, yet has very few jobs like Seattle). “Vibrancy” and “innovative culture” are qualitative terms that are overused to the point that they no longer have meaning. Things in Boston started ramping up in late 2010 and hasn’t stopped since- Acceleron, Momenta, Moderna, Agios, Joule, Bind, Dimension, Blue Bird..the list goes on and on of smallish, exciting places to work for.

    Versus SF area, Boston also has less traffic, lower housing prices (with bigger lots too!), way better public transportation, and lower income taxes. “Quality of life” is subjective in many ways and I think that has been much better for me here in Seattle based on my personal interests (outdoor activities, natural history, gardening, beer/wine, food, “roadtripping”). The western states (Southwest, Pacific Northwest, Rockies) have geological advantages over anywhere in the East. The most humdrum town in the West has way better scenery and climatic variability compared to the best place in the East.

    Boston is that place though- a full service city that is very close to beautiful natural settings. The best place East of the West all around. I can write paragraphs of good things about the Boston area, just as I can for the Seattle area, but I won’t bore you guys.

    I just wish the biotech. money would flow back to Seattle. We almost have it all here in my opinion. I’ve been to SF just once since I moved out here- it was a good trip but I don’t feel the need to get back there any time soon. There is just so much to do up here year round!