San Diego Biotech Entrepreneurs, Innovation Lead to “Maturing” Ecosystem

Xconomy San Diego — 

The local biotech ecosystem is growing up thanks to its innovative science and collaborative ecosystem, advantages that put it nearly on par with the nation’s top life science regions, according to industry veterans.

San Diego has long been considered a second-tier primary biopharma hub in terms of number of companies and venture capital raised, falling behind the twin behemoths of Boston-Cambridge and the San Francisco Bay Area on those and other metrics.

At Xconomy’s Xcelerating Life Sciences San Diego event this month, investors, executives, and others noted under-looked strengths contributing to the region’s maturation.

Venture capitalist Nancy Hong recalled that some people who lost biotech jobs during the last US recession had to move out of the San Diego area entirely because there weren’t enough companies to support them. She is optimistic that dynamic has changed in recent years, and that the region now has enough outfits to make relocation to the area a less dicey proposition than it may have been a decade or so ago.

“We’re still small, and it’s still pretty easy to wrap your arms around the biotech scene here and meet who you need to meet, but we’re not too small that we don’t hit that critical mass,” she said. “I think San Diego’s finally got that critical mass; that’s what I’m hoping.”

Hong moved to San Diego about two decades ago from the Bay Area. In 2016 she joined St. Louis, MO-based RiverVest Venture Partners and helped it open its San Diego office.

While relatively few venture capital firms are headquartered in San Diego, a number, like RiverVest, have in recent years opened an office in town, or have someone who lives in or travels often to the region, such as New Enterprise Associates (NEA) partner Carol Gallagher.

Xcelerating Life Sciences panelists highlighted other aspects of the region’s biotech ecosystem that they view as accelerants to its growth.

Ciara Kennedy, CEO of local biotech Amplyx—whose investors include NEA and RiverVest—emphasized the community’s cooperative attributes as an essential element of its successes to date.

“I think the collaborative nature of San Diego as a community is heightened within the biotech space,” Kennedy said. “When we think about ecosystems like [Johnson & Johnson (NYSE: JNJ) incubator] JLABS, Amplyx started as a JLABS company [and] we’ve collaborated with multiple other JLABS companies, and that happens when you’re having a conversation about your science and your research over a cup of coffee in the break room, and I think that enables a cross-fertilization of ideas.”

Amplyx, which is working to develop a new class of antifungal medicines to treat life-threatening infections in patients with compromised immune systems and the critically ill, has also benefitted from sharing know-how with local academics and other startups, she said.

“We have such wonderful institutions here, there are some top-tier infectious disease researchers at UCSD and other institutions,” she said. “We’ve collaborated with other small companies in the area to really apply novel techniques to understand our mechanism of action.”

The quality of the people available to serve on board of directors can play a defining role in an early-stage biotech’s ability to progress, she said.

“As a CEO, one of the biggest resources, apart from the financial resource of our investors to keep our company financed, is our board members as resources in terms of connections, how we’re thinking, recruiting, and staffing,” Kennedy said. “Ultimately, everything we do as a small company is all about a team, so it’s all about who we have in the various seats at our company and do they have the resources to go do what they’re best at.”

David Weitz, who heads Takeda California, the Japanese biopharma’s global R&D site in San Diego, also believes the region’s biotech ecosystem has been advanced by its willingness to work together.

He lived in some of the nation’s premium biotech hubs, including New York, Boston, and San Francisco, before coming to San Diego about 15 years ago.

“San Diego definitely has a different feel, and one of the things I love is the accessibility of people,” Weitz said. “It’s much less of a burden to find just the right person to make an introduction; people can just introduce themselves. In a way, I think it’s kind of a flatter ecosystem.”

Josh Schimmer, senior managing director on Evercore ISI’s biotech team, said he would put San Diego on par with its neighbor in the northern half of the state when it comes to the scientific work being done.

“As I’ve gotten to know San Diego, I think of it as right there alongside San Francisco, and in some ways, possibly even ahead in terms of the quality of the innovation and the depth of it,” said Schimmer, who has lived in San Diego for about two years. “Maybe not [in] the maturity of the publicly traded companies, but it feels like it goes toe-to-toe.”

It’s possible that a longstanding local concern—that the acceleration of San Diego’s biotech ecosystem is hamstrung by the low number of fully integrated companies—has proven unfounded, Hong added.

“There’s a great core of folks here who love to be entrepreneurs, who love to start a company, make it work, then start a new one,” she said. “Having that balance of a few bigger companies, a few strong pharma partners … [with] that right mix of the different sizes, I think we’ve found a really good balance.”