Researchers at Gilead Sciences, headquartered in Foster City, CA, have advanced the nucleotide prodrug remdesivir to Phase III studies, as well as Emergency Use Authorization in the U.S. and a conditional approval in the European Union. [Gilead Sciences]

California’s life sciences industry faces two key challenges in the coming months. The big one is continuing to cope with COVID-19 after a surge of cases in the past two weeks halted the Golden State’s momentum toward reopening its economy. Gov. Gavin Newsom on Thursday added three counties, bringing to 26 the state’s “watch list” of counties with rising infection and hospitalization rates.

The other challenge comes to a head this November, when state voters are expected to decide whether to approve Proposition 14 (The California Stem Cell Research, Treatments, and Cures Initiative of 2020), which would authorize $5.5 billion in general obligation bond funding for the California Institute for Regenerative Medicine (CIRM), the state’s stem-cell agency. The ballot measure would also expand from 29 to 35 the number of directors on CIRM’s governing board, the Independent Citizen’s Oversight Committee (ICOC); and create a fourth working group to advise the ICOC, with a focus on improving access to treatments and cures.

Last month, ICOC patient advocate member Jeff Sheehy was the lone dissenter as the Committee voted 21-1 to endorse additional bond funding for CIRM. Among his arguments: The new authorization would cost state taxpayers $7.8 billion (including interest).

Jeff Sheehy, patient advocate member of the Independent Citizen’s Oversight Committee

Sheehy also cited the Legislative Analyst Office’s estimate that the new bond measure will add at least another $310 million a year to the $327 million in repayments to the general fund that the state must make for issuing the original $3 billion bond—funds that will not be available for other state needs such as education, healthcare, and housing.

The same day as Sheehy’s solitary “no” vote, ICOC board members awarded $750,000 to Celularity’s Chief Scientific Offer Xiaokui Zhang, PhD, toward conducting the third CIRM-funded clinical trial for a COVID-19 therapeutic. Celularity is partnering with San Diego-based Sorrento Therapeutics to develop the allogeneic, off-the-shelf Natural Killer (NK) cell therapy CYNK-001, one of Sorrento’s numerous candidates against the virus; others include antibody candidate STI-1499 (COVI-GUARD™) and vaccine candidates STI-4398 (COVIDTRAP™), STI-6991, and T-VIVA-19.

COVID-19 has sparked numerous drug and vaccine R&D programs and clinical trials statewide, most notably efforts by Gilead Sciences to reposition its antiviral drug remdesivir into a leading candidate targeting SARS-CoV-2. California’s oldest biotech Genentech and parent Roche hope to repurpose arthritis drug Actemra® (tocilizumab) into a COVID-19 treatment, while the state’s largest biotech, Amgen, has partnered with Adaptive Biotechnologies to develop fully-human neutralizing antibodies against the virus.

All of that activity has taken place since last year, when California saw its life science industry grow to more than 481,000 jobs statewide, up 53,600 jobs or 12.5% from 2018, according to the 2020 California Economic Impact Report recently published by BIOCOM, a statewide life science industry group. The report calculated a total $372.5 billion in direct, indirect, and induced economic impacts from California’s life-sci sectors in 2019, up 7.6% from $346.2 billion the previous year.

Among highlights of the report (see charts below):

  • Life science wholesale saw the largest year-over-year numerical job gain among industry sectors,
  • Medical devices and diagnostic equipment grew the fastest by percentage of jobs, over 15%.
  • The San Francisco Bay Area showed the biggest job gain among the state’s three top-tier clusters—the other two being Los Angeles/Orange County, and San Diego. All three regions made GEN’s most recent annual A-List of Top 10 U.S. Biopharma Clusters, to be updated this fall. [See charts below]

Joseph Panetta, BIOCOM’s President and CEO, discussed the report, and the challenges faced by California’s life-science industry, with GEN Edge in an interview lightly edited for length and clarity.

GEN: Is it too soon to figure out what effect COVID-19 is going to have on some of these numbers at this point a year from now?

Panetta: I think that’s an interesting question. I’ve been asked that question in a number of different ways. And I think it’s still too early to tell, because obviously there’s been a big shift in research focus to COVID.

From what I’ve seen, I don’t think that’s entailed any significant increase in jobs. I think it has been more of a shift in focus. But there are hundreds of companies working in different areas of COVID in California. Not all of these companies are going to be successful within the various segments that they’re working in, whether it’s devices or diagnostics therapies or vaccines.

So, it’s too early to tell. We’ll see who’s successful moving things ahead. Because everything we see, relative to the predictions for success I think point to at least early next year for anything to begin to come through. But then, if we’re talking large-scale vaccine production or large-scale therapy production, I guess then we’ll know more what we’re seeing in terms of increases in manufacturing jobs.

GEN: How does CIRM view its role in getting COVID-19 research and commercialization going in California?

In two ways really: It’s partially looking at whether there are applications of stem cell technology that that can be used to develop vaccines and therapies. And also, just simply looking at tangential kinds of research projects that serve might get off the ground, that aren’t necessarily, you know, pure stem cell types of research projects.

CIRM is seeing its role as, basically, doing what we can to try to contribute to helping to solve the COVID-19 pandemic. At CIRM, we just rededicated $5 million to grant funding for COVID-related therapies, and not necessarily stem cell therapies, either, but just to just to get things jumpstarted. We’ve already approved about 10 different early-stage projects.

GEN: This is potentially a referendum year for CIRM. How does the COVID-19 pandemic play into the referendum, if at all? Does that help build a case for continued state bond funding of CIRM? And if so, how?

I think, indirectly, it does. And I think people are becoming more aware of the fact that developing any therapy is a long-term proposition that is cost intensive and that is chancy, where success can be big, but the number of successes is few versus the number of failures. And I think that helps us in explaining why the CIRM funding should be renewed in the face of misunderstanding, and sometimes even criticism that CIRM has been around for 16 years and we haven’t cured anything yet.

You know, CIRM has 50 different programs in clinical testing various stages of clinical testing right now. Some are university programs; some are industry programs. But I think a challenge for the proposition going forward is that we have to better explain to people how we spent $3 billion—why that was a very, very effective use of $3 billion, why we need more money, and why we haven’t cured anything yet. I think we can do that. I think we can effectively do that. But I think the COVID issue helps to get people to understand how challenging it is.

2 Category includes Bioinformatics Scientists, Molecular and Cellular Biologists, and Geneticists. Source: U.S. Bureau of Labor Statistics

GEN: What does November look like for CIRM? Does a second referendum pass in the way that a second $3 billion referendum passed last November in Texas with CPRIT (Cancer Prevention & Research Institute of Texas)?

Well, our biggest focus right now is just to get qualified to be on the ballot, to get enough verifiable signatures to get on the ballot. We’ve got a great story that we tell to the public. Everything that we’ve done has been under the public microscope. We’ve told a great story.

I think we need support, still, from legislators, although this is not a legislative initiative. But we need some supporters to take this on. I’m hopeful. I know the governor is very, very busy on COVID and the budget right now, but I’m hopeful that the governor will take a leadership role as well. I know he values the life science industry very much.

GEN: Every state is financially challenged in light of COVID. How are those challenges likely to affect the life sciences industry in California in the months ahead?

The conversations that I’ve had with investors have been pretty positive. What I hear more is companies want to continue to scale up and getting people back to work. Of course, this is an industry where it’s very, very costly to flip the switch off, because you can’t necessarily just flip it back on again. And so, companies have been continuing to keep their essential projects going. Investors have continued to fund those projects.

I think one of the positives that’s going to come out of this is an increased investment in an area that hasn’t seen much investment, and that’s the whole area of anti-infectives. We’ve got a number of companies, some struggling along, to work in a very, very important area that we’ve sort-of treated as the poor stepsisters, ‘Why invest in anti-infectives? It’s a one-time shot, then you don’t need them anymore. Who knows if, by the time you get one you’re even going to need it?

I think COVID is showing us a whole different side of this, and I think we’re going to see more interest in investing in those companies. In my conversations with them, the venture capital folks continue to show an interest in funding companies and keeping their companies afloat and Big Pharma continues to invest, obviously. Many Big Pharmas are investing in COVID, too.

GEN: How strong or challenged is California to compete, given the shift of interest that COVID has wrought in terms of, as you mentioned, anti-infective drug developers and vaccine developers?

California really dwarfs every other life science economy in the world. You can’t even begin to compare when you know the magnitude of the impact: $370 billion-plus dollars annually of economic impact. Close to 1.5 million jobs in the state, and $4 billion in NIH funding. Three or four—depending on how you want to divide up the geography—strong clusters, each one possessing the depth and breadth and sides of more than any single biotech cluster in in most parts of the world. Incredible research universities—not one or two, but a dozen.

So, I think California’s bigger challenges, I think, go to things like the cost of living in the Bay Area, the challenges of moving people around. When I talked to people in the Bay Area. They say, Gee, it’s getting more difficult to recruit people here because the cost of housing goes up monthly.

But I think when it comes to training people and the depth and breadth of the technologies and the research we’ve got, we are so strong. We’re just so strong.

1 Region includes neighboring Riverside and Ventura counties, both of which are counted within the region in GEN’s annual A-List of Top 10 U.S. Biopharma Clusters

GEN: The regional clusters, it seemed, all showed job growth, although most of that was incremental: A thousand here, a couple of thousand there, as opposed to a very dramatic surge of jobs.

You’ve got more people employed in the life science industry in Los Angeles than you do in San Diego. San Diego is always considered one of the big three life science clusters in the country. One thing we’ve learned in the short time we [BIOCOM] have been in Los Angeles is that it’s so big. It’s so big geographically. It’s so big population wise, it’s a big economically that life science has grown organically there: Close to 3,000 life science establishments. Close to 100,000 people working in the industry.

It hasn’t made a big splash, I think more, because of the fact that you can’t really point to Los Angeles and say, oh, that’s where the first therapy was developed to treat hepatitis C, or that’s where the first monoclonal antibody cancer drug was developed. But Los Angeles, I think, is beginning to surprise some people in terms of its strength. And of course, the County of Los Angeles continues to focus on building the biotech industry there.

GEN: How much of this activity in the LA region reflects spinouts of the region’s biggest home-grown biopharma, Amgen?

Amgen was always a pretty insular company, not just because it’s up in Thousand Oaks, but they just didn’t really do much to go out and partner. But that’s changed significantly in the last few years. And I know for example that because of their involvement in our advisory committee in Los Angeles that they’re beginning to give people direct responsibility for plugging into the life science community in the LA area, and partnering with them for licensing opportunities. It hasn’t been much of a factor until now. I think it’s beginning to become one.

That area has, between USC and UCLA, some strong research, and some incredible ability to do clinical work at places like Cedars-Sinai. And there’s biotech work that goes on and medtech-related work at Caltech as well. You get down into Orange County, and then you have UC Irvine, which, you know, it’s just been strong in the medical device arena.

GEN: How do you see the San Diego region?

I see by the numbers that San Diego has stayed strong. It continues to be a very, very big growth area in terms of incubation of companies. A lot of early stage companies, a lot of incubators are being created. San Diego has always been known for its innovative technologies in early stage companies that become acquired, because those technologies are so unique. And that’s in fact why we have so many large pharma and large biotech companies in San Diego. They’re almost all a result of acquisition, with the exception of one or two; Johnson. Johnson is maybe one of those few.

But San Diego in San Diego is beginning to diversify and more in the area of telemedicine and AI, areas where the tech community and the biotech community are getting to converge.