Weeks after 8,000+ biopharma executives and investors descended on San Francisco for J.P. Morgan’s 42nd Annual Healthcare Conference, it remains to be seen where next year’s event will occur. Fueling concern is the exodus of two tech conferences from the City by the Bay—Google Cloud Next ’24 (to Las Vegas in April), and Red Hat Summit 2024 (to Denver in May and Orlando, FL, in 2025).

Retaining J.P. Morgan and its economic activity—$86 million last year, according to the San Francisco Travel Association, the city’s official destination marketer—is a priority for the state’s largest life-sci group BIOCOM California, which has evolved over the past five years from a San Diego-focused organization to one intent on growing the industry statewide.

BIOCOM California is gearing up for The Global Life Science Partnering & Investor Conference, set for February 27–29 at The Lodge at Torrey Pines in La Jolla, CA. About 650 attendees are expected at the event, which will include 1,000+ one-on-one partnering meetings, presentations from some 50 companies, panel talks, fireside chats, and opportunities to meet investors from nearly 50 top-tier firms, including the venture arms of Alexandria Real Estate Equities, Eli Lilly, Johnson & Johnson, and Roche.

Joseph Panetta, BIOCOM California President and CEO

“We want it primarily to be a conference that’s attended by small- to mid-sized biotech companies that are looking for partners and investors, true investors,” said Joseph Panetta, president and CEO of BIOCOM California, the Golden State’s largest life sciences industry group with more than 1,700 members. “I’m talking about venture investors, investment bankers, and pharma investors, and licensing and business development people from large pharma and large platform companies. There’s still a lot of opportunity to grow.”

Panetta, who has headed BIOCOM since its San Diego days in 1999, has been a founder or active member of numerous life-sci focused boards, business coalitions and committees—most notably as a member of the Independent Citizens Oversight Committee, which oversees the California Institute for Regenerative Medicine (CIRM), funded with $5.5 billion in bonds approved by voters in 2020 and $3 billion in 2004,

Panetta recently discussed California’s life sciences challenges, and many strengths, with GEN Edge [This interview has been edited for length and clarity].


GEN Edge: What are the key issues facing biotech in California this year? What are some of the most important issues BIOCOM California plans to address?

Panetta: I think the key issues are funding, funding, and funding. You could say staying alive is a key issue. And I think, in tandem with that, how to find a pharma partner with deep pockets. That’s going to be the key this year. It’s great that it looks as though venture funding is beginning to return. It’ll be interesting because so many companies went public, and typically publicly funded companies are done with venture funding. But a lot of those publicly funded companies had no reason being publicly funded companies.


GEN Edge: You spoke about finding larger partners with deeper pockets. At the recent J.P. Morgan conference, numerous CEOs spoke about their collaborations or their interest in new partnerships. What did you get out of their presentations?

Panetta: The common themes were not only that they’re excited about what they have in their pipelines now to develop, but that they’re also focused on what they can acquire and what they can license in, and that they’re going to be focused on that in the coming year. They need to do this.


GEN Edge: Was there anything important you didn’t hear from those CEOs?

Panetta: I didn’t hear a single CEO bring up the Inflation Reduction Act (IRA). That’s the elephant in the room—the fact that they know that if it’s a small molecule, it’s going to get nine years of exclusivity. If it’s a biological, it’s going to get 13. And then they’re going to be subject to whatever the next list of 10 products is when CMS [Centers for Medicare & Medicaid Services] gets around to going after them once again, year after year after year, so they need new, unique products. They need products that are going to fill their revenue gap down the road. They’re planning for that.

Last year there was a lot of dire concern that the drug pricing provisions in the IRA were going to destroy the industry. What I heard this year subtly was that the companies are now going to get down to work and find ways to make sure that they’ve got a pipeline of products that can overcome the challenges of price controls limiting their return on investment in the products that are out there. So, it’s a good time for biotech companies right now who have good technologies. And the other message I heard was, ‘we want unique therapies. We want unique therapeutic areas that we can focus on.’


GEN Edge: How positive or negative is the fallout from the Inflation Reduction Act? If it spurs more pipeline development, you could say it’s alright. But if companies rush through molecules just to have more things to not be subject to price controls, is that so great?

Panetta: If we look at the evolution of the industry and some of the challenges and barriers that we faced in the past, the one common theme is that the industry has always found ways to move forward and invest in research in new products. And whether it’s forced or voluntary, I don’t think one is necessarily always worse or better than the other. So, I’m not saying that I think it’s great that government is forcing them to do this. But I think at the same time, maybe some of it would not have happened had it not been for the IRA, especially in the merger and acquisition arena.


GEN Edge: California Gov. Gavin Newsom (D) has said the state needs to plug a budget deficit of 37.86 billion for the 2024-25 fiscal year. The Legislative Analyst’s Office, which advises California’s legislature on fiscal matters, has projected a $68 billion shortfall. Who’s right? And how does this affect the life sciences?

Panetta: California is a mess, honestly, when it comes to fiscal management. I think that there needs to be a lot more focus on ensuring that we have a stable tax base, which we don’t have in California. We haven’t for years. It’s been subject to the amount of capital gains that come in. It’s been subject to the millionaires and billionaires we have in the state, who are paying the majority of the tax. There’s a big issue there. So, we’ll have a budget deficit this year. My concern is that we’ll continue to see this, because we’re seeing high net worth people leaving the state.


GEN Edge: Specifically for biopharma and life science, is there a migration to other states as a result? How does the state budget affect the industry? Is there any threat to economic incentives that the industry needs?

Panetta: We don’t see biotech companies leaving the state. We don’t see active biotech CEOs leaving the state, although I certainly see a lot of investors and inactive biotech CEOs who have made a lot of money leaving the state and paying the taxes on their future earnings somewhere else.

The problem with it is when I hear the governor say things like, well, we’re going to cut in certain areas, or we might have to cut infrastructure in certain areas. That impacts the health of the state, the ability of the state to function adequately. I know from my first day in this organization and even my time in a biotech company before that, what’s basic to the biotech industry here is to have the educational base to continue to hire the talent that we need, which means we’ve got to have the funding for the universities to train people, and for any heavy infrastructure in terms of power and roads and water and other services that companies need to be able to build their businesses.

It’s a concern when things go into disrepair like that, even things like providing medical care here in California. We aren’t able to provide the level of Medicare to the population here that we used to be able to provide, because we’ve got too many uninsured people that have to be taken care of, and everybody needs healthcare. I’m not saying that we don’t need to be providing healthcare to those who need it. But the system’s overwhelmed, and those kinds of things make it a challenge. And people say, Do I really want to work in California? Maybe I should work in Massachusetts or North Carolina instead.


GEN Edge: What sort of legislative changes are you looking for this year?

Panetta: We have several hundred companies in a healthcare benefits trust that we had to get legislative authority to continue a few years ago, that provides affordable healthcare to thousands of employees in the biotech industry in California. We had to get legislation passed a few years ago to basically force the Department of Managed Health Care to allow us to continue that healthcare benefits trust for companies in the biotech industry. That sunsets in 2025. We’re going to see a lot of companies who aren’t going to be able to provide healthcare for their employees—at least affordable health care—if that happens. So that’s something we’re beginning to focus on already, and in the next year.


GEN Edge: How is the industry engaging state lawmakers?

We’ve got an organization in Sacramento called the California Biotech Foundation, that spends all of its time and resources educating legislators about not just the value of the industry here, but the state of the industry, the products that the industry has developed, the size of the industry.

We release our economic impact report each year. Primarily, that economic impact report is something that we use to go and educate legislators about the size and diversity and the breadth of the industry in California. I think they take it for granted in large part, and I’ve heard this message before. I think even the current governor feels this way. You know, where are we going to go? Where are we to get the employee base that we’ve got here? Where are we going to get the research base we’ve got here? So, we’re kind of stuck with what we’ve got.

Where we’re fortunate is that we’ve got an organization like CIRM that we’ve invested another $5.5 billion in that doesn’t exist anywhere else in the world. And we’ve got an incredible university and private research base here in California. We’re fortunate that we’ve got all of this.

Does the legislature make it any easier? No. Look at Massachusetts: The state runs a $500 billion biotech venture fund. I’ve asked the state treasurer two or three times in the past about doing something like that. No interest at all in doing that to support startups here in California. So, I think we’re taken for granted. We try hard to make sure that they know who we are. We get in front of them. We take them to other states. We take them to Washington State. We’ve taken them to Massachusetts, to see what exists in other places.


GEN Edge: Any other states you look to as benchmarks?

Panetta: The one that I would look to more so than any other is North Carolina, primarily because if you look at the studies that are done and released each year, especially the real estate studies like the one from JLL. North Carolina sometimes even ranks ahead of California or San Diego, as a life science cluster, and I think a lot of it is due to the fact that the manufacturing is very affordable in North Carolina.

I’ve heard legislators say in the past, ‘Well, you know, we want manufacturing in California.’ Well, land is expensive, power is expensive, water’s expensive. Nevertheless, you can’t say that we don’t. Look at our economic impact report: We’ve got a significant amount of biotech manufacturing in California. But North Carolina certainly wants to attract companies there. And we see companies go to North Carolina to do their manufacturing as well. And those are great jobs, and they contribute to the economy. So, they’re just as important as the research and discovery jobs that are here in California.

But every state is competing. Texas is trying to grow its biotech base. Washington State is an up-and-comer. In fact, we’re working now to begin to extend some of our BIOCOM member benefits to companies in Washington State as well.


GEN Edge: How much has that growth in North Carolina come at California’s expense?

Panetta: Hard to say. Just anecdotally, North Carolina provides incentives. They provide land, they provide easy permitting and zoning. They have a talent base. So, it’s a matter of competitiveness; they continue to find ways to compete. We know that they’ve attracted companies there, and they’ve attracted manufacturing there that we’d like to keep here in California.


GEN Edge: North Carolina has focused like a laser on cell and gene therapy, and so has Greater Philadelphia, and to lesser degrees many of the other clusters. Last year, BIOCOM California discussed making California more of a cell and gene therapy destination. What progress, and continuing challenges, have there been?

Panetta: California maybe would surprise people in terms of both the size of the cell and gene therapy sector. We started a cell and gene therapy committee a couple of years ago. And the participation in that committee just grows each year.

North Carolina is focused like a laser on cell and gene therapy and other areas are, too. But I don’t think in any way we can discount the magnitude of California’s life science industry, and the stem cell and gene therapy that exists here.

When you talk about cell and gene therapy, you have to talk about the work that CIRM is doing. California is unique in that regard. We’ve got close to 70 stem cell therapies in clinical trials right now here in California.


GEN Edge: How much has CIRM’s second bond authorization of $5.5 billion in 2020 stabilized the agency following the turmoil surrounding its first $3 billion authorization in 2004?

Panetta: In the last years of the first round of funding, I can remember sitting around the table and really having to make some difficult decisions about how much funding and to whom to provide funding, because we were running out of money.

We’re in a great position now. We’ve got the dollars to be able to really, I think, aggressively fund the qualified applications that come in. And we still are very rigorous–that hasn’t changed. We’re still very rigorous about grading and approving funding for discovery grants, for research grants, for clinical trials. I participate in those decisions every month. But the good news is, we don’t have to worry about the money right now.


GEN Edge: Last year GEN’s A-List of Top 10 U.S. Biopharma Clusters ranked the San Francisco Bay Area number one, replacing Boston/Cambridge after nine years. How has the Bay Area built up bioscience? And how much is that threatened by downtown San Francisco’s issues with crime and quality of life?

Panetta: I continue to see the growth in bioscience each day across the entire Greater San Francisco Bay Area. Even before the troubles began in downtown San Francisco, we began to see a bit of an exodus from Mission Bay. For example, Merck moved from Mission Bay down to South San Francisco.

Part of the problem is that if you consider what is the national and international image of San Francisco, a lot of it is what the media cover relative to homelessness and crime in San Francisco. And as I find when I travel to places like China and other places around the Far East, people don’t know South San Francisco from San Francisco. It’s San Francisco, right?

Now that BIOCOM’s a California-wide organization, I’m not going to say, ‘Well, that’s fine. Tell them to come to San Diego.’ No, I want biotech to go to San Francisco, too. Honestly, we see South San Francisco thriving. I was just up there for J.P. Morgan, and the construction continues on biotech facilities in South San Francisco. So I think we’re solid.

It’s unfortunate, very, very unfortunate, because—and I’ve got personal experience with my own daughter—it’s a challenge to live in certain parts of downtown San Francisco. But a lot of younger people want to live in that urban environment, and it makes it difficult.


GEN Edge: J.P. Morgan’s Chairman and CEO Jamie Dimon said San Francisco was “in far worse shape than New York” in terms of crime and quality of life. Have you heard whether next year’s conference will be in San Francisco?

Panetta: I know Jamie Dimon said that. But at the same time, the governor cleaned up San Francisco for J.P. Morgan. What people saw this time around, and what they experienced this time around, I know this was certainly not what it was a year ago, or two years ago, or three years ago with the homelessness. So, maybe the crime in San Francisco is worse than it is in New York City. I don’t know. I hear a lot of negative things about New York City. I’ve got friends who live there, and they’re not too positive about the situation.

I’ll tell you what we’re focused on: We’ve got an amazing global partnering investor conference in San Diego. It’s now at least in its fifteenth year. It becomes more attractive internationally each year. It grows each year. We’re going to keep focusing on growing the level of importance and participation of our conference and let the chips fall where they fall in terms of where J.P. Morgan goes.

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