December 1, 2013 (Vol. 33, No. 21)

In a Quest to Match or Exceed Bay Area and Boston as Hubs, NYC Gets Down to Brass Tacks

Recently there has been a steady stream of press about New York City’s efforts to finally establish itself as a biotech hub. From the recent MIT e-forum to CBRE’s 2013 Summer Report, conversations are happening in the fields of life science, real estate, economic development, and technology, among others. Indeed, there seems to be a unique stirring that promises a new, enduring momentum toward this goal.

Much of this progress can be traced to commitments from the city and state over the past few years to develop the industry, attract private investment, and create an enticing environment for pharmaceutical and biotech companies. While this investment has created a solid foundation, New York City must (and is beginning to) focus on harnessing the city’s raw resources to grow biotech startups as a necessary step to reach the next stage of becoming a biotech hub.

New York City has long had the intellectual components to thrive in biotech. It boasts the highest concentration of academic institutions, sits among the top cities in total higher education degrees in biological sciences, graduates the highest number of advanced science and engineering degrees in the nation, and receives the second-highest number of grant awards provided by the NIH.

With droves of exceptional facilities and human capital, New York City would seem an attractive location for big pharma and biotech companies, which seek proximity to talent and basic research. These charms, however, are just part of the site-selection story. The scarcity (and high cost) of suitable real estate has pushed many pharma and biotech companies to the periphery of New York City or out of the state altogether.

Ilse Daehn, Ph.D., and Eleanor Wendell

Solid Support

Through sustained encouragement from city and state organizations to incentivize companies, this trend has begun to change. A particularly favorable development, noted in a 2008 report from Life Science Clusters, is the New York City Economic Development Corporation’s plan to focus on biosciences. This organization’s efforts, in conjunction with those of the Empire State Development Corporation and other public agencies, have yielded an influx of city- and state-backed grants for research facilities and incentives for biotech companies. One such incentive is the NYC Bio tax credit.

This support has encouraged significant private investment toward large facilities including the Alexandria Center, which covers more than 1 million square feet; BioBAT, which is expected to occupy 500,000 square feet; and the New York Genome Center, which extends to 170,000 square feet.

The rise of Alexandria Center and BioBAT are especially promising developments because of their scale. If New York City is to realize its ambition of becoming a major player in the field, it must cater to big pharma and established biotech companies.

Daunting Challenges

A challenge with these recent developments is that these new centers are geographically dispersed. Zoning limitations may be one of the key factors dictating the current landscape of commercial biotech spaces in New York City, but proximity (creating a biotech “hub”) should still be an objective.

Biotech companies should have the opportunity to spontaneously interact with colleagues from across science, technology, engineering, and mathematics (STEM) fields, including those companies that are more established and those that are just emerging. In a well-connected biotech space, models for entrepreneurship and scientific discovery can be observed and exchanged, thus cultivating innovation and entrepreneurial partnerships.

New York City’s geography poses another challenge: Manhattan, a slender island, both concentrates and excludes. It has the potential to support a corridor or cluster of diverse research facilities and biotech incubators, in particular along its eastern side, which is home to five of the city’s major academic research institutions and the Alexandria Center. Such a corridor may seem too ambitious at present, given the aforementioned space limitations and zoning restrictions, but it remains an important goal.

In addition, the multitude of new centers, while providing laboratory and office space, has not mitigated the financial burden for startups. Many reports and articles that discuss New York City’s potential repeatedly note the high costs to build out and/or rent laboratory space.

This untenable startup environment has driven early-stage companies to more affordable locations or more established hubs such as Boston and the San Francisco Bay area. These hubs are accustomed to nurturing both startups and established companies. To retain early life science startups, New York City needs to do more than prepare fertile ground for newly formed startups; it must also provide them a diversified infrastructure, supporting them as they grow.

Startup Ecology

Only recently has there been a push to build an ecosystem in New York City that fosters innovation and a thriving startup culture. There are now more networking events, meet-ups, and online groups to facilitate a community around biotech and entrepreneurship.

NYC Tech Connect, for example, is a private-public partnership that brings scientists together with business and industry mentors. Community-building efforts sponsored by the New York City Economic Development Corporation (NYCEDC) include the Entrepreneurship Lab and SBIR Impact NYC. In addition, Empire State Development’s NYSTAR division continues to support opportunities for new tech companies. For example, it supports the Innovate NY Fund.

Academic research institutions are also playing a part in this development by introducing business courses to their graduate programs. These efforts are churning out a new generation of industry-savvy scientists and advocating a vibrant and dynamic entrepreneurial culture, essential for biotech startup activity. There are now new partnerships of academic institutions and pharmaceutical companies working together to more effectively develop drugs from the discoveries made in reasearch labs and accelerating early-stage drug discovery.

There are now more opportunities for funding early proof-of-concept biopharmaceutical projects through government incentives and a new wave of angel investors. These high-risk projects have been underfunded, but they are crucial for facilitating the transition from academic research to business operations.

Large accelerator programs such as Accelerator Corp., are coming to New York City, providing management and financing to biotech startups. In addition, the NYCEDC recently provided a seed grant to Harlem Biospace, a 2,000-square-foot incubator for young spin-out companies that provides shared equipment and affordable rent.

Harlem Biospace is the first initiative to diverge from the traditional development model, which favors large, expensive, and geographically distant incubators. As such, it represents a significant step toward encouraging new companies to stay in New York City. However, many essential resources will need to become more available—and affordable—before startup companies can flourish.

Building Momentum

New York City’s biotech hub has arrived at a crucial moment. Thus far, it has managed to become a serious contender in biotech. It has made the most of its academic and intellectual resources, encouraging established companies to open offices, branches, and research arms within its boundaries.

As New York City’s biotech hub continues to develop, it will need to do more to encourage sprouting from academia. In addition, it will need to foster a culture for biotech startups. For New York City to match or even exceed the Bay area and Boston as a biotech hub, the focus in the next few years should be on growing an environment that can springboard early-stage innovation. New York City needs more diversified offerings in terms of facilities for young and emerging companies.

Ilse Daehn, Ph.D., and Eleanor Wendell are part of the team developing KiiLN (Keystone for Incubating Innovation in Life Sciences—NYC), an affordable incubator for biotech startups in East Harlem, New York.

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