CLSA in BioWorld: California life sciences industry flourishes, report finds

U.S. regional analysis: California life sciences industry flourishes, report finds
By Peter Winter | View Original Article at BioWorld
December 4, 2017

The California life sciences sector continues to flourish and remains an engine of innovation for the state according to the latest 2018 California Life Sciences Industry Report. The current data reveals that there has been an annual 6 percent growth in the number of enterprises with about 45 percent of the 3,249 companies that are operating in California focused on biotechnology and pharmaceuticals, and there are 1,796 device and medical equipment manufacturers (55 percent).

In terms of economic growth, including life science-related venture funding, National Institutes of Health (NIH) funding, and digital health venture funding, California continues to outpace other states, the report says.

According to Sara Radcliffe, president and CEO of California Life Sciences Association, an advocacy and business leadership organization which produced the report along with PwC US, “The life sciences sector continues to drive the 21st century economy here in California – the birthplace of biotech. As home to 11 of the world’s top universities, California garners more federal biomedical research dollars than any other state.”

Their report found that the state’s research infrastructure attracted $3.8 billion in research grants from the National Institutes of Health (NIH), which compared to almost $2.7 billion in NIH funding being awarded to institutions in Massachusetts and $2.3 billion for New York.

The University of California, San Francisco (UCSF) led the way in terms of NIH funding received at $589 million, Stanford University followed with $464 million and University of California, San Diego was in the third spot with $422 million.

By the numbers

The report identified that life sciences companies in the state directly employed 298,709 people, which ranks second only to computer technologies among the high-technology industries, with the sector’s annual wages averaging about $113,000. Biopharmaceutical and medical device employment in California combined grew 7.7 percent between 2012 and 2016. The sector generated $169 billion in revenues, and companies were responsible for $22.7 billion in exports and they paid $17.3 billion in federal, California state and local taxes.

Regionally, the Bay Area led the state with over 72,600 direct life sciences jobs. Los Angeles County followed with 58,400, while San Diego County employed 45,950 and Orange County reported 45,100 life sciences jobs.

This year the report highlighted San Diego as a thriving life sciences hub noting the city’s 12.5 percent growth in biopharmaceutical jobs and 21.9 percent growth in medical device jobs, and 10 percent growth in R&D employment.

San Diego County attracted over $800 million in research grants, and is projected to receive $668 million in life sciences venture funding.

Venture funding

Private San Diego-based biopharmaceutical companies have this year been recipients of a collective $490 million in venture capital, from 17 transactions that revealed financing terms according to BioWorld data.

Among the deal flow was Effector Therapeutics Inc., which raised $38.6 million from a series C round. (See BioWorld, July 25, 2017.)

The new funds will help Effector advance a phase II program with EFT-508, a small-molecule MNK1/2 inhibitor, including a combo study in metastatic colorectal cancer (CRC) with Bavencio (avelumab) under a collaboration pact signed last month by the company, New York-based Pfizer Inc. and Merck KGaA, of Darmstadt, Germany. Data are expected next year.

San Francisco-based companies have so far raised $702 million in venture capital from 24 deals, BioWorld estimates.

Based on projections from the first two quarters of this year, the report stated Californian life sciences companies are expected to attract a total of $6.66 billion in venture capital investments by the end of the year – a 54 percent increase on the $4.29 billion that was raised during 2016.

California’s digital health sector has also been a magnet for funding and is projected to attract $2.3 billion in VC investment for this year, a total which will rank it in first place for this targeted capital. New York is projected to rank second by attracting approximately $1.2 billion in VC digital health funding.

In terms of innovation the report cites the impact that companies are making on human health. It notes that as of Sept. 21, 2017, “California companies had 1,274 medicines in the pipeline to treat cancer, infectious diseases, immune issues, central nervous system disorders and many other conditions. In addition, California companies received approval for 440 medical devices in 2016.”


The report notes that M&A transactions have been robust in the period with a total of 23 biopharma and 21 medical device related deals completed.

Headlining the list of deals year-to-date is the blockbuster $11.9 billion Foster City, Calif.-based Gilead Sciences Inc. paid to acquire Kite Pharma Inc., a leader in chimeric antigen receptor and engineered T-cell receptor development, with both near-term and long-term therapeutic opportunities. This vaulted Gilead into the forefront of the white-hot immuno-oncology space. (See BioWorld, Aug. 29, 2017.)

One of the latest deals to be announced was Novato, Calif.-based Ultragenyx Pharmaceutical Inc., which is focused on the development of therapies for rare and ultra-rare diseases, acquiring Dimension Therapeutics, Inc., of Cambridge, Mass., for approximately $151 million in cash.

Ultragenyx gains access to Dimension’s advanced gene therapy platform, which will augment their late-stage clinical, regulatory, and commercial expertise in the rare disease space.

Maintaining leadership

California’s life sciences ecosystem has, the report notes, all the essential ingredients that continue to contribute to its success, including basic research institutions, a critical mass of experienced entrepreneurs and researchers, committed investors and seasoned leaders, and supportive government initiatives, including an extension to 2030 of a state sales tax exemption for equipment used in manufacturing and research and development to encourage more investment in the state. In addition, in October, a Governor’s Advisory Committee on Precision Medicine was established to continue the state’s efforts to promote the use of advanced computing and technology to better understand, treat, and prevent disease.

Its mandate is to advise the Governor’s Office on emerging precision medicine policy issues, which will encompass data sharing and data privacy; precision medicine approaches to care and its clinical and economic impact. It will also make recommendations about how precision medicine can be effectively integrated into health care.

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