In Biotech, Not All Roads Lead to Kendall Square...
A couple of weeks ago, the Boston Globe ran an article by Scott Kirsner, “The suburbs are cheaper, but they don’t have what Kendall Square has for biotechs: serendipity.” This article argued that even if you can save significant costs by choosing a location outside of Kendall Square, you may miss out on interactions that could be helpful in building the company and ultimately finding a successful exit.
I wrote a response that was published in the Globe a few days later. I wanted to expand upon this response in this blog post.
We moved Siamab Therapeutics from Cambridge to Newton in 2015, and through the course of Siamab’s successful exit, subsequently launched LabShares along the Charles River in the same location. To date, we’ve hosted over 20 companies in our incubator and are expanding.
Siamab had a successful exit – and the company we sold to was based several thousand miles away. The BD activities that led to the sale - over the course of several years – took place at JP Morgan, BIO, BIO-Europe, some in-person Boston meetings, and countless video cons. I’ve previously posted about BD and partnering meetings here and here. My experience was that I had to take a global approach to partnering and engaging with companies across many geographies to do both early deals (Momenta, Novartis, Boehringer Ingelheim) and to complete our exit transaction.
Siamab worked extensively with scientific consultants, CROs, and other experts to complement our small internal team. A few of these were local to the Boston area, but once again the majority of these were far from home – which didn’t matter very much, thanks again to endless calls, emails, and regular videocons. There is certainly a concentration of expertise in Kendall Square – and many great companies. But the resources we needed at Siamab were found much more broadly.
One argument Kishner made was that hiring is easier for firms in Kendall Square. At Siamab and more recently LabShares, we have not found that to be the case. While young tech employees might appreciate living in the city and commuting on the red line, we’ve found that most biotech employees are older, having completed long-term advanced degrees and many are moving to the suburbs as they start families.
It may well make sense for large pharma scouts to base themselves in Kendall Square – and many have established themselves there. Consider as well that pharma scouts also want to connect with less well-known “nuggets of value” instead of attempting to partner exclusively with the small set of highly funded (and therefore expensive to complete a deal with) firms willing to pay for a Kendall address. A company that has raised a $50m or $100m “A” round is only looking to do pharma deals in the high 8/9 digits, while a more thinly-funded, scrappy firm that may have only raised single-digit millions can afford to do a much more affordable deal with pharma and still have a significant win.
“Serendipity” and random connections matter, but much less so for the vast majority of staff working in the lab. Senior executive and BD professions, of course, need to get out of the office and in meetings and networking regularly. Some LabShares members rent a small office in Cambridge (i.e. at the CIC or Workbar) for networking; I am in Kendall Square several times each week. But we all have found that traveling there in a more strategic manner – off commute hours – saves lots of time and frustration. Serendipity can also happen, and be significantly enriched, at the right conferences and meetings. Some local gatherings are run by MassBio and larger ones across the country include JPM, BIO, AACR, and many more.
In real estate, location matters; but so do dollars – and smart CEOs of scrappy firms need to balance how to spend very limited money on science, people, data, BD, and much more. Finding ways to spend less on space and more on science can be the smart move that helps take your growing business to the next level.