At 7 AM sharp on any given Thursday, about a dozen runners gather on the steps of 400 Technology Square. The athletes, usually a mix of venture capitalists, scientists from pharmaceutical giants, and chief executive officers of small start-ups, are there to begin their day with what has to be the healthiest biotech networking event in town—a 5-mile run through Cambridge and Boston along the Charles River.
As the runners leave the shady confines of Tech Square, they can see a construction crew working on a new building that will house Pfizer. Heading down Main Street, they pass Novartis and the Whitehead Institute for Biomedical Research. Next they glide between the glass-fronted Broad Institute and the David H. Koch Institute for Integrative Cancer Research. No one has even broken a sweat yet.
Before finishing their first mile, the runners skirt Biogen’s campus on their left and Genzyme and the Cambridge Innovation Center on their right.
The close-packed collection of companies, research institutes, and start-up incubators the runners cruise by are all in Cambridge’s Kendall Square—the neighborhood at the heart of Boston’s biotech boom. Approximately 160 biotech and pharma companies have offices in Kendall Square’s 2.5 sq miles, according to the Massachusetts Biotechnology Council.
That flourishing ecosystem includes everything from tiny start-ups renting space by the lab bench to large pharma companies employing thousands of people. Being part of a tight-knit community brings major benefits to businesses, such as proximity to partners and the ability to swap ideas with world-class scientists at the corner coffee shop. But as more and bigger companies flock to the hub, prices are rising and lab space is becoming scarce. Some in the area wonder whether Boston can maintain the entrepreneurial spirit it was built on.
“The density of biotech and biopharma expertise within a 1-mile radius of where I’m standing is definitely the highest in the world,” observes Bruce Booth from his office in Tech Square.
Booth, a partner at the life sciences venture capital firm Atlas Venture and founder of the running group, says that packing companies in close quarters leads to “a virtuous cycle of innovation.” Academic labs and start-ups are constantly churning out new science, and larger companies make great partners for turning that science into drugs, diagnostics, and other life sciences products.
Just 10 years ago, Booth points out, Boston was shoulder to shoulder with biotech clusters in San Francisco, San Diego, Philadelphia, and North Carolina’s Research Triangle Park. “What has happened in the last 10 years is that Boston has massively outstripped every other ecosystem,” he says. “San Francisco remains very strong, but I think Boston is even stronger today. The other clusters have, unfortunately, suffered.”
The right ingredients for a biotech cluster have long been available in Boston. The metropolitan area boasts more than 100 colleges and universities, including research powerhouses Massachusetts Institute of Technology and Harvard University. Filling those ivory towers of academia in any given year are roughly 22,000 science and engineering graduate students and postdocs. The city is also home to 16 research hospitals, making medicine discovery a natural focus.
“Boston and Kendall Square have always had a strong early innovation and biotech presence,” Booth says. “Biogen, Vertex Pharmaceuticals, Genzyme, and companies like them were all born out of this part of Cambridge.” But Booth says the real change came when Novartis moved its global research headquarters to Cambridge in 2002.
Ask anyone who’s watched Kendall Square grow from biotech backwater to its current status as top hub and they’ll tell you the same thing. Novartis has become such a cornerstone in the area that it is currently the fourth-largest employer in Cambridge after Harvard, MIT, and the city itself.
The reason for making the move was simple, says Jeff Lockwood, Novartis’s director of communications. “There is just such a deep and broad pool of smart people, and we want to work with them, and we want them to work for us.”
Other big pharma firms have followed Novartis’s lead. “The main draw to being in Kendall Square is just being within walking distance of so many laboratories and so many other companies,” says Michael D. Ehlers, head of Pfizer’s Cambridge operations. In 2014, Pfizer moved 4 miles from its site in northwest Cambridge to space in Kendall Square. Last month, the company announced it would be leasing all 500,000 sq ft of a new building going up there.
“We determined that it’s really the microenvironment that makes a big difference,” Ehlers says. “If you can avoid getting on the T or getting in a car and you can meet colleagues, collaborators, competitors, just by walking a block or two, it makes a great difference in terms of the level of interaction. We’ve certainly seen that.”
If there’s a con to locating in the area, Ehlers says, it’s the fierce competition for talent. “It means everyone needs to be up on their game doing the most exciting and innovative science,” he says. “People who are there know that if they are really good, they can walk down the street and find several dozen other companies that are equally interested in finding the best and brightest minds.”
Novartis’s Lockwood agrees. “The joke here is that you can change your job three times in Cambridge and not change your parking space.”
And the competition is only getting tougher. This summer, Bristol-Myers Squibb became the latest major drug firm to join the rush into Cambridge. The company is closing sites in Connecticut and the Boston suburbs and will open a research facility in Kendall Square in 2018. The labs will house about 300 scientists working on genetically defined diseases, molecular discovery technologies, and discovery platform chemistry.
Carl P. Decicco, BMS’s head of discovery, tells C&EN that in addition to the workforce in Cambridge, the company is drawn to the academic institutions there and the possibility of collaborating with them and with other small companies.
But Kendall Square may be becoming a victim of its own success. As more companies decide to locate there, rents for lab space have skyrocketed to as much as $70 per sq ft, more than twice the price in Boston’s suburbs. And even if a company can afford to pay a premium for space, with Kendall Square’s vacancy rate approaching 2%, the space may be hard to find.
“We don’t want to squeeze out the little guys and have them move to the suburbs or Silicon Valley or North Carolina,” Lockwood notes. “We need to make sure we can keep this balance in the ecosystem because if in 10 years we look down the road and it’s just big pharma companies and there are no small or midsize companies, that kills the reason for coming here.”
Yet the squeeze is already happening. “Start-ups like us are being priced out,” says Michael Gilman, founder and CEO of Padlock Therapeutics. Padlock is developing drugs that target protein arginine deiminases, a novel target for autoimmune disorders, and Gilman is searching for roughly 15,000 sq ft of lab space to grow into. He had nearly finalized a lease in Kendall Square, he recounts, when another company came in and essentially bid over the asking price.
“It’s the classic gentrification phenomenon,” Gilman notes. “Rich people are moving in, buying up properties, tearing them down, and building palaces, and then the people who grew up there can’t afford to live there anymore.”
Gilman says he’s considered moving the company to the suburbs. “It’s cheaper out there, and most of our people live out there, so on some level it would be easier for us. But I don’t really want to do it. I love the energy of this place.”
Gilman has been a fixture in Kendall Square for the past 20 years. And before that, he was a student at MIT in the 1970s. “When I was an undergraduate, we were basically told not to go into Kendall Square,” he recalls. “Until five years ago, while it was safe to go into Kendall Square after dark, there was no reason to go into Kendall Square after dark. There was no place to eat. There was no place to drink. It would clear out after business hours.” Today the area is home to restaurants, retail space, and residential properties.
All that verve and bustle makes Kendall Square the perfect spot for what’s called the bump-and-connect factor—chance meetings that foster networking and the opportunity to bounce ideas off of the area’s many experts.
For example, Gilman recently met a board member for coffee at Tatte Bakery & Café in Kendall Square. “I must have seen 10 people I know walk into that place in the hour I was there,” he says. “This is incidental contact, and you’re not going to get that in the suburbs where your neighbors are likely to be a Home Depot.
“I complain a little bit about it, and it does sort of piss me off that it’s so difficult to find space,” Gilman says, “but I just think what’s happening here is amazing and wonderful and great for everybody. Even if it makes my life a little difficult, I still feel privileged to be part of it.”
Charles Wilson, president and CEO of Unum Therapeutics, a company focused on cancer immunotherapy, also sees the power of bump-and-connect. “Just a few weeks ago, in the middle of a crosswalk, I bumped into a former colleague who passed along some information on recent clinical studies, and that was really useful information for us,” Wilson says. “That’s the kind of thing that just happens all the time.”
Unum set up shop at Kendall Square’s LabCentral incubator facility in June 2014 with one scientist working at a bench. Now the company has 14 employees and continues to grow—so much so that it no longer fits its LabCentral suite.
Being in Kendall Square has been great for Unum, Wilson says. It puts the company close to the venture capitalists that fund it and to a talented workforce from which to draw. And the presence of large pharma in the area, Wilson says, has helped his company form much-needed partnerships.
But there’s a downside too. Like Gilman, Wilson had a tough time finding space to house his growing company. Whenever a large company swoops in and sucks up a few hundred thousand square feet, he says, the options for start-ups narrow.
Unum recently signed a lease on lab space in the outer-Cambridge facility that Pfizer vacated to come to Kendall Square last year. Wilson says he had some trepidation about moving to the last stop on the subway’s red line, but he’s excited about having the room to mature. It remains to be seen whether leaving the center of the action will cool Unum’s ability to attract the best talent or put a freeze on the interactions its scientists find so useful in Kendall Square.
And although some biotech companies fight to stay in Cambridge, not all executives think they need to be in the thick of things.
“For companies that are on angel money and starting up from the ground—not tapping into venture capital—Cambridge and Kendall Square may not be the best environment for them to be in from a financial perspective,” cautions Andrew Fraley, senior vice president for R&D at PNA Innovations. “The space is extremely expensive for small start-ups, and while the environment is fabulous, from a business perspective it may not always be the best choice.”
Founded in 2011, PNA Innovations develops synthetic nucleic acids to create tools for research, diagnostics, and therapeutics. The company, established on research conducted at Carnegie Mellon University, until recently had its headquarters in Pittsburgh. In June, Fraley and CEO James M. Coull rented a 16-foot truck. They loaded it up with freezers, files, rotovaps, glassware, chromatography equipment, and other lab tools in Pittsburgh and drove to the company’s new home in Woburn, Mass., about 13 miles from Kendall Square.
They uprooted their business to be closer to potential partners, customers, and venture capital firms. They are also seeking a deeper talent pool from which to hire and more support services than were available in Pittsburgh.
Fraley and Coull did the heavy lifting themselves because the company is keeping an eye on the bottom line. Relocating to the Boston area came at a price: Although the rent is less than half of what they’d pay in Kendall Square, it’s still about 30% more than what they would pay in Pittsburgh. Employees also cost more in Massachusetts. For example, the one chemist who relocated from Pittsburgh to Boston got a 25% bump in salary.
It takes roughly 30 minutes to drive from Woburn to Kendall Square (if there’s no traffic), but Fraley and Coull say the company still benefits from the resources the region offers. Choosing Woburn instead of Kendall Square also means they can pour their rent savings into staff.
Although the company’s neighbors in Woburn include other small biotech firms and even a Genzyme outpost, Fraley and Coull admit they don’t have the cachet of a Kendall Square address and the benefits of bump-and-connect. “You can make up for that though,” Fraley insists. “You can schedule a few meetings in Kendall Square for a day and then meet a friend for lunch or coffee.”
Or, there’s always the option of dusting off the running shoes on a Thursday morning.