Maryland is on par with biotech leaders California and Massachusetts in terms of research and development intensity, concentration of STEM employment and science and engineering degree holders, according to Bloomberg. But rankings can be deceiving.
Two key metrics where our state falls short are productivity (commercialization) and biotech company density (a vibrant biotech industry cluster), critical areas that indicate the long-term growth potential of the biotech industry in our state. We lag in these two indicators because Maryland has a funding gap between what we need to advance the commercial viability of biotech startups and what we've received in public research dollars and seed funding.
There has been a significant drop in venture funding in Maryland recently. And state funding is increasingly seen as the critical tool here and elsewhere. Maryland is not alone in wanting to grow its life sciences industry, and increased funding initiatives have been launched by other states. If we're serious about building one of the nation's leading life sciences clusters in Maryland, then we need to capitalize — literally fund — that vision.
Maryland has world-class federal labs, scientific institutions and universities that lead the country in innovation. We do a solid job funding basic research and the earliest stages of translating that research into commercial viability, including many state-financed programs through the Maryland Technology Development Corporation (TEDCO), which I chair. The result is that there is no shortage of promising life science technologies waiting to be commercialized.
Maryland fails to take full advantage of their potential, however, because we lack the investment capital to translate promising science into viable businesses. The result is that either the commercial viability of promising research conducted in Maryland is never explored or, if it is tested, the emerging company moves to a state that offers additional investment capital. Either result is regrettable. While we've always been aware that Maryland lags in the commercialization of its research potential, Maryland's life sciences cluster is increasingly a farm team to better-funded states. The research dollars and early-stage investment we make as a state is realized somewhere else when that company relocates from Maryland for what is often a nominal investment to continue their growth.
The challenge is that the funding required to take a life science innovation from the lab to commercial viability is profoundly different from that required by other technologies. A life science company can't compete for capital, for example, with a cybersecurity company — the dollars required and the time to market are vastly different. The private sector (venture capitalists, angel investors) is reluctant to invest in a life science concept that might be years away from commercial viability.
To be competitive, Maryland needs to create a dedicated fund to invest risk capital in promising early-stage life science companies. We need to fund the gap between seed investment and later-stage institutional capital. This is the funding gap addressed by other states, and the result is they're literally assembling life science clusters they didn't create, one relocated Maryland company at a time.
Several noteworthy companies founded in Maryland have been recruited to relocate by outside investors in the recent years. These include promising companies such as Johns Hopkins pharma-spinout GrayBug (now located in California), which is focused on developing therapies for ocular diseases; HeMemics Biotechnologies (now located in Virginia), which is developing innovative preservation solutions for biologic materials; and Vapotherm (relocated to New Hampshire), a company developing ventilation support systems for patients in respiratory distress.
Our most recent departure, PathoVax (relocated to New York) is developing a universal HPV vaccine to provide more complete protection. This promising business was a biotech spinout from Johns Hopkins University that was lured away from Maryland by a public investment from Buffalo of a mere $500,000 — after receiving $100,000 from TEDCO and approval for another $150,000.
Maryland's incredible life sciences research cluster should not be our leading export. A fund targeted at promising, early-stage life science companies, focused on creating jobs in Maryland, would significantly stem the exodus of and set Maryland on the path to realize its life sciences potential.
Newt Fowler is chair of the Maryland Technology Development Corporation and a business transactions partner at Womble Carlyle. His email is NFowler@wcsr.com.