Fabien Dépis, an immunologist and CEO of the startup TregShield Bio, found himself unable to afford admission to the prestigious BIO International Convention in Boston this year, a key event for the biopharmaceutical industry.
As he faced a tight budget, he prioritized funds to pay for his lab space in Allston, forcing him to seek networking opportunities outside the main event.
Dépis’s primary goal during the conference was to connect with potential investors who could provide crucial funding to keep his fledgling company afloat.
The challenge of securing financial backing has become even more daunting for early-stage biotechnology firms as the industry struggles to recover from a post-COVID downturn.
Once a landscape where venture capitalists eagerly wrote large checks for promising technologies, the funding environment has dramatically shifted.
Cuts in federal research spending under President Donald Trump have further complicated the funding landscape, leading to increased difficulties for startups operating without significant financial reserves.
Young companies are now feeling the pinch more acutely than their more established counterparts, driving many entrepreneurs to explore various avenues for support.
To address this, LabCentral, a prominent biotech startup incubator, has initiated a program allowing larger pharmaceutical companies to invest in innovative research without making long-term commitments.
Through this program, pharmaceutical companies can sponsor lab space for individual scientists for one year, offering flexibility if the research does not yield promising results.
Recent discussions among the Massachusetts Biotechnology Council have centered around establishing a seed fund to aid companies emerging from the incubator program, with collaboration from partners such as LabCentral and the Massachusetts Life Sciences Center, a quasi-public state agency.
MassBio CEO Kendalle Burlin O’Connell emphasized the pressing need to support early-stage companies, stating, “What’s happened this year just validated our plans.
We knew that we needed to support these early-stage companies.
It’s imperative for Massachusetts to be an entrepreneur, founder-centric ecosystem.”
Dépis’s work focuses on improving drug delivery methods for treating immune diseases, highlighting how crucial timely funding is for researchers like him.
Having applied for a federal Small Business Innovation Research grant earlier this year, Dépis faced setback when the government employee overseeing his application was laid off.
Even after the employee was reinstated, Dépis’s application remains unresolved, forcing him to express concern over the critical timeline for funding.
His situation mirrors that of many in the industry grappling with similar challenges.
Prior to the post-COVID biotech slump, companies accepted into LabCentral typically secured funding and moved in within a matter of weeks.
Now, however, startups often face a wait of six months to a year, and some may not move in at all, according to LabCentral CEO Maggie O’Toole.
She noted that startups are remaining in the incubator longer as they struggle to secure the necessary funds to expand into larger facilities, with the average duration of tenancy rising from 18 months to approximately 36 months.
The long wait for funding has forced some startups, affected by cuts to federal funding, to surrender their spots at LabCentral simply because they cannot afford the rent.
O’Toole stated, “It was nothing to do with the promise of their science.
They had received approval for funding that never came through.”
Industry expert Robert Coughlin, now a managing director at JLL after previously serving as MassBio’s CEO, drew parallels between the current biotech downturn and the Great Recession of 2008.
Layoffs have become prevalent across the sector, highlighted by recent job cuts from companies like Vertex Pharmaceuticals and Vor Bio.
Even the successful COVID vaccine developer Moderna has recently undergone layoffs, signaling a broader trend.
According to a report from the Massachusetts Biotechnology Education Foundation, 2024 marked the first year in over a decade when employment in Massachusetts’ life sciences sector stagnated.
As the commercial real estate sector in Boston grapples with the biotech slump, the lab space vacancy rate has surged to 32 percent, the highest among major metropolitan areas, per JLL’s latest report.
While the situation may appear grim, Coughlin observed a sense of optimism during the BIO conference, with a significant turnout from established biotech centers and representatives from states and nations aiming to cultivate their own life sciences sectors.
He remarked, “People want to get together.
They want to collaborate and talk about these challenges.”
Marin Wolf can be reached at [email protected].
image source from：bostonglobe
