Writer: Esteban Pages
4 min read January 2024 — While Philadelphia has claimed its rightful place as a consolidated regional life sciences hub, its resilience has been tested as industry headwinds such as a slower investment impact the Mid-Atlantic and the country as a whole.
In 1H23, the national life sciences industry raised $11.59 billion, the lowest since 1H18, according to global real estate services company JLL. In addition, late-stage companies are getting a larger size of the venture capital pie, representing 34% of overall funding in 1H23 compared to 1H18’s 18%. By the end of 1H23, 274 publicly traded biotech companies had cash runways of nine months or fewer. This challenging funding landscape, compounded with higher interest rates, is also being felt on the commercial lab space side. In 2Q23, nationwide tenant demand amounted to 10.1 million square feet, a 41% drop compared to 2Q22’s 17.1 million square feet.
On the flip side, Philadelphia’s life science research ecosystem produced 3,732 biomed graduates in the winter of 2023, ranking fourth in the nation behind Boston’s 5,079 graduates, New York’s 4,529 graduates and San Francisco Bay Area’s 3,985 graduates, according to Colliers. Philly’s metro area also represented 5% of the U.S. life sciences job postings for 1H23, again ranking fourth behind Boston (13%), New York’ (11%), and San Francisco (6%). Despite the constrained capital availability, Philadelphia’s own Mineralys Therapeutics went public in February 2023, raising $192 million by selling 12 million shares of common stock at a share price of $16. Meanwhile, Newtown Square-based ArriVent Biopharma raised $155 million through a private stock sale in March 2023, followed by Fiore BioTherapeutics $75 million in August 2023. Aro Biotherapeutics, Vivodyne, Imvax, Interius Therapeutics, Verismo Therapeutics and Vittoria Therapeutics made the list of Philly life sciences companies that managed to raise capital within the $10 million to $50 million bracket for 2023.
To speak further about the state of affairs of Philadelphia’s life sciences landscape, Invest: sat down with Dea Belazi, president & CEO of AscellaHealth and Nancy Rawson, executive vice president and chief impact officer of Monell Chemical Senses Center.
What are the key challenges faced by the life sciences and biotech industry in Greater Philadelphia?
Dea Belazi, President & CEO, AscellaHealth: Several challenges in the life sciences and biotech sector are at the forefront of our considerations. One significant challenge is funding and investment, especially for early-stage research in life sciences companies. Raising capital to support research, navigate the complex process and potentially bring a product to commercialization is increasingly challenging due to changes in the economy and elevated costs of raising money. Despite market challenges, we aim to support our life sciences partners by connecting them with potential financial partners interested in investing in these developments. R&D to support the introduction of a therapy for a smaller, rare disease population is especially challenging since the ROI for manufacturers is diminished when compared to drugs that treat mainstream diseases, like diabetes. Our novel financial solutions are bringing these partners greater confidence to embark on drug discovery and commercialization with increased assurance that payers will provide coverage.
While the life sciences industry has previously seen substantial capital infusion, this has changed with the current economy and bringing a product to commercialization remains challenging and risky, impacting investor appeal. To address this, we focus on identifying life sciences clients with strong scientific foundations, robust track records and competent management teams. By connecting them with suitable financial partners, we aim to help secure the capital needed to advance their product development.
In response to evolving industry needs, we’ve positioned ourselves as an end-to-end partner. By acquiring businesses and expanding services, we provide comprehensive support throughout the product development life cycle. This approach streamlines processes for life sciences companies, allowing them to engage with a single organization rather than multiple vendors — from early research to product approval, launch, distribution and beyond.
One specific service we offer relates to clinical trials. While we are not a Clinical Research Organization (CRO), our unique model allows us to step in at the conclusion of the last clinical trial. By managing medication distribution to patients, we seamlessly bridge the transition from the clinical trial phase to real-world commercialization, ultimately impacting outcomes. This service, focusing on converting patients from trials to real-world scenarios, stands out as a key differentiator in our portfolio.
Nancy Rawson, Executive Vice President & Chief Impact Officer, Monell Chemical Senses Center: There are many challenges with the hybrid workforce. There is a benefit of having Zoom meetings; however, we haven’t figured out how to have that work environment be as effective as in-person work for certain kinds of interactions. I think many organizations are struggling with this still. There are equity issues with equipment and other challenges, which impact the nonprofit world considerably. We don’t have the same leverage over our employees that corporations have, so we have to attract employees here and create an environment they want to come to. Our biggest challenge currently with this is our facilities, because we are in an older building that would really benefit from some renovations to both improve and expand our capacity. . It is a big challenge for nonprofits to build those attractive facilities, but we are working with partners to launch a growth plan that will fuel our fundraising activities in this area, starting with a $1M RACP award from the State of Pennsylvania last year!. Another concern is that Monell, like many biomedical enterprises, recruits and employs scientific talent from all over the world, but the reputation Philadelphia and elsewhere in the US has in many places is not positive due to violence and social issues. In terms of funding, we are fortunate to have a diverse portfolio including funding from state and federal sources, foundations, corporate sources and donations. However, with rising costs on every front, increasing our revenue is essential to fuel our growth strategy. We are embarking on a number of institutional initiatives that will focus on connecting our science to impact and telling our stories more widely to accelerate our fundraising success and help us grow! That is positive, and we believe that will help us to grow.
What are the overarching opportunities for life sciences companies in the region?
Belazi: In Philadelphia and the surrounding area, we are privileged to be recognized as a leading hub for life sciences and biotechnology companies in the U.S. and globally that rely on our end-to-end solutions for pre-commercialization, product launch, market access, exclusive distribution and beyond for specialty drugs, cell and gene therapies (CGTs) designed to treat rare diseases and complex conditions. We are proud to join and collaborate with the legion of companies in this region which is at the forefront of innovative advancements that address the unmet needs of this vulnerable population and our clients.
Our collaborative efforts focus on supporting pharma manufacturers in commercializing their therapies, ensuring efficient, swift delivery to patients that results in optimized outcomes. We also actively engage with these companies, participating in key events, such as bio conferences, associations and the chamber of commerce. The symbiotic relationship we share with these companies is truly exciting. We find ourselves at the forefront of numerous innovative advancements, technologies and potentially lifesaving drugs. Our role is pivotal in helping to successfully bring these innovations to market, supporting the continued progress of healthcare and life sciences in the region.
Rawson: Monell is at a transformational point in our 55-year history, with our fourth Executive Director, Dr. Ben Smith, who joined the Center in August. Dr. Smith is poised to move us into a growth phase made possible in part by gifts from the Ambrose Monell Foundation and a bequest from the estate of our former board member, Louise Slade. The timing is ideal, because COVID put an emphasis on taste and smell, and what happens when you lose those senses. We are also looking to grow into the diagnostic sector. We are trying to understand how the odors that we omit are generated, and how they change with cancer or can help diagnose other diseases and disorders quickly and early. We have intellectual property in this area that is rife for translation, which we are partnering to move forward. Institutionally, we will be more visible, and Philadelphia is the perfect-sized city for us to do that. We are excited about the growth in Philadelphia, and the new female mayor. Being ideally situated – surrounded by Penn, Drexel, Temple,Jefferson, and the University City Science Center – we are at the heart of a truly transformational environment for advancing science. I was so impressed by how Philadelphia came ‘roaring back’ from COVID. Having shifted from Acting Director in 2022-2023, to my current role as Chief Impact Officer, I look forward to helping Monell to become an even larger voice in this vibrant community and in the biomedical enterprise in the coming years.
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