2014 Industry Snapshot

Massachusetts Biopharma Industry Employment Employment in the industry has grown 9-10 x faster than state and national growth rates for all employment.* *4.8% MA 10-year employment growth, all industries 4.1% US 10-year employment growth, all industries Source: U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages (QCEW); MassBio 41 %

Economic Impact ,642 employees $125,056 average salary $7,208,460,412 total MA-based payroll Source: U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages (QCEW)

10 - Year Employment Performance: MANUFACTURING Top 5 in job growth Top 5 in Percentage Growth The U.S. lost 10,091 biopharma manufacturing jobs since 2004, a 3.6% decrease. Massachusetts grew by 24.2% in biopharma manufacturing in the same time period. Source: U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages (QCEW)

Massachusetts has more employment classified as Biotechnology Research and Development than any other state.* *NAICS : Research and development in biotechnology Source: U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages (QCEW) 7 - Year Employment Performance: Biotechnology Research & Development Top 5 in job growth Top 5 in Percentage Growth

Apples to Apples As explained in the appendix, MassBio uses 8 industry classifications in determining overall employment in the biopharma industry. This reflects a conservative approach, as other reports include other industry classifications. In estimating employment attributable to the biopharma industry, MassBio uses only a percentage of employment reported for several industry classifications (1.9% of university employment, for example). Our determination of what percentage to utilize in our estimate is determined by the unique composition of these industries in Massachusetts. As the profile of each such industry segment varies by state, it not appropriate to compare these particular industry segments using the percentages that we have developed specifically for Massachusetts. Fortunately, two NAICS classifications, Pharmaceutical Manufacturing (NAICS 3254) and Research and Development in Biotechnology (NAICS ), are considered fully part of the biopharma industry and would be so considered in any state. Additionally, these two industry segments are core segments of the industry. These two industries, therefore, are particularly appropriate for “apples to apples” comparisons to determine industry performance among the biopharma states. Therefore, we have considered ONLY two NAICS codes for the following state-to-state employment performance comparison: NAICS 3254, Pharmaceutical Manufacturing, and NAICS , Research and Development in Biotechnology.

Apples to Apples: Core Biopharma employment performance since 2007 Top 5 in job growth Top 5 in Percentage Growth Source: U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages (QCEW)

Biopharma Manufacturing Employment, 2013 Massachusetts is also a leading state in biopharma manufacturing, with 1 out of 5 jobs in the industry involved in manufacturing. With over 600,000 liters of mammalian cell culture manufacturing capacity in the region, Massachusetts is the leader globally in this type of biologics manufacturing expertise.

Medical Device Employment in MA Only California and Minnesota employ more in the medical device industry. Source: U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages (QCEW)

R&D in Biotech: Industry Concentration What is a Location Quotient? Location Quotients are used by economists to determine the strength of an industry in a geographic region. They measure the concentration and strength of an industry in a region versus the nation as a whole. Location Quotients of more that 1.0 mean that the industry enjoys a greater concentration in a region versus the nation as a whole. Massachusetts holds a dominant position in terms of industry concentration in “Biotechnology Research and Development” – almost twice the concentration of jobs as the next closest state. Source: U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages (QCEW)

2013 National Institutes of Health (NIH) Funding - by State Total (millions) and Per Capita Massachusetts trailed only California in total dollars in HOWEVER, NIH funding was reduced by 12.2% nationally in In MA the reduction was 7.3% or $182 million. Source: NIH, Research Portfolio Online Reporting, U.S. Census Bureau

Job Listings on MassBio.org Average Daily # of Job Listings for the Month of May, In June and July of 2014, average daily listings on MassBio.org have been consistently above 1,400 jobs. MassBio.org is not a comprehensive listing of all jobs available in the industry in Massachusetts. Given its significant volume, it does provide a statistically strong sampling in determining job hiring trends.

Top NIH Funded Independent Hospitals 2013 Source: NIH, Research Portfolio Online Reporting The Top 5 NIH-funded independent research hospitals are in Boston. Please note: NIH lists hospitals that are part of universities separately.

Top Massachusetts NIH Funded Non-Profits, 2013 Source: NIH, Research Portfolio Online Reporting Massachusetts non-profits are significant recipients of NIH funding. Johns Hopkins University and its Medical School is tops nationally, with $575 million in total NIH awards.

Venture Capital Investment Venture investment in MA was rose to $941 million in Source: PWC MoneyTree Historical data and Evaluate Pharma. Investment in Massachusetts Biotech Companies, Massachusetts received over 20% of all VC investment in biotechnology in the U.S.

Top 15 VC Financings in MA Source: Evaluate Pharma ®

Biotech VC in Massachusetts by Location $500+ million dollars in VC went to Cambridge-based biotechs in Companies in other Massachusetts communities garnered almost $400 million. Source: EvaluatePharma®

Seed Stage Funding Seed stage At this initial stage, the company has a concept or product under development, but is probably not fully operational and has usually in existence less than 18 months. Source: PWC MoneyTree Historical data.

Massachusetts Seed Stage 5-year trends Average Seed Deal Size MA share of U.S. Seed stage funding for biotech... MA seed stage deals have grown in number and in size since In the most recent 5 years, MA companies have received 33.4% of all seed funding for biotech in the U.S. Source: PWC MoneyTree Historical data.

5-year Trends in Seed Stage Financing Seed Stage as percentage of overall VC deals... Seed Stage share of overall biotech VC investment... Over the past decade, MA has outperformed the nation in percentage of deals and investment at the seed stage. Source: PWC MoneyTree Historical data.

MA Seed Stage Funding by quarter, The “Good Old Days” weren’t so good... but, there has been a drop since the high watermarks. Source: PWC MoneyTree Historical data.

MA Seed Stage Funding - Annual, yr average, $83,429,940 5-yr average, $152,382, will be a revealing year for seed funding. Will MA move above the 5-year trending in funding? $198,917,200 in Seed funding in MA is needed for the 5-year period ending in 2014 to equal that of the prior 5-year period. Source: PWC MoneyTree Historical data.

2013: The IPO Comeback Bind Therapeutics $70.5 m Foundation Medicine $106 m Agios Pharmaceuticals $122 m Bluebird Bio $116 m Acceleron $93 million* Enanta Pharmaceuticals $65 m Epizyme $80 m Tetraphase Pharmaceuticals $80 m Karyopharm $109 m An initial public offering, or IPO, is the first sale of stock by a company to the public. If the company has never issued equity to the public, it's known as an IPO. There were virtually no IPOs in 2008 or 2009, with a modest comeback beginning in *figures refer to “offer amounts” (investment secured) at time of IPO. Source: Nasdaq.com, BioSpace

2014: IPOs Continued $90 million* $91 m $90 m $84 m $65 m $100 m $59.5 m $12 m $52 m $96 m $32.7 m $90 m $65 m $66 m Fourteen IPOs through July of 2014, sets an annual record in IPOs for Massachusetts biotech companies. Source: Nasdaq.com, BioSpace *figures refer to “offer amounts” (investment secured) at time of IPO.

Industry IPOs by Geography, since 2013* 37 IPOs $2.57 billion aggregate raised $69.4 million average initial offering 24 IPOs $1.9 billion aggregate raised $79.2 million average initial offering 6 IPOs $399 million aggregate raised $66.5 million average initial offering 9 IPOs $520 million aggregate raised $57.8 million average initial offering *through July 25, Includes leading four states only. California Pennsylvania Massachusetts New Jersey Source: Nasdaq.com, BioSpace 5 IPOs $402 million aggregate raised $80.3 million average initial offering New York

Drug Development Pipeline, by Phase Source: EvaluatePharma®, July ,384 drug candidates in development 6% of the global pipeline 12% of the U.S. pipeline

Behind the Numbers Projects TDI 174/175 Pathology associated with proteins that normally assist in RNA processing and mutations in the genes that encode them have been associated with ALS. These two projects are aimed at developing therapeutics that will influence RNA binding and metabolism and may stabilize susceptible neurons. ALSTDI is a Cambridge non- profit that seeks to end ALS “Lou Gerhrig’s Disease”, a progressive neurodegenerative disease that causes muscle weakness, paralysis, and ultimately, respiratory failure. Research Project Phase At this “discovery stage” the goal is to find a new molecule or chemical that can be a useful drug through extensive laboratory work in which drug targets are defined, screened and the formulation and delivery mechanism of the drug candidate is developed. Source: Evaluate Pharma ®, ALSTDI website.

Behind the Numbers Elesclomol Phase II Phase II clinical trials subject typically include patients to assess the efficacy and safety of a drug. A drug is not presumed to have therapeutic value at this stage. Phase III trials, with 1000 or more patients, determines therapeutic effect. Synta is a Lexington-based company focused on discovering, developing and commercializing small molecule drugs to extend and enhance the lives of patients with severe medical conditions, including cancer and chronic inflammatory diseases. Elesclomol is in a Phase 2 clinical study in patients with recurrent ovarian cancer, fallopian tube cancer, or primary peritoneal cancer who have progressed while receiving platinum-based therapy. Source: Evaluate Pharma ®,Synta Pharmaceuticals website.

Massachusetts Pipeline by Therapeutic Area Source: EvaluatePharma®, May, 2014

Recent Drug Approvals for Massachusetts Companies 2013: Kynamro (Genzyme) to treat rare forms of high cholestorol Tecfidera (Biogen Idec) best-in-class treatment for relapsing multiple sclerosis Aptiom (Sunovion) treats seizures associated with epilepsy 2014: Alproliz (Biogen Idec) for the treatment of hemophilia B Entyvio (Millennium, The Takeda Oncology Company) for treatment of adults with ulcerative colitis and Chrohn’s Disease. Sirextro (Cubist) for treatment of acute bacterial skin and skin structure infections Source: CenterWatch

Changing the Lives of Patients Sources: Developed from multiple sources including EvaluatePharma®, emedicine medscape, NCBI, CDC. Over 160 drugs have been commercialized by current Massachusetts- headquartered companies.

Largest Industry Employers in MA, 2013 Sources: MassBio Membership Reports & Surveys; Boston Business Journal Book of Lists, 2013

2007 Life Sciences Lab Inventory Growth Source: Colliers Meredith & Grew, Life Science Review, , CBRE- NE BioView, ,203,999 s.f. 16,063,990 s.f. Completed in 2013 Vertex, Boston Pfizer, Cambridge Biogen Idec, Cambridge 2014 Construction Novartis, Cambridge Lonqwood Center, Boston Alexandria Center, Cambridge

Industry Geography Top 10 Communities by number of BiopPharma Companies* Cambridge (130) Boston (41) Worcester (31) Waltham (26) Lexington (25) Woburn (24) Watertown (16) Bedford (14) Marlborough (9) Billerica (9) *The Bureau of Labor Statistics indicates 738 biotechnology and pharmaceutical establishments in MA. For this list, MassBio used its own database and the MassBio/MHT 2014 Complete Guide, which include 431 company addresses.

What’s in a Number? Please note: Prior to 2012, MassBio used two different federal sources for employment data. In order to present more consistent employment data on a more timely basis, we no longer use County Business Patterns (CBP) data of the U.S. Census Bureau but rely primarily on the U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages (QCEW) for this data. As a result, historical employment data found in the Snapshots vary from that found in past reports. Though the historical annual employment figures vary by about 5% between the 2012 Snapshot and those of past years, the trend lines are very similar. Why use the QCEW? QCEW data is comprised of employment and wages from unemployment insurance (UI) tax reports submitted by employers and is augmented by both BLS worksite reports and the Annual Re-filing Survey (ARS), which surveys one quarter of all private-sector establishments each year. The QCEW data is available on a more timely basis than the CBP and is directly related to the state’s ES- 202 data, providing an additional, ongoing corroborative source.

What’s in a Number? What is considered “biopharma” employment? Using the North American Industry Classification System (NAICS), with which QCEW data is reported, MassBio has determined that several NAICS classifications can be considered part of the biotechnology and pharmaceutical industry. However, only in certain cases can the industry claim 100% of any one NAICS code. MassBio determined that a percentage of some industry classifications could be used in estimating overall industry employment. In some cases, the percentage determination for certain industry codes was based on reports developed by other organizations. The following NAICS codes are utilized: NAICS 3254: Pharmaceutical MFG, including biologics (100%) NAICS : Research and Development in Biotechnology (100%) NAICS : R&D in Physical, Engineering, and Life Sciences (except biotech) (22%) NAICS : Analytical Laboratory Instrument MFG (30%) NAICS 54138: Testing Laboratories (9%) NAICS 622: Hospitals (4.5%) NAICS 61131: Universities (1.9%) NAICS : Medical testing laboratories (100%) NAICS 4242, Drug merchant wholesalers, is no longer included in any current or annual employment figures. NAICS , Medical Laboratories, is included. Prior to 2013, we omitted Medical Laboratories, as these laboratories are health care services related, providing services to the medical delivery and patient care system, rather than the biopharma research development and manufacturing industry. We now acknowledge that Medical Laboratories are closely connected to the biopharma industry, requiring similar capacity and skills found in the biopharma industry. MassBio also tracks employment for “green biotechnology” classifications: , , and However, the QCEW does not reveal employment data for these categories beyond minimum ranges, so this data is not included in the employment figures presented in this Snapshot nor is it factored in comparisons with other states.

Questions? As the premier source of information on biotechnology in Massachusetts, MassBio tracks industry statistics over time and issues an overview Industry Snapshot each year. For more information, contact: Peter Abair, Director of Economic Development & Global Affairs