Last year, nearly 60 percent of venture capital for Massachusetts life sciences companies was deployed to companies outside Cambridge, the highest share since 2019, when the Massachusetts Biotechnology Council began tracking that metric, according to a report the council released this month. That was up from 51 percent outside Cambridge in 2022, and 42 percent in 2021.
The new clusters are already having a broad impact on communities outside the traditional biotech hub, bringing jobs, tax revenue, and a cutting-edge vibe but also more traffic and pressure on real estate costs. Venture dollars stayed largely within eastern Massachusetts last year, but moves are afoot to accelerate the industry’s expansion to cities and towns in the state where space is more plentiful.
“We need the scale, in terms of space, that isn’t ideally suited for Cambridge,” said David Hallal, chief executive of ElevateBio, which outfitted a 300,000-square-foot facility to make cell and gene therapies near the intersection of Routes 2 and 128 in Waltham.
Six-year-old Elevate, which has about 140 employees in Massachusetts, reeled in the state’s largest venture capital round in 2023. It raised just over $400 million to expand capacity at its “genetic medicines foundry,” a contract manufacturing plant that supports more than 20 drug makers.
Other large venture outlays went to biotech startups such as Cardurion Pharma in Burlington ($300 million), Aiolos Bio in Boston’s Back Bay ($245 million), MapLight Therapeutics in Burlington ($225 million), Upstream Bio in Waltham ($200 million), and Abcuro in Newton ($155 million).
Mariana Oncology($174 million) is one of several early-stage drug developers that leased space at 100 Forge, a nine-story glass tower that opened in 2022 behind the Arsenal Yards development in Watertown. The company uses radiopharmaceuticals, drugs containing radioactive particles called isotopes, to seek out and destroy cancer cells.
“Cambridge was super expensive, and parking was difficult,” said Simon Reed, Mariana’s chief executive, who looks out his office window onto the Charles River. “And the commute there was a major issue for the people who were coming in from the suburbs.”
Kendall Square, home to MIT, looms large in the biotech field’s origin story, spawning several foundational companies starting in the 1980s. Biogen Idec (now Biogen), Genzyme Corp. (now part of Sanofi), and Millennium Pharmaceuticals (now owned by Takeda) helped kickstart the industry with cell-based therapies — a departure from chemically derived pills — for multiple sclerosis, Gaucher disease, and multiple myeloma.
Since then, Cambridge has grown into a global capital for the industry, fueled by venture capital, Big Pharma alliances, and cutting-edge technologies licensed from hospitals and universities.
Among the drug makers that came of age there are Vertex, which vanquished cystic fibrosis in most patients who received its treatments, and Moderna, which developed the messenger RNA vaccine that was used against COVID.
Many have gravitated to Kendall Square partly because of its celebrated “bump factor,” the ease with which drug developers and financers can run into each other in the dense neighborhood. But that phenomenon has also created a kind of bubble of highly educated scientists and entrepreneurs seemingly removed from the rest of the state and all it has to offer.
“For a long time, when people thought about life sciences, they thought about Cambridge,” said Kendalle Burlin O’Connell, the MassBio chief executive. “Research and development is Cambridge’s sweet spot. But there are capabilities in the Merrimack Valley and in Worcester. Land is cheaper, and you can tap into a whole new workforce.”
Business leaders and state officials, bemoaning the industry’s geographic concentration, have stepped up efforts to broaden its reach, particularly in niches such as biomanufacturing that require more space and large numbers of production workers.
To help companies understand their options, MassBio has rated 90 communities as BioReady, certifying they’ve made the zoning changes and water and sewer upgrades required to accommodate biotechnology properties.
Even cheerleaders in Kendall Square say they welcome the biotech clusters outside Cambridge, while still boasting pride of place.
Reacting to the new MassBio report showing 58 percent of venture funding was directed elsewhere last year, Kendall Square Association executive director Beth O’Neill Maloney said, “It’s exciting to see that 42 percent of the venture capital investment dollars … were invested in Cambridge.” But she also applauded the growth in other communities, saying it “strengthens Massachusetts’ dominance in life sciences.”
Outside of Cambridge, meanwhile, local officials greet the arrival of biotechs as a windfall.
“They’re coming into Watertown and finding things might be a little cheaper here,” said Watertown City Council president Mark Sideris, who noted that Alexandria Real Estate has plans to build three more life sciences buildings on the Arsenal on the Charles complex. “And there’s some benefits from that.”
If a Watertown company like Mariana Oncology hatches the next breakthrough drug, he said, “that would be a feather in our cap.”
Sideris said Watertown has been able to build two elementary schools, renovate a third, and demolish an old high school, all without an override boosting the limit on property tax increases, thanks to tax revenue generated by biotechs and other new companies.
“All of this growth has helped us to do that,” he said.
Lower rents aren’t the only draw for biotechs setting up shop outside Cambridge. Boston’s pricy Seaport district has lured dozens of life sciences companies — starting with Vertex, which moved there from Cambridge in 2014 — with more space and quick access to Logan Airport. Among the recent arrivals are Lilly, the Indianapolis-based company that makes a popular obesity and weight loss drug.
Across the city, a smaller cluster has risen in the Fenway neighborhood, where Third Rock Ventures, which bankrolls startups, decamped. Rapport Therapeutics, a Third Rock-backed company, closed on another $150 million venture round last year from follow-on investors. It operates out of a 1325 Boylston Street office just a block away from Pesky’s Pole, the Green Monster, and what fans call America’s most beloved ballpark.
While its white-coated researchers experiment with small molecules to fight neurological disorders, such as focal onset seizures, a treatment-resistant form of epilepsy, they can steal a glance at the boys of summer — an amenity unmatched across the river in Cambridge.
“We can look out of some of our windows and see Fenway Park,” said Rapport chief executive Abe Ceesay.
Robert Weisman can be reached at email@example.com.