Loxo deal shows potential of Connecticut biotech
STAMFORD — Six years ago, a biotech firm planning to develop genetically focused cancer treatments launched downtown.
That firm is now worth several billion dollars and has put its first product on the market.
The rise of Loxo Oncology — which has agreed to be acquired for about $8 billion by pharmaceutical giant Eli Lilly & Co., after recently gaining U.S. Food and Drug Administration approval for its Vitrakvi drug — reflects the growing prominence of the biotech sector in southwestern Connecticut. The area’s central location and public subsidies have attracted other life-sciences startups, but long-term expansion could hinge on sustained fiscal and operational support for the industry.
“Any success of a Connecticut-based company does a lot to promote the state’s robust biotech sector,” said Paul Pescatello, executive director and senior counsel for the Connecticut Business & Industry Association’s Connecticut Bioscience Growth Council. “We have to make sure we take advantage of that momentum.”
About half of Loxo’s approximately 125 employees are based at its offices at 281 Tresser Blvd. It also maintains offices in South San Francisco, Calif., and a laboratory in Boulder, Colo.
“We’re able to recruit and attract people on both coasts and in the middle,” Loxo founder and CEO Josh Bilenker, a Stamford resident, said in a recent interview. “One of the hardest things we encounter is just hiring great people to take us to the next level. It’s nice to have a footprint in these different cities because it lets us talk to more types of candidates.”
Loxo operates within a couple of blocks of Purdue Pharma, the maker of OxyContin, and Cara Therapeutics, which is developing treatments for chronic and acute pain and the itch condition pruritus.
One mile south, genomic testing firm Sema4 opened its main offices at 333 Ludlow St., in the fall of 2017. It moved from its original home at the Mount Sinai Health System campus in Manhattan.
Sema4 settled on Stamford as its new home city because it was looking for space for its growing operations that it could lease for a fraction of Manhattan rates, while still operating nearby.
The Stamford offices now house 126 employees.
“It’s gone better than expected,” Sema4 founder and CEO Eric Schadt said in an interview last year. “It’s more relaxed, with more space. It’s a better working environment and a better quality of life.”
Last April, Sema4 announced it would move its Manhattan lab work to Stamford and increase its headcount in the state by more than 400 within the next five years.
The approximately 55,000-square-foot lab is scheduled to open in the third quarter of this year. It would house DNA and RNA processing and sequencing and genetic-counseling operations.
Sema4 officials have not disclosed the new testing center’s address, but they say it would be at a property that formerly housed another lab.
In addition, Sema4 has operated since 2014 a lab in Branford, where it employs about 40.
Meanwhile, the area continues to make new recruits.
SpringWorks Therapeutics, which is developing drugs to treat cancers and rare diseases, relocated last November from midtown Manhattan to 100 Washington Blvd., in the Harbor Point neighborhood of Stamford’s South End. Sixteen employees are now based there.
Supporting the growth
Significant state investment underpins the industry’s expansion.
Related to Sema4’s new lab, the state Department of Economic and Community Development loaned the company $6 million to purchase machinery and equipment, make capital improvements and move ahead with new hires. The company would be eligible for up to $5 million of forgiveness if certain milestones were met.
In December 2015, DECD gave the company a separate $9.5 million loan to help create 145 positions.
Other major biotech investments during former Gov. Dannel P. Malloy’s eight-year tenure included the renovation of University of Connecticut health buildings in Farmington, the opening of the Jackson Laboratory for Genomic Medicine in Farmington and the creation of a bioscience innovation fund.
Connecticut Innovations, the agency that manages the bioscience investment fund, has so far invested about $186 million in life-sciences companies, helping to attract about $1.8 billion in outside investment in those firms. Loxo is not CI-funded.
Biotech businesses account for about half of the companies in CI’s portfolio.
“Loxo is a great story,” said Dan Wagner, CI’s managing director of investments. “With our strategy of helping life-sciences companies to grow, we hope some of them turn into the next Loxo and have a substantial impact on our state for a number of years.”
With its biotech-focused expenditures, Connecticut ranks in the top 10 in several standings. It placed No. 4 among the states for private-sector R&D investment, on a per-capita basis, according to a 2017 report by the nonprofit Connecticut Economic Resource Center. Its total of $2,227 was more than twice the national average.
At the same time, it came in No. 7 for state-funded R&D investments.
A number of other programs aim to encourage the industry’s development.
Accelerator for Biosciences in Connecticut, an approximately six-month program for those launching new bioscience ventures, last month announced 12 projects for its second cycle, which is running this year.
Branford-based Design Technologies is overseeing the public-private initiative. The state business-development agency CTNext is backing the program, while corporate sponsors include three pharmaceutical companies with headquarters or major operations in Connecticut: Purdue Pharma, Pfizer and Boehringer Ingelheim.
“We see increasing growth in early-stage venture formation including biotech, biotech research services, medical devices and digital health,” Design Technologies Principal Mary Howard said. “We see more spin outs from more Connecticut universities this year than last and more interest by corporations and health providers outside Connecticut to engage with Connecticut-based health-focused ventures.”
Statewide, bioscience accounted for more than 35,000 jobs across more than 2,000 companies, according to the CERC report.
“We have a lot of good programs and (tax) incentives in place,” the CBIA’s Pescatello said. “To the extent we can improve our transportation systems and the state’s fiscal health, that will help us in those endeavors to capture these growing biotech companies, especially those coming out of New York City. They’re there for the taking.”
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