Boston’s Health Care Hotbed Could Spur Next Wave of Medical Breakthroughs

In the last several decades, Boston has become a hotbed for health care companies. The communities around the Charles River are home to innovative health care companies as well as educational institutions and medical facilities that contribute to the area’s health care ecosystem. Massachusetts General Hospital is a leading medical center and has the largest hospital-based research program in the United States. Local universities such as MIT, Harvard, Brandeis and Boston University have set global standards with their local research efforts and vast resources while producing the next generation of pioneers in the health care industry.

These institutions foster an increasing diversity of talent supporting the growing community of health care companies in the region focused on drug discovery and the entire value chain. In an article published by The Economist in January, the close proximity of similar firms in Boston not only facilitates the formation of new connections, but it also encourages meetings. Kendall Square, a neighborhood in Cambridge, acts as a focal point of Boston’s health care companies including leaders such Biogen (Nasdaq:BIIB) and Vertex Pharmaceuticals (Nasdaq: VRTX). According to The Economist article, firms located in Kendall Square have collectively absorbed about $14 billion in venture-capital investments.

With vast academic and institutional resources in the area, Boston-based companies are advancing the health care industry through commercialization of medicines for serious diseases, creation of transformative therapies and research discoveries recognized through Nobel Prizes. The founders of companies including Biogen, Alnylam Pharmaceuticals (Nasdaq: ALNY), Paratek Pharmaceuticals (Nasdaq: PRTK), and Flex Pharma (Nasdaq: FLKS) have conducted valuable research in the space, and their companies continue to innovate within the health care industry.

Walter Gilbert, Ph.D. co-founded Biogen in 1978 as a global company specializing in the development of innovative medicines. Two years later, he won the 1980 Nobel Prize in Chemistry for his work in DNA sequencing. Co-founder Phillip Sharp, Ph.D. was awarded the 1993 Nobel Prize in Medicine for his discovery of split genes. Today the company continues to discover medicines for people around the world living with serious illnesses.

Gilbert and Sharp went on to launch additional health care companies in Boston. In 1996, Gilbert founded Paratek Pharmaceuticals, a biopharmaceutical company developing solutions for patients with infectious or neuromuscular diseases. Several years later, Sharp founded Alnylam Pharmaceuticals, a biopharmaceutical company focused on the discovery, development and commercialization of RNA interference therapeutics.

This trend of innovation has continued to grow in the 21st century as seen by 2003 Nobel laureate Roderick MacKinnon, the Scientific Co-founder of Flex Pharma, a company developing proprietary treatments for neuromuscular disorders including muscle cramps.

Economic Impact on Boston

In addition to making groundbreaking discoveries with global applications, Boston’s health care hub also provides value to the local economy. For example, Vertex Pharmaceuticals opened an $800 million Boston headquarters in 2014 and today has nearly 2,000 employees. The influx of new offices and employees creates demand for both commercial and residential real estate, contributing to the current development boom in the area.

The Future of Health Care in Boston – Companies to Watch

In addition to these established multi-national firms, startups including 2016 CNBC Disruptor 50 companies Moderna Therapeutics and Ginkgo Bioworks are based in the Boston area.

Ginkgo Bioworks bioengineers a range of substances using yeast as a base. Due to the technology’s versatile application, it has potential to disrupt a variety of consumer and industrial products. So far, the company bioengineers substances ranging from perfumes and cosmetics to sweeteners. Ginkgo Bioworks recently constructed Bioworks2, a facility housing the testing of designer DNA. This year, CNBC named Ginkgo Bioworks a top 10 CNBC Disruptor 50 company.

Moderna Therapeutics is developing a technique to reprogram cells in the body to produce defenses against disease, called RNA technology. When injected into patients, it has potential to generate natural immune responses that destroy cancerous cells. Moderna Therapeutics has more than 90 preclinical programs as of January 2016 in addition to two clinical programs currently taking place. According to CEO Stéphane Bancel in a May 2016 interview, Moderna could begin clinical human trials within 12-18 months.

Beyond Boston: Over-Performance in the IPO Market

Beyond the Boston area, health care firms, particularly biotechnology and pharmaceutical companies, have continued to list at a steady pace. Year-to-date, 27 biotechnology and pharmaceutical firms have listed on Nasdaq, one third of which are headquartered in Massachusetts. This is inclusive of the first IPO of 2016 – Editas Medicine (Nasdaq: EDIT), which hails from Cambridge and listed on Nasdaq February 3, 2016. Year-to-date, five of the top ten best performing IPOs across all industries have been in the biopharma space.

“There’s a golden age of biotech, where they are solving some incredibly massive challenges,” said Nelson Griggs, Nasdaq Executive Vice President of Listings Services in a MarketWatch article earlier this year. “There is still work to be done in the medical field, which makes promising trials highly valued. We look forward to seeing the continued success and innovation of companies within the sector and industry.”

Nasdaq Listings - Health Care and Biotech in Massachusetts

Nasdaq has had a steady stream of health care IPOs out of Massachusetts this year. Year-to-date, Nasdaq has a 100% biotech IPO win rate in Massachusetts. Our team of health care specialists has in-depth knowledge of the needs and challenges health care companies face. They aim to facilitate the growth and innovation of these companies via capital raising and other Nasdaq services. In addition to strength in biotech, Nasdaq is also the leader in health care companies with over 100 listings in Massachusetts alone. Nasdaq prides itself in not only having 100% of biotech listings in Massachusetts listed on our exchange, but also for having a 87% year-to-date win rate across all sectors state-wide.

The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security, sector, or an overall investment strategy. Neither Nasdaq nor any of its affiliates makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Statements regarding Nasdaq-listed companies are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED.
Jordan B. Saxe is Senior Managing Director, Listing Services at Nasdaq. He is responsible for leading business development efforts in the health care sector, and brings over thirteen years of experience within the exchange field. He also works closely with venture capital, private equity and investment firms to educate them on the liquidity options Nasdaq can provide. He holds a B.S. in Business Administration from the University of Vermont.

Michael Fitzgerald is Director, Listing Services at Nasdaq. Based in Boston, he is responsible for relationship management with Nasdaq’s listed companies headquartered in New England and Bermuda. Michael consults with issuers on topics such as trading, corporate actions, mergers and acquisitions, investor relations, corporate governance and marketplace regulations. Prior to Nasdaq, Michael was Vice President and Head of Market Data Services Vendor Management at State Street Global Advisors. Michael holds a B.S. in Finance, M.S. in Finance and MBA from Bentley University.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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