Biotech is floundering in New York City because local institutions aren't doing enough to promote commercialization of small projects, says a new report.

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"The criticism," said Jonathan Bowles of the Center for an Urban Future, a New York City think tank that published the report last month, is that "for a long time [technology transfer offices] put too much emphasis on the blockbuster deal," ignoring smaller technologies that could have been developed by start-up companies with the help of venture backing.

The group based its conclusions on the most recent data on science and engineering from the National Science Foundation, sources such as the Association of University Technology Managers and PricewaterhouseCoopers, and interviews with venture capitalists, tech transfer experts, and other key players in innovation in the region.

There's no doubt that institutions in the New York City metro area -- that is, New York City and parts of New Jersey and Pennsylvania -- are producing great science. In 2007, New York University (NYU) earned $791 million from licensing deals, and Columbia earned $135 million. No other university in the country brought in more than $100 million, according to the report. Universities and colleges in the region spent approximately $2.8 billion on R&D in 2006, the most of any other major metro area. (San Francisco was second, with $2.2 billion in expenditures.)

Although the data are indicative of the city's lucrative scientific output, they also show that the investment isn't yielding as many start-ups as other regions with comparable scientific investment. The report singled out Columbia University in particular. "Everyone acknowledges Columbia is the stand-out institution in New York" for innovation and technology transfer, said Bowles, "but it seemed like the first institution people singled out when talking about the problems in New York [biotechnology]." That's because "Columbia, like a lot of other institutions, was pursuing blockbusters at the expense of other promising technologies," said Bowles.

Orin Herskowitz, vice president of intellectual property and technology transfer at Columbia Technology Ventures, the university's technology transfer office, countered that the report didn't take into account recent efforts. "I think that's a reputation from the past," he said. "We receive 300 inventions a year, and file 250 patents a year. If we weren't trying to actively license those, then it wouldn't make sense for us to file those patents." Indeed, with the high cost of legal fees for filing patents, few technology transfer offices are able to pay for their efforts with the income from deals, said Bowles. NYU and Columbia are two exceptions.

"I'm sure there's more universities could do," said Herskowitz. Already, he said, he regularly meets with others from technology transfer offices at New York institutions to plan joint events such as "speed dating" for scientists, businesspeople, and engineers in order to boost collaboration.

Another weakness the report noted was New York City's lack of a strong engineering school -- such as MIT in Boston or Stanford in the Bay area -- to spur innovation. Engineers "are much more apt to look at real world applications," he said, while "scientists are content looking at questions" -- it's only when you put them together that "you get real entrepreneurial thinking," said Bowles.

Bowles is the first to admit that there isn't a single fix for New York's thin biotech portfolio. Still, he insisted, having done a number of reports on the New York biotechnology sector over the years, "I continued to hear about the role of the universities" in the technology transfer bottleneck.

He conceded, too, that the city's lack of affordable commercial lab space is an additional major barrier. "I think you can't get past real estate -- it's a critical problem," he said. "It probably is the number one obstacle for New York."

Even if support from universities wasn't an issue, as the report contends, securing venture funding often means leaving the region. "From a venture perspective," said Ron Lennox, a partner at CHL Medical Partners in Stamford, CT, "space is the major issue. When we find interesting technology we're more likely to move it out of the city." Although New York's East River Science Park, scheduled to start accepting tenants by the end of 2009, will be a welcome addition, it can't compare with space available in other biotech hubs. "There's enough NIH funding, there's enough smart people, but if you look at the numbers, Boston has 15 million square feet of lab space. And after the Science Park is finished, New York will have 1 million," Lennox said. And with fewer venture capital firms there, there's a smaller pool of investors for any give venture, he added.

According to the report, out of the 60 companies still in operation that Columbia spun off between 1983 and 2008, only seven have kept major operations in the city. "You could start [a biotech] but you couldn't grow it here. It was physically impossible, at any price," said Maria Gotsch, president and CEO of the New York City Investment Fund.

But there are some signs that things may be changing in New York City. At least one California-based venture firm, Bay City Capital, decided to keep its flu vaccine start-up, Vivaldi Biosciences, in the city, close to the company's scientific founders. That move was facilitated by networking and financial assistance from Gotsch at the New York City Investment Fund, as well as from Alexandria Real Estate, the developers of the East River Science Park. "We got a lot of help, from people who were keenly interested in us staying. It was an easy decision," said Doug Given, a partner at Bay City Capital and CEO of Vivaldi Biosciences.

"I think [the report] portrays a bit of a darker picture than is necessary," said Herskowitz.

Correction (October 16, 2009): The original version of this article quoted Ron Lennox saying there were 50 million square feet of lab space in Boston. The accurate number is approximately 15 million square feet. The article has been corrected. The Scientist regrets the error.


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