Putting Biotech on the Map
Perhaps not thought of in the same biotech vein as San Francisco or Boston, Philadelphia has much to offer the life science community. Steve Doneson, an EisnerAmper LLP auditor specializing in technology and life sciences, discusses the key ingredients that make up any vital hub (workforce, tax incentives, research facilities, incubators, financing) and what the City of Brotherly Love has to offer. Steve then reads the tea leaves and gives you an idea of where this burgeoning biotech hub is headed.
Dave Plaskow: Hello and welcome to EisnerAmper’s Technology Podcast Series. With an impressive roster of biotech clients, we’re always interested in the latest industry trends and developments, as well as any related business and accounting opportunities and challenges. Today’s topic is Philadelphia as a biotech hub. I’m your host Dave Plaskow and with us today is Stephen Doneson, an auditor specializing in technology and life sciences based in EisnerAmper’s Philadelphia office. Steve, thanks and welcome to the podcast. It’s great to be here in the City of Brotherly Love.
Stephen Doneson: Nice to be with you Dave.
DP: When people think of biotech hubs, Steve, they probably think San Francisco, Boston, maybe New York, but they may not think of Philadelphia. I’ve seen a report in BizPhilly that the city is up two places to number five in the U.S. as far as a biotech center. Tell us about this city’s place among these hubs.
SD: Philly has a lot to offer, and the environment for startups is vibrant. I see the dynamism and the action everyday with my clients. Philly offers tons of resources that place it within the pantheon of biotech hubs. We offer the industry a skilled work force, available lab space and world class universities, hospitals and research groups. There are a wealth of tech and biotech companies in the region that feedback into that energy and innovation. Also, the startup ecosystem is very strong here with incubators like University City Science Center, Ben Franklin Technology Partners and Robin Hood Ventures, for example. They invest and support the sector.
DP: With biotech, obviously the flip side of the innovation coin is financing. Give our listeners a lay of the financial land for life sciences here.
SD: Philadelphia is a rich environment for capital investment, and the city is traditionally strong in banking, and that has only increased over time. There are a lot of options right here for startups and entrepreneurs with a great idea, including some powerful venture capitalists, a robust community of angel investors and many transaction opportunities. Also, with a large health care industry headquartered right here, and universities looking to support innovation through private grants and government funding, there’s a lot of potential for finding strong investors in Philly.
DP: What kind of support is available here for up-and-coming biotech companies?
SD: We have an outstanding network of incubators, tech meet-up groups, and member associations that all bring the community together for events, education, mentoring and networking. Investors and innovators get to meet in these settings, which enables more development of great startups in the sector. In addition, there are some really exciting projects like the Comcast Innovation Center right around the corner from our office and U City Square, which is near Penn’s campus.
DP: Are there any particular incentives monetary or otherwise for startups here?
SD: Well, Philly has a relatively lower cost of living, while having easy access to the full northeast corridor from DC, Baltimore to New York and Boston. Also, there are many tax incentives and research and development credits they can apply for in Pennsylvania. There’s also a ton of talent together with high-caliber universities and hospitals as well as a robust health care industry. All of these ingredients make it financially and logistically prudent to grow your business in Philly.
DP: Let’s bring it a little closer to home. Tell us about EisnerAmper’s role in the Philadelphia Life Science space.
SD: We’re happy to service many startups, pre-revenue and experienced companies and venture capitalists and angel investors, providing them audit, tax and consulting services. We have a very experienced team here, and our clients seek our advice to help strategically attract new investors and grow their companies. We also support the ecosystem by being active members in important life science and technology groups catering to this region.
DP: What about you, Steve, what has your experience been like with clients in this world?
SD: This sector is particularly interesting and exciting for me, to be able to assist in any way I can, to see the types of innovations these companies bring to the market, especially in my home town. I primarily manage audits for my clients. However, I have also consulted with clients in analyzing investment alternatives and interpreting equity transactions, which are important for funding their innovations.
DP: Any interesting clients you’ve worked with or projects you’ve worked on lately (obviously, without mentioning any names)?
SD: I worked with one of our clients that has developed a new medical device. They’re constantly growing, and they had an opportunity with an international investor and some opportunities with local investors. Based on the structure of their CAP table, they had to make a decision as to which one would be better for their company—looking at dilution and how their original owners could benefit. We took the different investment alternatives, presented it in a different way for the company to better make a decision and, ultimately, we helped them make that decision, which I believe was to go with the international investor. But it was our help and the way we were able to slice and dice that data that helped them get to that final step in the decision process.
DP: Excellent. Steve, where do see Philly as a biotech force in, say, 10 years?
SD: Well, 10 years is difficult to predict. But I have high hopes that we’ll continue to build this sector. Those amazing breakthroughs you see in the news, saving people’s lives, many of them come from Philly, and I expect that only to increase in the future. As an up-and-coming city and center for biotech excellence, I think the infrastructure is here to keep us at the forefront.
DP: It sounds like a great place for biotechs to plant some roots. Thanks, Steve, for your expertise and this great insight. And thank you for listening to the EisnerAmper podcast series. Visit EisnerAmper.com for more information on this and a host of other topics. And join us for our next EisnerAmper podcast when we get down to business.