Boulder biotech space strong but grappling with tight capital, labor markets

BOULDER — Boulder’s biotech scene might feel a little less booming than it has been in recent years — due in part to a changing credit and capital environment in which money is no longer essentially free — but the industry’s fundamentals and foundation remain strong and ready to withstand the macroeconomic headwinds that could be on the horizon. 

“The economic conditions around the country, we’re not immune to them here in Colorado,” Colorado Bioscience Association CEO Elyse Blazevich said Tuesday during BizWest’s CEO Roundtable on Life Sciences held at the University of Colorado Boulder’s BioFrontiers Institute.

Nevertheless, she said, new scientists are being educated, new companies formed, and existing firms still have access to the capital they need to grow and perhaps eventually be acquired. 

Capital crunch

With interest rates on the rise and venture capitalists adopting a more-conservative posture, “We’re at the end of a speculative bubble … but there’s still a lot of money out there,” Boulder Ventures Ltd. founder Kyle Lefkoff said.

It’s not just investors who are being more scrupulous, but also biotech companies’ clients, KBI Biopharma Boulder site head Greg Sebring said. 

Unlike many other industries, a potential slowdown in the economy could have more negative impacts on the biotech industry than COVID-19, because many life-sciences companies thrived during the pandemic when their resources were marshaled toward combating the disease. 

“We spiked during COVID,” RMC Pharmaceutical Solutions CEO Timothy Joy said, but now “people are being much smarter and more demanding of data” before doing deals.

The crash of Silicon Valley Bank, which counted many Boulder Valley biotech firms among its clients, certainly didn’t help the overall capital situation, but experts disagree on the severity of the impacts. 

“Biotech is funded by equity, not debt, so it doesn’t really matter who their bank is,” Lefkoff said.

Troubles at Credit Suisse, a much larger institution, should be more concerning than SVB for most observers, CU distinguished fellow Marvin Caruthers said.

Still, concerns about the overall health of the banking sector, combined with geopolitical turmoil around the globe, hark back to some pretty dark periods in history, Beryl Therapeutics Inc. founder Lisa Padilla said, and shouldn’t be overlooked. 

Labor laments

In addition to access to capital, access to talent pipelines is top of mind for biotech leaders.

“We’re having a terrible time finding people,” Boulder IQ and Boulder Sterilization founder Jim Kasic said. 

As manufacturers of drugs and medical devices, “we need people in the office,” Joy said. Employees, who generally prefer working from home, are demanding a premium to come to the office, he said, which forces companies to charge higher prices and exacerbates inflation.

In some cases, other companies’ workforce misfortune can be a blessing.

Layoffs elsewhere are providing a new pool of hirable talent David Brunel, CEO of Velocity Sciences Inc., said. “I’m not sure that that’s positive, but it’s helpful for us.”

Development soldiers on

Regardless of which headwinds may or may not be present, development of life-sciences centric real estate, particularly flex-industrial spaces, is moving along full steam ahead, CBRE senior vice president Erik Abrahamson said. 

The projects in early planning stages within Boulder city limits “will get built,” and likely at a pretty rapid clip, he said, simply due to the city’s overall lack of large flex spaces. Proposed projects farther east in Boulder County could take a little longer to come to fruition, but are unlikely to be scrapped if the economy turns downward. 

“There’s still good demand out there,” Abrahamson said, and unlike other biotech hubs, “we never overbuilt” during previous bubbles.

Institutional importance

The University of Colorado and the BioFrontiers Institute helped create the Front Range’s life-sciences industry, and will remain a force in shaping its future, industry leaders said.

“We still seem to be getting a lot of people knocking on our door,”  BioFrontiers Institute director of interdisciplinary research Kristen Bjorkman said.

As the Boulder area matures as a biotech hotspot, the university and institute will need continued support from government and industry partners, BioFrontiers Institute director Roy Parker said.

“Were outstanding, but were not that big. …What we are missing here is the scale of our university effort,” he said. “… Should we make the case that the faculty should be doubled?” Parker asked of the roundtable participants, who responded resoundingly in the affirmative.

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