Editorial: Delaware is staring down a crossroads on its R&D future
In this week’s edition, you will find a spotlight piece regarding new efforts to build out Delaware’s advanced laboratory space in order to prevent an exodus of incubated research firms from the First State. To those who have been longtime readers of Delaware Business Times, this is not the first time that you’ve read about the growing bioscience industry concern about the need to keep promising startups in state.
Organizations like the Delaware Bioscience Association, Delaware Sustainable Chemistry Alliance, Committee of 100, Delaware Business Roundtable and Delaware Prosperity Partnership have been ringing the alarm for the last few years.
Nothing could have more acutely put the economic risk into perspective than Prelude Therapeutic’s initial public offering in September. Prelude is an oncological research firm working on small-molecule inhibitors like another Delaware titan Incyte Corp., where several Prelude executives spent parts of their careers.
Prelude is still considered to be in the incubator stage, has yet to turn any profit and does not yet have a drug that has completed a clinical trial. But Prelude, based out of the Delaware Innovation Space at the DuPont Experimental Station, is worth more than $1.5 billion as of Oct. 8. Investors like what they see in the company’s promise and Prelude’s share value has skyrocketed in its first weeks of trading, making it the seventh most valuable stock per share based in Delaware.
Just a few years ago, Prelude was still an idea that founder and CEO Kris Vaddi wanted to explore. Now it will likely become an employment engine for well-paying jobs at its New Castle County headquarters.
Prelude is not alone in those prospects, as other Delaware startups working with pharmaceuticals, advanced materials, fluoropolymers, batteries, and more are showing promise. Any one of them has the potential, with the right guidance, to become a company worth millions or even billions of dollars.
So, what stands in our way? Space, and specifically the lack of it.
Startups that are ready to expand or tackle a new challenge don’t have a whole lot of options in Delaware. Space at state incubators and accelerators is pretty much tapped out and most of these promising, but not revenue-generating, companies won’t be able to secure large loans to build the necessary space. If we don’t find a way to incentivize or subsidize the creation of such space, we will watch as they leave for other nearby markets that are awash in biotech.
Tim Mueller, vice president of science and technology at the Delaware Innovation Space, told industry stakeholders Oct. 7 that he recently learned that Philadelphia-area developers are expecting to bring at least 1.5 million square feet of new lab space online in the next two years.
“That’s a real challenge for us,” he said.
We think Mueller put that as politely as possible. News of such an enormous amount of lab space coming online so close should be ringing alarm bells at state offices and agencies.
We should feel good that many of our top economic drivers like DuPont, AstraZeneca, Inctye, Chemours and W.L. Gore & Associates continue to keep large-scale operations in Delaware. We should also be encouraged that we already have a sizable workforce in some of the most-sought-after sectors for venture funding, including biotech, drug discovery and fintech.
But we also are in the unenviable geographic spot of having two of the largest biotech markets in our backyard, with Philadelphia and Washington, D.C., within a two-hour-drive radius. Both Maryland and Pennsylvania are Top 10 recipients for venture capital funding, due in part to their longstanding financial support of the bioscience sector.
Pennsylvania’s Benjamin Franklin Technology Partners has incubated tech companies for decades while the state’s Keystone Innovation Zones has provided tax relief for burgeoning companies. Maryland uses a similar approach, with TEDCO providing funding to early-stage companies and RISE Zones providing tax relief to sector development near the state’s universities.
Delaware has been bolstering its incubator and accelerator programs through the Delaware Technology Park and Delaware Innovation Space, and they are doing an admirable job of developing success stories, but officials should strive to do more to keep our homegrown startups in the First State.
We’re glad to learn that Delaware Prosperity Partnership is developing a grant proposal to help subsidize the cost of this needed space. We hope to see developers take advantage of the program in coming months to build out our available stock of lab space.
But it is also time that the Delaware General Assembly take a long look at developing innovation zones similar to what our neighbors have in place in order to level the playing field. Yes, tax breaks will lead to short-term losses on improved properties or new companies, but we must remain focused on long-term plays even as we deal with the lasting effects of the pandemic.
“I think we all know that not every company is going to stay resident here in Delaware, but creating the right ecosystem increases the probability of them remaining here, creating very good-paying jobs, diversifying the base economy, and really creating that foundation for success long term,” Mueller told his colleagues.
We wholeheartedly agree.
By Jacob Owens