Voices of San Diego has an interesting piece about the failure of Metabasis Therapeutics, a San Diego biotech firm that serves as a cautionary tale for New Orleans and its bid to bolster a bioscience corridor:
They didn't, however, expect CEO Mark Erion to walk into the room and announce that the company was all but broke, and nearly everyone -- 45 out of the company's 52 employees -- was being laid off. Nor did they expect Erion to tell them that they weren't getting any severance pay, or even their unused vacation pay, and that if they didn't hurry to the bank to cash their final paycheck, it would probably bounce.
The events over the next hours and days at Metabasis, as recounted by former employees, were bizarre, even for the world of biotech, where companies big and small can be one failed drug away from oblivion. In the conference room that Tuesday morning, human resources people hurriedly handed out folders with last paychecks to employees who immediately headed to nearby Bank of America branches, the only bank that Erion told them would take the checks.
"We were thrown out into a bank run," said one manager who was laid off. "It was a crazy scene, like the 1929 stock market crash. It was an amazing debacle."
The past year has been a bloodbath for San Diego's biotech cluster, which, depending on the day, includes about 700 companies. Since last June, local life sciences companies have laid off more than 3,000 people, according to the website Xconomy. Bud Leedom, a local stock analyst who focuses on California companies, said that while the events described by the former Metabasis employees are shocking, abrupt layoffs and company closures will become more commonplace given the barren funding environment that is likely to last for years.
"Management has been somewhat jaded over the last 20 years, confident that when push comes to shove something will happen," Leedom said. "That thought process is colliding with an unprecedented situation in the market -- it's not hard to raise money, its virtually impossible for some companies." Other industry watchers agree with Leedom that this is one of the most difficult periods in the history of biotech.
Remember that San Diego purportedly has one of the more robust bioscience clusters in the country. A recent New York Times article profiled the massive competition between cities for bioscience startups that have shown little track record for success.
SaveCharityHospital.com has been sympathetic toward the rationales for attracting a new bioscience industry to New Orleans. We have argued vehemently against the notion that the proposed LSU/VA is any more attractive as an anchor to such an industry than a new state-of-the-art facility in the world-renowned Charity Hospital.
It now appears increasingly appropriate to question whether the recent actions by LSU, and their inability to create a functional governance or financing plan, threatens New Orleans' chances of attracting a bioscience industry. Given the economy in general, the state of the bioscience industry around the country, and the apparently long odds cities have faced in attracting prosperous biotech companies even during better times, we need to ensure that the new hospital that ends up being built in New Orleans supports these wider goals.
Because New Orleans has had a pretty robust medical district historically, we believe it's worthwhile to put a little bit of seed money into attracting related businesses.
We don't, however, see any compelling reason why we should destroy a residential neighborhood, mortgage healthcare while we beg for LSU to get its act together, or close our eyes to the possible criminality involved in shuttering the hospital in the first place when there might be faster and less expensive options for bolstering healthcare to New Orleans residents and restoring jobs to our medical district.