NEW CLINIC: The executive board of New York City Health + Hospitals voted Thursday to execute a $30 million contract with Gilbane Building Company to build a new Gotham Health community clinic in Far Rockaway. According to Dr. Theodore Long, H+H’s senior vice president of ambulatory care, the neighborhood needs more medical resources to treat chronic diseases and mental health concerns, and the clinic would fill a void in the community. The clinic, which will be located across from the Beach 36th Street subway station, will offer adult and pediatric primary care, obstetrics and gynecology and behavioral health services. Gilbane is based in the Financial District and won the contract based on its experience constructing similar health care facilities in projects worth more than $15 million.
MENTAL HEALTH IN PRISON: About 20% of people incarcerated in the city’s jails and prisons in March had a serious mental illness, according to the latest Department of Correction data released by Comptroller Brad Lander Thursday. The statistic has stayed flat for four months in a row. About 11,000 incarcerated individuals missed medical appointments in February due to court appointments or refusing to go, the data also shows, a slight drop from January.
Investments in drug research and development are paying dividends while the cost to do so stays flat, a trend that appears to be benefitting local firms.
Large pharmaceutical companies’ returns on research and development investments rebounded in 2023, according to the latest report from Deloitte released today. The report measures returns on investments for the 20 companies that spend the most on R&D for drugs globally and found that projected returns on investment climbed to 4% in 2023, a 3 percentage point increase over 2022’s record-low of 1.2%. The 20 firms, which include Merck, Johnson & Johnson, Bristol Myers Squibb and Pfizer, spent a total of almost $146 billion on R&D in 2023.
While 2022’s record-low returns didn’t necessarily spell trouble for firms in New York and New Jersey, Kevin Dondarski, Deloitte’s life sciences R&D strategy leader, said the report’s results suggest an even brighter future for the metropolitan area’s pharmaceutical companies. He added that the increase is one of the larger ones since Deloitte began publishing the report more than a decade ago.
The positive performance was driven by companies bringing more drug candidates into the later stages of development as their value grew, Dondarski added. This includes Merck, which is based in Rahway, New Jersey, and New Brunswick-based Johnson & Johnson.
In the fourth quarter of 2023, Merck received multiple Food and Drug Administration approvals for its cancer drugs, such as a green light for its blockbuster Keytruda to be used with Padcev for adult patients with locally advanced or metastatic urothelial cancer. The firm also began phase 3 trials for four investigational oncology medicines. Keytruda brought in $25 billion in 2023, a 19% jump from 2022.
Johnson & Johnson gained FDA approval for its cancer drug Balversa to treat certain locally advanced or metastatic bladder cancer in the fourth quarter of 2023. The firm also submitted applications to the European Medicines Agency for Rybrevant to be used, in combination with chemotherapy, to treat adults with a certain type of non-small cell lung cancer who don’t respond to prior medicines.
Cancer continues to pique large companies’ interest, according to the report. Oncology medicines made up about 30% of the cohort’s overall late-stage portfolios, holding steady from 2022. Infectious disease drugs represent a growing area of interest, making up about 10% of the pipeline, a slight increase over the prior year. Cardiovascular therapies also held steady while central nervous system therapies comprised slightly less of the companies’ overall portfolios in 2023.
The report also shows that the average cost of taking a medicine from discovery to launch stayed flat at just over $2 billion. Dondarski said that’s a positive development because, among other factors, it signifies that fewer drugs are failing to launch.
While there are signs of success, company leaders surveyed in the report said there are still challenges to be wary of. Although the average cost of developing a drug stayed flat from 2022 to 2023, it has still grown overall, and about a third of executives said they are very concerned about the impact that could have on their firms. A quarter said they’re most concerned about the country’s regulatory environment; the federal Inflation Reduction Act sparked the most worry.
However, Dondarski emphasized that New York and New Jersey’s buzzing pharma ecosystem is well-positioned to continue a rebound.
More drug startups are popping up around the metropolitan area, he said, which he called “fertile ground” for partnerships and innovation. Although the influx of new firms could create competition, he described it as an opportunity for positive change, particularly with more companies beginning to use artificial intelligence to drive drug development.
“There's so much activity and interest and investment in everything, every single domain of data,” he said. “The sky’s the limit.”
Deloitte is headquartered in Midtown and has published reports on pharmaceutical R&D returns since 2010.
Tarrytown-based Regeneron Pharmaceuticals has struck a $100 million deal with Mammoth Biosciences, a California-based biotechnology company, to develop and commercialize gene editing therapies for multiple tissues and cell types, the firms announced Thursday.
Regeneron’s $100 million upfront payment includes a $95 million equity investment, according to the company. Mammoth could receive a total of $370 million per target in development and commercial milestone payments.
The firms aim to produce CRISPR-based drugs that can be directly infused into patients' bodies. CRISPR is a technology that scientists use to modify the DNA of living organisms; it has the potential to cure genetic diseases by cutting out targeted parts of DNA sequences.
According to Christos Kyratsous, Regeneron’s senior vice president and co-head of Regeneron Genetic Medicines, the firm chose to partner with Mammoth because the companies are working on aspects of gene editing technology that complement each other.
Regeneron has developed a virus platform that targets tissues and cells outside the liver, Kyratsous told Crain’s, whereas most gene editing therapies are currently limited to the liver. In turn Mammoth has created relatively small CRISPR editing systems that fit Regeneron’s platform, which could help the drugs reach tissues around the body and unlock treatments for diseases. Scientists at Regeneron will lead development and commercialization.
The deal also gives Mammoth the right to opt into co-funding and profiting from collaboration programs with Regeneron, instead of receiving milestone payments. Meanwhile, Regeneron will have access to some of Mammoth’s gene editing technologies for 5.5 years. It can extend access for another two years if it pays an undisclosed research extension fee.
The two firms will pick and research which sequences to target, Kyratsous added, declining to share specifics about which are being considered. The companies seek to begin developing therapies as soon as possible.
Regeneron earned just under $3.5 billion in revenue in the fourth quarter of 2023, a 1% increase over the same quarter of 2022, and is working on drugs to treat genetic diseases including ALS and hemophilia. Its financial results for the first quarter of 2024 will be released on May 2.
The Metropolitan Transportation Authority has a $6 billion to-do list to adapt the region’s transit to climate change — now it must get state lawmakers and federal officials to agree to fund it.
Transit officials unveiled a Climate Resilience Roadmap Thursday aimed at addressing the increasingly dire threat extreme storms, sea-level rise, heat waves and other weather hazards pose to New York transit. Since Superstorm Sandy walloped the region in 2012, the MTA says it has invested $7.6 billion in repairs and flood protections, but transit officials project that over the next decade at least $6 billion-worth of resilience projects will be needed to comprehensively safeguard the transit networks commuters rely on.
“This is something we have got to do now,” said Janno Lieber, the MTA’s chair and chief executive, during a Thursday news conference alongside rail tracks in the Bronx. “As I always say, for New Yorkers, transit is like air and water, we need it to survive and it will not survive unless we plan to protect the system from climate change.”
The 131-page report is the first by the MTA’s new climate planning division since it formed last year and prioritizes an estimated investment of as much as $2.5 billion into the subway system. Transit officials say those dollars would go toward shielding subway stations from stormwater, protecting trainyards from downpours and preventing open subway infrastructure from being flooded, including the 272 miles of track that run on or above ground.
Cash to fund much of the work outlined in the climate roadmap is expected to come from the bundle of infrastructure upgrades that is the MTA’s upcoming 2025-2029 five-year capital plan, which is anticipated to be released in the fall and is financed through a mix of state, federal and other sources.
In the meantime, the MTA is in the midst of carrying out its $54.8 billion-2020-2024 five-year capital program — work for which transit officials have been forced to stall because of lawsuits that threaten the expected June launch of congestion pricing. Jamie Torres-Springer, president of MTA construction and development, said the authority is also working to create resilience design guidelines to ensure new projects are built with the climate crisis in mind.
“It's much more practical to make something more resilient when we’re first building it or rehabilitating it then going back and doing a whole retrofit project,” said Springer. “So we're integrating resilience into everything that we do.”
Ask a subway rider and chances are they’ll tell you they’ve already felt the effects of a changing climate on their commutes. Flood waters from heavy rains routinely inundate the subway; since 2007 at least 200 subway stations out of 472 have been impacted by torrential rain events, according to the MTA. That translates to treacherous conditions including underground waterfalls, flooded tracks, and overloaded storm sewers backing up into stations.
Even on sunny, dry days the MTA pumps out roughly 10 million gallons of groundwater from the subway each day. This occurs at infrastructure called deep wells located along lines, such as the G, where the water table is above the subway’s tracks and requires constant pumping to keep groundwater out of the system.
Those systems, along with the 254 pumping stations peppered throughout the subway, become overtaxed during major floods and backup into stations, stalling service. Without broader upgrades, transit officials say sea-level rise and increasingly frequent major storms only promise to direct more of the MTA’s resources and manpower into bailing out water over ensuring the system can withstand the long-term effects of climate change.
As the city's real estate market tries to recoup losses in the pandemic's aftermath, exceedingly rare opportunities for building purchases will sprout up, says the owner of the Empire State Building.
"The crisis created by the capital dislocation, rising rates and heavy near-term market maturities will create a once-in-a-lifetime — once-in-a-generation — opportunity to buy into certain New York City assets," Empire State Realty Trust CEO Tony Malkin said on the firm's first quarter earnings call. "And we have begun to see cracks."
Malkin did not get specific about what distressed properties his company might target apart from saying that multifamily purchases would likely be the most straightforward, and office purchases would be the trickiest, with retail falling in the middle.
But the firm also spent much of the call touting the success of its own office portfolio despite the overall sector's ongoing struggles amid the persistence of remote and hybrid work. Its earnings report for the first quarter of 2024 showed that its Manhattan office properties were 92.7% leased, while its total commercial portfolio was 91.1% leased. Both figures were up year over year and quarter over quarter.
The company signed about 248,000 square feet of new leases, renewals and expansions across 23 deals. Highlights included an 11-year, roughly 57,000-square-foot lease with the trendy skin care company Sol de Janeiro at 1 Grand Central and Burlington Stores expanding to about 171,000 square feet on a 16-year lease at 1400 Broadway.
Empire State's office portfolio appears to be holding up better than Manhattan's overall office sector, which hit a record-high availability rate of 18.1% during the first quarter, according to data from Colliers. This has tempered the company's interest in office-to-residential conversions, despite growing momentum behind the idea and a new incentive package for them in the recently passed state budget.
"We certainly don't have anything in our existing portfolio for which it makes any sense because our portfolio is extraordinarily well leased," he said. "We do believe that we can find a lot of really good opportunities without the need to do office conversions into residential, so we don't put resi conversions from office high on our list of to-dos."
The firm's multifamily portfolio was 97.1% leased at the end of the quarter, a very slight drop quarter over quarter and year over year. Empire State purchased residential buildings at 561 10th Ave. and 345 E. 94th St. in 2022 and bought out its partners' 10% interest in the properties last quarter for about $14 million and the assumption of $18 million in debt.
And net operating income at the firm's famed Empire State Building observatory was up 13% year over year at $16.2 million, the earnings report says. This was down compared to the prior three quarters, but tourism is traditionally slower in New York at the beginning of the year.
Mark Zuckerberg’s fortune plunged $20 billion as shares of Meta Platforms tumbled, allowing Tesla’s Elon Musk to cement his status as the world’s third-richest billionaire.
Meta shares fell as much as 16% Thursday in New York after the social media company said second-quarter sales were likely to come in below estimates. Zuckerberg’s one-day drop in net worth is the fourth-largest ever related to a stock move among those in the Bloomberg Billionaires Index, with his fortune now at $155 billion. Musk, 52, gained $400 million in wealth to $178 billion as Tesla stock continued its post-earnings rally.
The two billionaires switched ranks earlier this month, when Zuckerberg, 39, overtook Musk for the first time since 2020 following news that Tesla’s vehicle deliveries fell in the three months through March.
Shares of Menlo Park, California-based Meta fell Thursday by the most since October 2022 after the company increased spending estimates for the year and projected second-quarter sales that were below Wall Street’s expectations, once again raising questions about whether its bets on artificial intelligence will eventually pay off for investors.
The stock is still up 22% for the year and has been trading near all-time highs for the past month, in part reflecting excitement around AI.
Shares of Austin-based Tesla surged 12% on Wednesday after Musk vowed to offer less-expensive vehicles as soon as this year, easing concerns about disappointing earnings results and diminished growth prospects. The stock was the worst performer on the S&P 500 Index before the rally, falling 42% through Tuesday’s close.
Musk derives his wealth primarily from his stake in the EV manufacturer, as well as his holdings in Space Exploration Technologies and X, formerly known as Twitter. Zuckerberg’s fortune is largely tied to Meta shares.
The two billionaires’ rivalry extends beyond their wealth: Musk and Zuckerberg have been engaged in an ongoing public spat that intensified when Meta launched Threads, a social-media platform that competes with Musk’s X. The two even traded barbs last year about a possible cage fight.
The number of New Yorkers commuting to work each week is nearly back to its post-pandemic peak.
The city's in-office occupancy clocked in at 51.4% for the seven day period ending April 17, up 1.4% from the week prior and just 0.7% from the city's post-pandemic peak, which it hit the week of Feb. 7 when office activity totaled 52.1% of what it was in 2019.
That's according to the latest data from real estate technology firm Kastle Systems, which tracks badge swipes at commercial office buildings in 10 major U.S. cities. Those metro areas are seeing similar trends as New York: Office occupancy across cities came in at an average of 51.9% last week, up slightly from where it has been in recent weeks.
Still, New York's return to the office rate continues to trail some major U.S. regions. The city lags behind Chicago, for example, the country's third largest city, where in-person activity clocked in at 55.9% of prepandemic levels. The city also sits behind major metro areas like Austin (67.4%), Dallas (59.8%) and Houston (59.4%).
On the other hand, New York's in-office recovery is slightly higher than that of Los Angeles, the country's second most populous city, which reported office occupancy of 47.1% last week. New York's rate also sits above that of Philadelphia (43.1%), San Francisco (43.8%), San Jose (42%) and Washington D.C. (48.9%).
Hybrid work makes it so not every day is created equal. Whereas Friday is the least popular in-office day, Tuesday is the busiest with New York clocking in at 64.3%, according to Kastle.
The Kastle Systems data represents commercial office buildings equipped with Kastle Systems security technology in 10 major U.S. cities and does not reflect a national average of the entire U.S. workforce.
Kastle’s tracker is one of multiple data points offering insight into the city's pandemic recovery.
The Real Estate Board of New York, for example, releases a separate report looking back at in-office visitation data each month. According to the latest REBNY, which analyzes mobile data provided by Placer.ai, New Yorkers were in the office during the month of February at a rate of 61% compared to prepandemic levels.