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With $190M in State, Local Sweeteners, Max Planck Set to Build US Center in Fla.

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The Max Planck Society plans to break ground late next year or soon after on its first US institute, in Florida’s Palm Beach County, where officials last week approved nearly $87 million as a final piece of a roughly $190 million package of economic sweeteners.
 
Max Planck, a Germany-based nonprofit network of 80 institutes, research units, and smaller working groups, anticipates it will start construction by the end of 2009 or early 2010 on its Florida site. The $60 million, 100,000-square-foot facility will rise on six acres at Florida Atlantic University’s MacArthur campus in Jupiter, Fla., adjacent to the Scripps Research Institute campus now under construction within FAU.
 
State officials are betting that Scripps and Max Planck will become anchors of a life-sciences cluster that Palm Beach County is creating, in hopes of diversifying a local economy long dependent on cyclical, and lower-wage, industries such as tourism and agriculture. The county’s unemployment rate has risen with the nation’s over the past year — growing to 6 percent in June, compared with 4.5 percent a year ago, according to Florida’s Agency for Workforce Innovation.
 
“Groundbreaking for the permanent facilities will probably be in 18 months from now, [and the] end of construction is envisaged for end of 2011,” Berthold Neizert, head of Max Planck’s international relations division, told BioRegion News via e-mail last week.
 
After construction on the Florida site is completed, Max Planck plans to base 135 employees there. The society has already established a Florida presence, basing an executive and a consultant within the offices of the public-private Business Development Board of Palm Beach County, BDB President and CEO Kelly Smallridge told BRN.
 
Among the priorities of Max Planck’s Florida representative, Claudia Hillinger, will be recruiting an executive to run the Florida Institute and hiring the contractors and other consultants that will build its permanent facility.
 
Until that gets built, the Institute will be based within a 75,000-square-foot space at a temporary, two-building research facility at FAU. Max Planck will replace the Scripps Research Institute, which is completing a $200 million, three-building campus of 350,000 square feet now under construction.
 
Scripps will start moving out of its temporary space in October and expects to complete the move by Jan. 1, 2009. The institute will celebrate the completion with a ribbon-cutting and other events planned for a grand-opening celebration Feb. 26-28, 2009.
 
That cluster that Scripps and Max Planck would anchor could include two potential mega-projects made public in recent weeks, but as yet not submitted to county officials for formal reviews. Scripps is considering a second development phase that would increase its presence to 2 million square feet of life-sciences space on part of an undeveloped 683-acre property. Another portion of that land may someday house 2.4 million square feet of life-sciences space.
 
Those campuses, plus the Max Planck and Scripps sites, would bring 4.5 million square feet of research space within a two-mile area to that corner of southeast Florida.
 
“We’re really creating this tremendous cluster. Between Scripps and Max Planck, we think we have an unbeatable team,” Shannon LaRocque-Baas, a deputy county administrator for Palm Beach County, told BioRegion News last week.
 
The county grant agreement caps a year and a half of work by Smallridge and BDB to help bring Max Planck to Palm Beach County. That work started in December 2005 when then-Gov. Jeb Bush and Scripps President Richard Lerner traveled to Germany and Switzerland to boost Florida’s exports to Europe.
 
During the trip, they visited Max Planck’s Munich headquarters and met with the society’s president, Peter Gruss. When they returned, state officials prepared a formal request for proposals from communities interested in wooing Max Planck, only to tell the BDB soon after that the society had set its sights on Palm Beach County.
 
“We showed them all of the parcels of land that could accommodate their needs. We were the ones that presented the project to [FAU] to see if land could be donated. We were the ones that went to the town of Jupiter to see if we could get certain fees waived for their building. We presented the project to all of our seven county commissioners, showing them the value of what it would mean to have a Max Planck in Palm Beach County,” Smallridge said.
 
BDB, she added, has assembled a team of business leaders to promote the county to society executives, introduce them to local elected officials, and over time, serve as a host group for the leader candidates it will soon recruit. Currently, the business-development board is introducing Max Planck to local contractors, architects, and other professionals who can assist with construction.
 

“One of the reasons why we were so interested in Max Planck is because they have such a success rate in spinning off companies. … You get the core, you get a Scripps, and you get a Max Planck. And then it just grows from there.”

It was Scripps that helped Florida thrust its way onto the biotech map in 2003, when Bush agreed to give Scripps $310 million in state funds, plus another $200 million in local government money toward its campus at FAU. In return for the money, Scripps committed to creating 545 jobs by 2015.
 
Scripps spokesman Keith McKeown told BRN the institute now employs 270 people at its temporary Florida space — up from 242 as of March 17, the figure it gave state lawmakers earlier this year. According to information furnished to the state Senate Commerce Committee in March and available hereScripps acknowledged receiving $149.9 million, plus $8.4 million in interest, of the money it was due from the state.
 
Scripps is projected to create 2,700 direct and indirect jobs over 20 years.
 
Scripps began one key step toward fulfilling those projections last year when it spun out its first Florida startup. West Palm beach-based Xcovery is a developer of kinase therapeutics for cancer and inflammatory diseases. The company’s management team is headed by CEO Sheridan Snyder, founder and former CEO of Genzyme; and Chief Scientific Officer Chris Liang, director of medicinal chemistry at Scripps Florida and a co-inventor of Sutent, a cancer drug developed by Pfizer.
 
Florida and Palm Beach County leaders hope for similar spinout activity from Max Planck, which operates 80 institutes in Germany and around Europe, with nearly 13,000 staffers and another 12,000 researchers and visiting scientists. The life sciences account for about one-third of Max Planck’s activity, which stretches from astronomy to the humanities.
 
Between 1990 and 2006, according to its most recent annual report, Max Planck spun out 75 companies generating 1,800 jobs, most of the society’s total 2,300 jobs created during that time. Forty-four of the companies were financed with venture capital. Seven became public, while 11 were the subject of mergers and acquisitions deals.
 
“One of the reasons why we were so interested in Max Planck is because they have such a success rate in spinning off companies,” LaRocque-Baas said. “That was really the hope here: You get the core, you get a Scripps, and you get a Max Planck. And then it just grows from there.”
 
Xcovery is one of about 100 companies, academic institutions, and research centers comprising Palm Beach County’s life-sciences cluster. Over the past year, publicly traded real estate investment trust Alexandria Real Estate Equities has transformed an existing building in Jupiter into a 46,000-square-foot incubator for life sciences and other technology users. This spring the Alexandria Innovation Center secured its first tenant, Cytonics, a developer of diagnostic assays and drug researcher for joint and spinal pain.
 
Other life-sci and related companies in Palm Beach County include:
  • AssureImmune, an adult stem cell collection and preservation company based in Boca Raton;
  • BioCatalyst, a venture capital firm that moved its headquarters last year from Charlottesville, Va., to West Palm Beach;
  • BioTools, a provider of life sciences instruments and niche services that moved in 2005 to Jupiter from Waucanda, Ill; and
  • Nabi Biologics, a Boca Raton-based unit of Nabi Biopharmaceuticals that was acquired last year for $185 million by Biotest Pharmaceuticals, a subsidiary of German-owned Biotest.
“Because of all the energy and focus on bio, many of the companies that were already in Palm Beach County have also chosen Palm Beach County as their site for expanding,” Smallridge said.
 
The size of the county’s total life-sciences work force is not known.
 
Target: 1,800 Jobs, $1.2B in Activity
 
Over the next 20 years, the Florida Max Planck facility is projected to create 1,800 direct and indirect jobs paying a total $2 billion in wages, and generate $5 billion in gross state product, including $1.2 billion in economic activity for Palm Beach County.
 
The county figure includes $354 million in employee compensation and profits, $175 million in disposable personal income, and $30.5 million in cumulative sales tax revenues.
 
Projections like these convinced Palm Beach County’s Board of Commissioners that the benefits will, over time, outweigh the cost of the $86.9 million sweetener they approved for Max Planck on July 22. The approval cemented a conceptual OK that commissioners gave to the grant last September [BRN, Oct. 8, 2007].
 
The grant is part of a total $188 million in economic subsidies the county showered on Max Planck in Florida. The cash is part of around $1 billion that the state and local governments have spent so far this decade toward attracting biotech research centers and their jobs. The society said its development deal with the county and FAU had a value of $94 million after accounting for the $6 million, 50-year sublease of its FAU site; $1.1 million reflecting a county waiver of its impact fees, and money used toward the lease of its temporary space; and the original county grant.
 
And on March 12, Crist’s Office of Tourism, Trade and Economic Development formally agreed to give the society $94 million of the $250 million available last fiscal year in Florida’s Innovation Incentive Fund — which has since been eliminated due to a budget shortfall [BRN, May 5].
 
Max Planck said it has received $10 million of the promised $94 million in state funds.
 
Palm Beach County will issue bonds to cover the grant funding, then make annual debt service payments over 20 years. Annual payments will range from $3 million the first year — the county fiscal year that starts Oct. 1 — and rises to about $4 million in five years, before growing again to about $6 million.
 
Of the grant total, $60 million will cover construction costs, to be drawn by Max Planck gradually as it submits expense documents to county officials.
 
“The Max Planck Society of Germany is not in a position to cover some of that expense on its own,” Neizert told BRN.
 
The remainder of the grant will fund facility operations and be released to the society over 10 years. Current disbursements include:
  • $4.1 million starting in fiscal year 2009 toward the purchase of equipment for the temporary facility.
  • $4.095 million in FY 2013;
  • $10.356 million in FY 2015
  • $3.028 million in FY 2016
  • $5.347 million in FY 2017
“The Max Planck Florida Institute will be self-sustaining after the grant agreements with State of Florida and the County will have been expired and the respective funding will come to an end,” Neizert said.
 
In response to a request by commissioner Burt Aaronson, Max Planck agreed to advance the starting date and extend the number of years it will distribute to local schools 3 percent of net revenues from its Florida-based research. The society will begin funding the schools in 2012, and continue through 2038; previously it committed to begin in 2018 and end in 2028.
 
As part of its deal with the county, Max Planck said it will award scholarships and promote science education from the K-12 levels up to FAU and Palm Beach Community College in Lake Worth, which in January opened its 91,000-square-foot BioScience Technology Complex at its Eissey campus. Those efforts will include an internship program, a student mentoring program, a speaker’s bureau, a school laboratory, educational materials, and its multimedia “Science Tunnel” exhibit.
 
Max Planck can also count on another $100,000, namely a donation pledged by Palm Beach County Commissioner Jess Santamaria. That donation kicked off a fundraising campaign by the society for its new Florida institute. The campaign is necessary because Max Planck is barred by law from spending overseas the public money it has obtained from Germany.
 
The society has said it will focus its new Max Planck institute on bioimaging.
 
“In addition to further developing and complementing the research activities conducted by our institutes, our Florida Institute will use the most advanced techniques for visualization of microscopic molecular processes to achieve a deeper understanding of the structure, dynamics, and function of molecules and tissues in order to tackle challenging problems in biology, bioengineering, and medicine,” Neizert told BRN last October.
 
In a press release announcing the grant approval, Gruss termed the county commissioners’ vote “a very important day for our organization as we finalize our entry into the United States. This decision impacts the overall advancement of cutting-edge biomedical research not only in Florida but also in the US and beyond,” he added.
 
Max Planck has said the expansion satisfies its desires to expand beyond its Munich, Germany, home base — and to be near Scripps Florida and its high-throughput drug-development center, which according to the society will allow for the possibility of future collaborations ranging from partner institutes to full-fledged Max Planck Institutes.
 
“Scripps and Max Planck are a dream team for innovative basic research in biomedicine,” Gruss said in announcing the Florida project last year.
 
As for Scripps Florida, its soon-to-open campus may not be its sole site in Palm Beach County.
 
Scripps is looking to develop, over time, an additional 1.6 million square feet of space that would comprise one of two life science campuses envisioned for the county’s largest remaining undeveloped property east of Interstate 95 — the 683-acre Briger tract owned by the Lester family of New York City. Scripps would develop 70 acres of the tract that have already been purchased from the Lesters by Palm Beach County, with the institute in mind.
 
The family has agreed to the county restricting the use of an adjacent 100-acre-section of the tract to 2.4 million square feet of life-sci and related space, complete with laboratories, office space and a hotel-conference center. The county and family have also discussed including about 2,300 residential units, from single- and multi-family houses to rental apartments; and 500,000 square feet of retail space. But both elements could be modified or eliminated by the time the application reaches officials, LaRocque-Baas said.
 
The two life-sci campuses will definitely be in the “development of regional impact” application being crafted by the Lesters and the county, to be submitted for review by the Treasure Coast Regional Planning Council, acting for the state Department of Community Affairs. If the council approves the application, it advances to the city of Palm Beach Gardens, which would need to approve it before construction can begin.
 
Upon approval, county officials expect the Lesters to sell the 100-acre life sciences campus to a private developer that would build the space.
 
The Lesters’ tract is within a larger Bioscience Research Protection Overlay, created in 2006 with the goal of fostering development of a total 8 million square feet of life sciences space in the county’s northern portion, near the Scripps and Max Planck facilities.
 
“The hope is that this becomes a science village, with uses that support all the biotech surrounding it,” LaRocque-Baas said.

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