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Up and Down the Aisles at BIO 2008: Patheon, Research Triangle Park, Southwest Michigan First, Oslo Cancer Cluster Innovation Park, East River Science Park

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Canada’s Patheon Cites Lower Costs, US Growth in Move to NC’s Research Triangle Park
 
Lower space and other business costs, client growth, plus the region’s workforce and quality of life, have persuaded Canadian CRO Patheon to relocate its headquarters and expand its lab facilities into North Carolina’s Research Triangle Park region, where it will create at least 100 jobs starting this summer, the company’s president and CEO told BioRegion News.
 
Wesley Wheeler, president and CEO of Patheon, said in an interview his company will base 50 of its employees within a 15,000-square-foot lab site that “will be up and running within about two months,” within RTP’s Alexandria Innovation Center at 7030 Kit Creek Road, a 38,325-square-foot facility owned by Alexandria Real Estate Equities.
 
“We’ve already moved ahead with pre-construction on the lab facility,” Wheeler said, with a director for the site to be named in about a week. Patheon — which provides dosage development and contract manufacturing services — hopes over time to expand its lab, which will focus on supporting the drug development processes of its clients. “The lab could grow to a couple of hundred people if we’re successful,” he added. “We’re looking for scientists, chemists, [and] laboratory people.”
 
By August, Patheon plans to move into about 15,000 square feet of office space in Durham, NC, within the mixed office-industrial Imperial Center Business Park. The office space will house another 50 employees, fewer than 10 of whom will move with their jobs from the Toronto suburb of Mississauga, Ontario. A lease for the space is still under negotiation.
 
Wheeler said Patheon sought to expand its US operations since 75 percent of its clients are based here. That client base includes biotech and pharma giants such as Amgen, GlaxoSmithKline, Merck, Novartis, and Roche. Those and other US clients account for half the company’s annual revenue, which during the second quarter climbed 16 percent to $186 million, from $160.2 million in Q2’07, with revenue expected to reach “just north of $700 million” this year. During Q2, the company slashed its net losses from nearly $22 million to about $8.5 million.
 
“We want to send a message to our customer base that we respect that. We want to be a US company,” Wheeler said.
 
During a three-month search overseen by commercial real estate brokerage CB Richard Ellis, Patheon chose RTP from a short list of locales that included Atlanta; Newark, NJ; and Philadelphia — with a late push by Ohio, whose lieutenant governor, Lee Fisher, sought to interest the company instead in expanding an existing Patheon site in Cincinnati.
 
Wheeler said RTP won out because of its supply of workers; what he termed the state’s business-friendly environment, especially for life science companies; its quality of life, and its lower business costs compared with other areas — especially the cost of lab space.
 
“When you look at New Jersey compared to North Carolina, the differential is about $10 per square foot. It’s $35 [psf] in New Jersey, and we’re looking at space at about $18 [psf] right now. It’s a big, big differential in cost,” Wheeler said.
 
Also lowering Patheon’s business costs will be as-yet-unannounced incentives the company and state officials are discussing. The incentives — whose value has yet to be set — will include tax credits toward the training of community college students for company jobs, said Kevin Johnson, RTP’s vice president of business development.
 
“Our ability to share the success stories like having Pantheon come down to our area solidifies us as a place to do the full value chain of life sciences business,” Johnson said.
 
The new RTP labs will be the company’s seventh “development center” worldwide. Patheon operates two such facilities in the UK and one each in Canada; Milan, Italy; Puerto Rico; and Rome. The company also has a manufacturing site in Cincinnati, two in Puerto Rico, and three in Canada.
 
“For the right deal, if a facility came along at RTP, we’d go for it. And there’s a few down there. Were looking,” Wheeler said.
 
Patheon employs 4,700 people worldwide, including 750 in Puerto Rico and 550 in Cincinnati.
 
Established in 1959, RTP is home to more than 160 employers engaged in R&D in the life sciences and other industries. They employ more than 40,000 full-time equivalent workers and 10,000 contract workers; and occupy more than 24.5 million square feet of space. At present, 600 acres are for sale, while about 250,000 square feet of office and lab space is available for lease within RTP, Johnson.
 
In January the Research Triangle Foundation of North Carolina, which oversees the park, opened a new headquarters building as 12 Davis Drive.
 

 
Southwest Michigan First to Break Ground for $3.5 M Addition to Innovation Center
 
Southwest Michigan First is set to break ground next month on a $3.5 million, 12,000-square-foot, office addition to its 58,000-square-foot Southwest Michigan Innovation Center, a life sciences incubator the economic development group operates in Kalamazoo, Mich.
 
“Over the past five years, our companies have gown at a 30 percent per year rate in staffing. So we’ll fill it quickly,” Fred Einspahr, president and CEO of the innovation center, told BRN. “It’ll expand our capacity by 40 people — probably 20 in offices, 20 in labs — which will really allow us to add another four to five companies.”
 
The innovation center needed office space since nearly all of the incubator now consists of labs, he added. The incubator is three-quarters full now with 12 companies. One key attraction of the incubator is its below-market monthly rent. The group starts tenants out at $7 per square foot triple net (without utilities or taxes), a rate that rises over six years to $30 per square foot (with utilities, taxes, and services such as reception, procurement, and finance). Rents account for two-third of the innovation center’s revenues; the remainder, subsidies from the state, which are applied to rent expenses.
 
However, companies must show progress toward meeting financial milestones in order to remain tenants at the incubator.
 
The Michigan Economic Development Corp. has approved $500,000 in funding for the incubator addition, to be matched by Southwest Michigan First. The project will also receive $350,000 from Kalamazoo County, $250,000 from the city of Kalamazoo, and a low-interest loan from the Kalamazoo Community Foundation, which assists nonprofit organization and was founded by pharma pioneer W.E. Upjohn.
 
Since it opened in July 2003, the innovation center has housed 19 companies, seven of which have graduated to their own sites. Among graduating companies are PharmOptima, which specializes in pre-human testing phases of clinical trials. Last month PharmOptima, now based in nearby Portage, Mich., won the Outstanding Incubator Graduate Award from the Association of University Research Parks [BRN, May 12].
 
In the last 12 months, Einspahr said, the innovation center has welcomed three new companies. That number will soon rise to four, if drug developer Tolera Therapeutics relocates from Cleveland as planned.
 
“We’ve not had a single failure. All those companies are still going and growing,” Einspahr said.
 

 
Oslo Cancer Cluster Plans New Research-School Building
 
The Oslo Cancer Cluster plans to transform a high school building within its campus into a new €150 million ($232.8 million) research campus that will house at least 17 biopharma companies ranging from startups to corporate giants, as well as a new high school focused on biotech science and entrepreneurship for up to 750 students from across Norway.
 
Ground for the new Oslo Cancer Cluster Innovation Park — a set of five interconnected buildings totaling 42,000 square meters (452,000 square feet) — will be broken early next year. “It’s going to be ready by the summer of 2012,” Bjarte Reve, the cancer cluster’s CEO, told BRN in an interview at the Scandinavian Pavilion at BIO 2008.
 
The new building joins the existing research center and clinic buildings at the cancer cluster. Within the cluster, the cluster’s cancer registry will move to the new building. The registry includes information on the cancer histories of Norwegians dating back to 1950.
 
Among occupants of the new building will be Norway affiliates of AstraZeneca and GlaxoSmithKline’s oncology unit. For AZ, the move will consolidate its Norway operations inside the innovation park. Occupancy at the new building is 70 percent committed, with lease contracts set to be signed by year’s end, Reve said.
 
The building will include space for cluster anchor Radium Hospital to conduct clinical trials, as well as space for the cancer registry, a biobank, and the research track of the PhD program for MD students at the University of Oslo; the doctoral students are expected to mentor the high school students.
 
“Our idea is basically to have the whole value chain of developing oncology drugs inside the innovation park. This will allow the researchers to work both in basic research and in the clinic. We believe this is quite unique, at least in Europe,” Reve said.
 

 
Alexandria Real Estate Equities Discusses Amenities for NYC’s East River Science Park
 
Alexandria Real Estate Equities will include a “world-class scientific conference facility” and a club-like facility “that encourages commercial loitering” within its $700 million, 1.1 million-square-foot East River Science Park taking shape in New York City, William Fair, a managing director of the publicly-traded real estate investment trust, said during a presentation of the project from the New York Loves Bio pavilion at BIO 2008.
 
The conference facility will be “a mutual convening ground for science in New York,” Fair said. “With all of the academic institutions in New York, there’s a real concern that if a meeting happens at Rockefeller [University], ‘Do I really want to go there because I’m throwing my hat in with Rockefeller? Or if it happens at Memorial Sloan-Kettering [Cancer Center]?’
 
Fair said the club concept would allow visitors to exchange cards and do business, activities he said are typically discouraged at the city’s array of venerable university clubs. He said he could not disclose additional details — but did say the conference venue and club would be in addition to proprietary amenities such as its “Science Hotel” incubator and its “Innovation Center” acceleration space for post-incubator companies that need services but fewer than offered by an incubator.
 
Fair noted the project is targeting the New York region’s longtime shortage of life sciences space, resulting in high rents — and in many cases, the decision by companies to relocate elsewhere,
 
“Anyone can put up a building. But we’re trying to build almost a cluster within a cluster, a place where companies of all sizes, from the rank start-ups, to larger pharma specialized research institutions, to venture capital firms, intellectual property attorneys, and really where those folks in New York City and New York State can come together to do commercialization,” Fair said.
 
All space at the park — starting with the 750,000 square-foot first phase, consisting of two 16-story towers — will be capable of accommodating lab users, though Alexandria expects a mix of lab and office use, Fair said.
 
“The one thing [New York] is lacking, and the reason it’s not in the pantheon of the San Diegos of the world, and the Cambridges, US and UK, of the world, is just the shortage of companies,” Fair added. “And that shortage of companies is not driven by anything but the shortage of space. And we hope the East River Science Park will help address that concern.”

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