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BioRegion Real Estate: Aug 14, 2009


Dendreon Signs Leases for New Manufacturing Facilities in Union City, Ga., and Seal Beach, Calif., as Provenge Nears Market

Dendreon used its most recent 10-Q quarterly report, filed Monday with the US Securities & Exchange Commission, to announce the creation of two manufacturing facilities at opposite ends of the US, as the drug developer gears up to bring its prostate cancer treatment Provenge to market.

The company said it entered into a lease July 31 with Majestic Realty Co. for a $70 million, 160,000-square-foot building to be constructed at the Majestic Airport Center in the Atlanta suburb of Union City, Ga., near Hartsfield-Jackson Atlanta International Airport.

The lease term is "anticipated to commence in the first half of 2010" and runs an initial 10 and a half years, during which time Dendreon has agreed to pay Majestic a total $6.7 million in rent, with two renewal terms of five years each, the company disclosed in the filing. Dendreon said the lease includes a one-time purchase option exercisable prior to March 2011, and a 10-year expansion option for up to an additional 47,000 square feet.

In a statement, Georgia Gov. Sonny Perdue said Dendreon was among biotech companies introduced to Georgia's life sciences sector when the Peach Tree State hosted the Biotechnology Industry Organization's 2009 International Convention in Atlanta this past May. Carol Henderson and Annie Marie Baxter, project managers with the Georgia Department of Economic Development, assisted the company in its site search, according to the statement.

News of Dendreon’s interest in the site dripped out into local news reports in recent weeks, in part after Majestic won approval from Union City officials in June to build a building of 202,000 square feet [BRN, July 24].

“Union City is poised, with its Opportunity Zone and strategic location on Interstate 85, to be a key player in the Southeast as well as the United States,” Mayor Ralph Moore said in the statement issued by Perdue.

Dendreon also said it entered into a lease Aug. 7 with Knickerbocker Properties for 184,000 square feet of existing space at the Pacific Gateway Business Park, in Seal Beach, Calif. The lease term there is for ten and a half years, during which time Dendreon would pay Knickerbocker a total $13.6 million in rent, with two renewal terms of five years each. The lease includes a one-time purchase option exercisable during the first three years of the lease term, Dendreon added.

"We chose Seal Beach due to the rich, biotech-centered talent pool and its proximity to LAX, which ultimately will help us better serve advanced prostate cancer patients on the West Coast," a Dendreon representative told the Orange County Register, which did not identify the person.

The lease signings are part of Dendreon's plans to ramp up production of Provenge. The company is pursuing final approval of the drug from the US Food and Drug Administration following successful clinical trials, though the application was tabled earlier this year to await additional results.

In addition to the leases, Dendreon also retained LifeTek Solutions "to provide consulting design and commissioning services" for the development of the Georgia and California facilities, as well as Phase II and Phase III of the New Jersey facility, at a maximum total cost of $5.9 million.

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Dendreon is on a growth wave, having hired a construction manager for its planned $50 million expansion of its therapeutic biotechnology processing facility in Morris Plains, NJ [BRN, June 26], then disclosing plans to more than double the size of its headquarters near downtown Seattle, as well as searching for about a quarter-million square feet of office and laboratory space along the city's waterfront or South Lake Union neighborhood [BRN, July 2].

At San Francisco’s Mission Bay Campus, Mayor Newsom Hints at Deal Soon for Pfizer Space

San Francisco Mayor Gavin Newsom said this week that an occupant is likely to emerge soon for the 105,000 square feet of space that Pfizer was supposed to have moved into next year at San Francisco’s Alexandria Science & Technology Center at Mission Bay.

“We are very close to announcing something,” Newsom was quoted as saying by the San Francisco Examiner. “Something arguably much better than Pfizer will be moving in — and I’ll leave it at that.”

Pfizer agreed last year to a 15-year lease for the space, plus an option for an additional 50,000 square feet, at the 210,000-square-foot 455 Mission Bay Blvd. South. The deal was considered a coup for Mission Bay, and especially San Francisco, which has worked in recent years to attract life sciences companies that traditionally based their operations in the Bay Area’s suburbs [BRN, Aug. 11, 2008].

Last month, however, Pfizer confirmed it had backed out of its plan to relocate to Mission Bay its Biotherapeutics and Bioinnovation Center and its 100 staffers, now based in neighboring South San Francisco, Calif., citing the weak economy and a rethinking of its real estate needs following its planned $68 billion acquisition of Wyeth [BRN, July 10]. On Thursday, Wyeth said in a filing with the SEC that it had agreed with Pfizer to settle shareholder lawsuits seeking to scuttle the deal.

Another factor in the about-face: Corey Goodman, who spearheaded the Mission Bay move as head of Pfizer’s BBC last year, left the company in April.

However, Pfizer’s lease forbids it from backing out of the lease for at least 10 years, forcing the pharma giant to sublease its space. Addressing analysts earlier this month, Alexandria Chairman and CEO Joel Marcus said Pfizer was in talks with a prospective subtenant, with a deal expected to occur soon [BRN, Aug. 7].

"They are looking to sublease, and we understand they may be very close to achieving their goal there," Marcus told analysts on an Aug. 6 conference call. "I think that will probably be off the market fairly soon as far as any sublease competition for us."

Newsom hinted at the deal for the Pfizer space Monday, while introducing US House of Representatives Speaker Nancy Pelosi (D-San Francisco) at an innovation summit held at the Mission Bay Conference Center.

Shire Signs Lease for Fifth Building at Lexington (Mass.) Technology Park, a 160K Sq. Ft. Facility

Shire has signed a 15-year lease for a 160,000 square-foot office and lab building in Lexington, Mass., that will break ground in the second quarter of 2010, and is expected to be finished in 2012, a spokeswoman for the pharma giant, Jessica Cotrone confirmed to the Boston Business Journal.

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The new building would be Shire’s fifth building in the Lexington Technology Park, bringing its footprint there to nearly 600,000 square feet upon completion. Shire now occupies 430,000 square feet of office and lab space in three buildings at the former Raytheon Co. Campus and is building a 190,000 square-foot manufacturing facility that is slated to be complete by the beginning of 2011, Cotrone told the newspaper.

Shire began shifting its Human Genetic Therapies division from Cambridge, Mass., to Lexington in May 2007. Last year, the UK-based Shire officially announced it would move the division’s headquarters from Cambridge to Lexington, a $394 million expansion of the campus that would more than double Shire’s Massachusetts jobs over eight years by adding 680 staffers to its existing workforce of 675 people.

In return for the promised jobs, Shire won a package of $48.1 million in incentives — $40.6 million from the state and $7.6 million from the town of Lexington. Shire chose to expand in Massachusetts rather than relocate to neighboring Rhode Island, which offered a $24 million incentive package, or to North Carolina or South Carolina, which topped Massachusetts with packages of $42 million and $50 million, respectively [BRN, Feb. 19, 2008].

Covance Campus at Manassas, Va., Tech Park May Be Delayed Up to Two Years

Because of the weak economy, Covance will delay by 18 to 24 months its planned redevelopment of a $145 million, 47-acre campus meant to be a life sciences anchor within the 1,500-acre Innovation@Prince William Technology Park in Manassas, Va., the Washington Business Journal reported.

Covance declined to give the newspaper further details on new construction dates, saying through spokeswoman Mona Terrell: “Covance is committed to continuing to serve our clients’ drug development needs, and we believe the long-term outlook for our industry is very strong.”

Covance was to expand a 300,000-square-foot manufacturing shell into a 410,000-square-foot laboratory that by the end of 2011 was supposed to house the 450 employees then based in Northern Virginia. The company said at the time it would increase that workforce by 100 additional people by 2014.

Based on those promises, Covance was awarded a $3.7 million package of incentives by Virginia and Prince William County that included $1 million from the Governor’s Opportunity Fund, and a $1.5 million performance-based grant from the Virginia Investment Partnership program. State economic development officials told the Business Journal they will only begin tracking Covance’s progress starting in 2011, so any delays at this point have no effect on the state money.

The Princeton, NJ-based contract research organization arrived in Prince William as an apparent answer to the desire of economic development officials for a life sciences anchor when it shelled out $20 million for the property in 2007, with the goal of consolidating operations now in the Virginia communities of Chantilly and Vienna.

But in May, Covance shut down operations at the oldest building on its 112,000-square-foot Vienna campus, laying off 90 employees and transferring 30 to other sites. Covance — which the newspaper said plans to sell that campus when the replacement campus opens — also leases 24,000 square feet in Chantilly.

Covance's delay ends the second effort in this decade to create a life-sci anchor at the technology park. In 2007, Eli Lilly & Co. gave up on a five-year effort to build a $425 million, 700-person manufacturing plant there.

“We understand and support the need for businesses to make decisions that will assure their long-term success," Jason Grant, a spokesman for the Prince William County Department of Economic Development, told the Business Journal.

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Flex Biomedical Bolts Boston for Milwaukee, with $150K Loan from Wisconsin’s Technology Venture Fund

Flex Biomedical, a developer of products for the treatment of musculoskeletal injuries and diseases, will receive a $150,000 loan from Wisconsin’s Technology Venture Fund tied to the company’s planned $2.75 million relocation from Boston to Madison, Wis. The company will use the loan for further research and development, and for the purchase of equipment, Flex Biomedical said in a statement issued by Gov. Jim Doyle, who announced the loan.

The loan was part of $985,000 raised by Flex Biomedical in a financing round announced Wednesday. Leading the round were the Wisconsin Investment Partners of Madison, NEW (an acronym for North East Wisconsin) Capital Fund of Appleton, and the Marquette Golden Angels of Milwaukee.

The Technology Venture Fund, overseen by Wisconsin’s Department of Commerce, provides low-interest loans to life science and other high-tech companies based in the Badger State, with the goal of assisting companies searching for angel or other seed capital investment.

Founded in October 2007, Flex Biomedical’s lead product is a polymer-based treatment for osteoarthritis.

Marshall University OKs $25M Toward Up-to-$50M Applied Technology Center Planned for Huntington, WV, Campus

The West Virginia Higher Education Policy Commission has approved a $25 million grant for Marshall University’s planned Advanced Engineering and Applied Technology Complex, which will house under one roof the university’s biotechnology, technology transfer, and engineering programs and the programs of several other departments, the State Journal of Charleston, WV, reported.

The complex was one of several projects approved for funding by the West Virginia HEPC on Aug. 7, though Gov. Joe Manchin still must approve the list before the state spends money on them. Even if that happens, Marshall will still have to raise about half the cost of the complex, since preliminary plans call for the applied engineering facility to cost between $40 million and $50 million.

Funding for the new building will come from a bond sale approved earlier this year. "We'll put federal grants and private funding with (the HEPC money)," Kopp said, according to the State Journal.

Preliminary plans call for a 140,000-square-foot building to be located along Third Avenue, between the Robert C. Byrd Biotechnology Science Center and the Arthur Weisburg Family Engineering Laboratories building. The applied engineering facility would house Marshall’s engineering and bioengineering research labs, the college of information technology and engineering, the departments of mathematics and computational sciences, a modeling and digital imaging resource facility, and the planned West Virginia High School STEM Academy, which will focus on preparing secondary school students for higher mathematics.

Kopp told the newspaper he expects the new complex to be open within the next three years. The complex is designed to complement another Marshall program, the Marshall Institute for Interdisciplinary Research, which according to the newspaper added its second researcher on Aug. 3.

Nutriceutical Ingredient Producer Enzymotec Opens cGMP Plant in Northern Israel

Enzymotec, a biotech company specializing in production of nutriceutical products, has opened a 200,000-square-foot cGMP manufacturing facility in the Sagi 2000 industrial region of northern Israel, southeast of Haifa. The plant facility includes several production lines, research laboratories, and Enzymotec’s main offices.

Israeli president Shimon Peres joined Ariel Katz, Enzymotec’s founder and president, and some 350 guests from Israel, the US, and elsewhere at an event marking completion of the facility. Also in attendance was Jarrow Rogovin, president of Jarrow Formulas, a nutritional supplement formulator based in Los Angeles, and Enzymotec’s first customer in the US.

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Enzymotec’s ingredients are designed to improve cognitive function, reduce cardiovascular disease, and promote balanced nutrition for babies and toddlers. The company sells its products in the functional foods, dietary supplements and infant nutrition markets.

Emergent BioSolutions Selling Frederick, Md., Sites; Buying Two New Plants in Maryland, with Anthrax Vaccine Production in Mind

Emergent BioSolutions said it will sell its two facilities in Frederick, Md. — namely a pair of 145,000 square-foot buildings it acquired in 2004 and 2006, respectively — in return for two other facilities in the state. The deals comprise a restructuring of Emergent’s operations in Maryland tied to stepping up production of its current BioThrax anthrax vaccine and an anthrax vaccine candidate it acquired last year.

Emergent said in a statement that it will use proceeds from the sale of one Frederick building to acquire a laboratory in Gaithersburg, Md., that it deems suitable for its growing development programs. The new Gaithersburg lab will include space for product development, process development, assay development and administrative functions. Proceeds from the sale of the other Frederick building will be used toward acquiring a second facility whose location the company will not disclose pending completion of the deals.

“We are acquiring a large scale facility that includes several suites suitable for cGMP manufacturing of multiple products as well as space for process development and administrative functions,” Fuad El-Hibri, Emergent’s chairman and CEO, told analysts on an Aug. 6 conference call.

Emergent CFO Don Elsey told analysts during the call: “When these transactions are closed, which we expect to occur in the next 90 days, we would expect a cumulative transaction effect to be essentially cash neutral.”

One consequence of the deals: Emergent is in talks with Frederick County officials to return at least part of the $325,000 in tax increment financing the county awarded as an economic incentive to the company when it bought the two buildings. Under TIF, the county agreed to pay for infrastructure improvements with part of the increase in taxes that was to have been generated by Emergent’s activity in Frederick. Emergent received $300,000 of the approved $325,000 subsidy.

Emergent promised county officials it would employ 100 people initially, and expand that workforce eventually to 400 people. However, Emergent will still receive $2.5 million in state economic incentives from the Maryland Department of Business and Economic Development, since the company says it still plans to create jobs within the state, according to the Frederick News-Post.

Laurie Boyer, director of the county's economic development office, told the newspaper it was premature to comment on the talks.

Emergent said the acquisitions are expected to broaden the company's manufacturing options, increase its flexibility in the use of manufacturing assets, facilitate the continued growth of its product development programs, and reduce the company’s overall debt and annual interest and operating expenses. The projected savings was not disclosed.

The company said it was selling the Frederick sites because it would have cost too much to convert them into facilities suitable for producing the recombinant protective antigen, or rPA, anthrax vaccine candidate that it acquired last year. Emergent wants to produce rPA from the two sites it is acquiring, while converting another plant it operates in Lansing, Md., into a site for full-scale production of its BioThrax anthrax vaccine, the only product licensed by the US Food and Drug Administration for preventing anthrax. Sales of BioThrax accounted for a 788 percent year-over-year leap in Emergent’s operating income during the second quarter, to $22.7 million.

Emergent seeks rPA as potentially lucrative, since it has entered into contract talks with the US Biomedical Advanced research and Development Authority to develop and deliver 25 million doses of the vaccine candidate after responding for a former request for proposals issued by the US Department of Health and Human Services. “If awarded, the contract is anticipated to have a value in excess of $500 million and a term of up to eight years,” El-Hibri told the analysts.

At Philadelphia’s Science City, Avid Radiopharmaceuticals Graduates from Incubator to Its Own Space

Avid Radiopharmaceuticals has relocated within the University City Science Center in Philadelphia, in an expansion move that has brought the developer of molecular imaging agents from 5,000 square feet at the center’s Port Business Incubator, at 3624 Market St., to 16,000 square feet of office and lab space at the center’s newest building, the 155,000-square foot 3711 Market St.

Avid spun out of the University of Pennsylvania in 2005, and has grown since then to its current work force of 37 employees.

In a statement, Daniel Skovronsky, founder and CEO of Avid, said the company had made “tremendous” progress on clinical trials since its spinout: “As a result, we needed more space to support our Phase III clinical trials and research for our Alzheimer’s amyloid imaging compound, 18F-AV-45, and our Phase II clinical development for our Parkinson’s disease imaging compound, 18F-AV-133.”

Avid’s agents allow for the earlier detection of diseases, including Alzheimer’s disease, Parkinson’s disease, dementia with Lewy bodies, and diabetes mellitus. Avid plans to use its agents in the development of compounds designed to diagnose the diseases before patients display symptoms. In May, Avid announced it completed the first closing of a $34.5 million Series D financing.