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QB3 Expands Incubator into FibroGen's Mission Bay Facility to Give Biotech Startups Room to Grow

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By Alex Philippidis

A University of California institute has joined with three partners to expand the space available for life sciences startups in San Francisco's Mission Bay section — with the goals of accommodating growing tenant demand and, over time, satisfying that demand through additional sites elsewhere in the Bay Area.

The California Institute for Quantitative Biosciences, or QB3 — which includes UC's San Francisco, Santa Cruz, and Berkeley campuses — has partnered with FibroGen, the San Francisco Chamber of Commerce, and the San Francisco Center for Economic Development to open a roughly 10,000-square-foot suite of laboratories within 409 Illinois St., the 239,000-square-foot building to which FibroGen relocated late last year.

The expansion, which will quadruple the amount of incubator space that QB3 currently operates, is designed to quench the growing thirst of Bay Area startups for incubator space at Mission Bay. Demand is strong enough to force QB3 to turn away one to four inquiries from fledgling companies a week, officials said.

Longer term, the partnership, called the QB3 Mission Bay Incubator Network, envisions developing a set of incubators across the region, Douglas Crawford, the institute's director of industry alliances and associate executive director, told BioRegion News on Wednesday.

"The prime driver was the frustration of having to turn away one to four inquiries a week. We love to help entrepreneurs. We want to be the nexus between new companies and the university. We really do feel that space is a critical element in launching successful companies. All of those factors motivated us to want to participate in this initiative," Crawford said in an interview.

"Our long-term ambition would be to undertake a similar venture in the East Bay. We're in various discussions with people right now, but we haven't rolled that out yet. There's been a huge growth in the biotech industry in West Berkeley, Emeryville, and up to Richmond, too. Currently, there no spaces available there for really small companies," Crawford added.

Pursuing such space at a cost startups can afford may compel the network to consider partnerships with developers owning "units that are a little bit further away, but offer larger and less expensive space," even if they are farther from universities than is the case with the network's initial portion of FibroGen space at Mission Bay, Crawford said.

"In the fullness of time, our network will grow to include other providers of space at Mission Bay," Crawford told BRN — especially the developer of Mission Bay's largest R&D campus, Alexandria Real Estate Equities. The network hopes to expand into a portion of the publicly-traded landlord's Alexandria Center for Science and Technology at Mission Bay, located about a quarter-mile northwest of FibroGen's new space.

That cannot take place until at least early 2010, since Alexandria — a publicly traded real estate investment trust based in Pasadena, Calif. — has all but filled the building it has completed at Mission Bay, the 153,000-square-foot 1700 Owens St.

"If they have space available, they have in the past, and would very much in the future, like to participate in renting out small units of space" to startups within the network, Crawford said. "We hope that the Mission Bay Incubator Network will grow to two or three different private developers."

As more developers join the network, he added, "I will be ecumenical. I'll say to the tenants, 'Here are your options. There's space at FibroGen. There's space at Alexandria.' But right now, there's only one show in town."

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Absent a perfect re-leasing effort, Alexandria next year may have at least part of 105,000 square feet available for startups in a third Mission Bay building it is constructing, 455 Mission Bay Blvd. South. That space had been leased to Pfizer until the pharma giant earlier this month backed out of its nearly year-old lease deal with Alexandria, citing changing space needs due to the economy and its pending $68 billion acquisition of Wyeth [BRN, July 10]. Pfizer had also agreed to an option for another 50,000 square feet in the 205,000-square-foot building.

Space is also expected to be available for the network at Alexandria's next building to come online at its Mission Bay campus, the 158,000-square-foot 1500 Owens St., where all space has been fully leased or committed to UCSF and a "multi-billion-dollar equity-market-cap biotech company" whose name Alexandria has never disclosed.

The new network has one advantage for the life-sci startup tenants it will house at FibroGen: They need not maintain an affiliation with the UC system, unlike the stipulation in place for startups now within the 2,500 square feet of space that comprises QB3's three-year-old incubator, dubbed "the Garage." The FibroGen-based startups also need not have an affiliation with the drug discovery company focused on tissue fibrosis, connective tissue growth factor, and hypoxia-inducible factor, or HIF, biology.

Late last year, FibroGen relocated its headquarters and labs from a South San Francisco, Calif., site to all of 409 Illinois St., part of a two-building, 450,000-square-foot complex redeveloped by Shorenstein Properties from its former use as the warehouse site for Esprit. FibroGen maintains an option to lease the second building, the 211,000-square-foot 499 Illinois St.

Four startups moved in quietly in recent weeks, occupying a combined roughly 2,000 square feet at 409 Illinois — small-molecule therapeutics developer Carmot Therapeutics, cardiovascular therapeutics agent developer CV Ingenuity, influenza therapeutics developer Gemmus Pharma, and protein therapeutics developer Osprey Pharmaceuticals USA.

A fifth startup — Solidus Biosciences, a provider of high-throughput, predictive in vitro toxicology services — will move into the new network's FibroGen space by Aug. 1.

"We're really convinced that a number of these companies would not have gotten started without the incubator network," Crawford told BRN. "Usually what happens is, people contact me first. I bring them here, show them the campus, show them the core facilities, then I walk them across the street and introduce them to the facilities management folks at FibroGen. They then pick up the ball at that point and talk to them about the space."

At the FibroGen space, as at the Garage, startups can rent labs starting at 120 square feet, as is the case with one recent arrival, the biotherapeutic platform developer Omniox. Companies can then grow in increments of about 150 square feet. FibroGen's startup space will lease for about the same as the $5.50 per-square-foot, per month operated until now by QB3.

That rate includes full janitorial and utility services, as well as the class A lab space itself, but without equipment. As with the Garage, startups at FibroGen's space will typically furnish their labs by tracking down sources of used equipment, Crawford said.

The Garage is home to six startups, including Omniox. Of QB3's first 10 companies, four closed venture capital financing rounds, one company shut down, and one, True Materials, was acquired by Affymetrix last year for $25 million in cash. Companies must grow out of QB3, or move out, within two years.

Garage tenants have access to amenities such as UCSF's library, use of its core facilities at hourly rates, ownership of their data, and university contacts for lawyers and other professionals they will need to hire in order to do business. In addition, QB3 runs monthly seminars led by experienced entrepreneurs and service providers, as well as scientific seminars held at UCSF's campus.

"One of the great advantages in being near a university is that there are lots of law firms, accounting firms, independent people who are all experienced at this, but they're not always well-known to young companies. So we have a playbook, and one of the things that QB3 is happy to do for its own entrepreneurs, and for members of our network, is provide that networking service to those entrepreneurs," Crawford said.

"One of the great advantages for starting a company in the Bay Area is that young companies get to continue to collaborate with investigators, and we'll help broker those collaborations," Crawford added. "Big companies are more autonomous. They have more internal resources. But when you're a tiny company, you really need to be able to network actively to fill the gaps in your own resources."

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