April's BioDirt 🧬

As we roll into Q2 of 2024, a look at Q1 reveals some promising signs of the life sciences sector rebounding in a positive way. Keep reading for some reasons why things are looking up. (How's that for a tease?!)

One last thing: after this issue, we'll be releasing BioDirt as a quarterly recap of all things where commercial real estate meets biotech. We'll also be focusing more on Los Angeles. See you in July!

REAL ESTATE HIGHLIGHTS

Pfizer Oncology has recently expanded its R&D footprint. The firm leased 230,000 square feet for 15 years at Torrey View, a 520,000-square-foot life science development in San Diego, California. Breakthrough Properties, a joint venture between Tishman Speyer and Bellco Capital, owns the soon-to-be-completed project. Pfizer will occupy two buildings at the 10-acre, fully preleased campus. The firm also agreed to provide Breakthrough’s StudioLabs clients with streamlined access to its scientific, clinical, and strategic infrastructure via Pfizer Ignite. (source: Commercial Search)

AnaBios will move into about 20,000 square feet at 1155 Island Ave, San Diego, an eight-story Class A life sciences building. The space will be used for drug discovery and research translational services based on human tissue and cells, including heart and lung, according to an announcement. Rental rates were not immediately disclosed. The 200,000-square-foot building named Genesis-San Diego will be 50 percent leased after AnaBios joins neighboring tenants Novoron Bioscience, Excellos, and Native Microbials. (source: Commercial Observer)

Montana Avenue Capital Partners has unloaded about 90,000 square feet of fully leased research & development and lab space in San Diego. Dollinger Properties acquired two adjacent buildings at 16981 Via Tazon and 11501 Rancho Bernardo Road in Rancho Bernardo for $30.8 million. Millennium Health, a medication monitoring and drug testing services company, occupies space at the property. (source: Commercial Observer)

As the nation’s third-largest hub for life sciences real estate, San Diego is home to 16 percent of all development projects underway in the United States, according to a report from CommercialEdge. San Diego is set to see 3.6 million square feet of space added just this year, which is almost double the amount completed between 2019 and 2023. See the below table for the rest of the top 10. (source: CommercialEdge)

NOTABLE FUNDINGS + HIGHLIGHTS

Culver City-based TORL BioTherapeutics announced its closing of an oversubscribed $158 million Series B-2 financing. The financing was led by Deep Track Capital, with new participation from leading global biotechnology investors, including RA Capital Management, Perceptive Advisors, and Avidity Partners, as well as all existing biotechnology investors, including Goldman Sachs Alternatives, UC Investments, Bristol Myers Squibb, Vertex Ventures HC, Moore Strategic Ventures, Blue Owl Healthcare Opportunities, and Perceptive Xontogeny Venture Fund, brings the total raised to date to greater than $350 million. Proceeds from this Series B-2 financing will be used to continue the clinical development of TORL-1-23, the Company's first-in-class ADC to treat CLDN 6+ tumors, through Phase 1 and a pivotal Phase 2 trial that will start in the second half of 2024. (source: PR Newswire)

San Diego-based oncology startup Avenzo Therapeutics closed a $150 million Series A-1 financing led by Deep Track Capital, New Enterprise Associates, Sands Capital Ventures, and Sofinnova Investments. The San Diego-based firm has now raised $347 million since the company’s founding in August 2022, per the company. The startup plans to use the new proceeds to advance its emerging oncology pipeline, which includes a treatment for metastatic breast cancer and other advanced solid tumors. (source: Crunchbase)

San Diego-based Mirador Therapeutics launched with a $400 million Series A funding led by Arch Venture Partners. The company was founded by CEO Mark McKenna and executives from Prometheus Biosciences, which was acquired by Merck in 2023. With breakthroughs in genetics and machine learning, the company is focused on precision medicine for chronic inflammation and fibrotic disease and plans to leverage open-source human genetics data and cutting-edge data science, which, according to McKenna, will enable the company to file for investigational new drugs (INDs) by 2025. (source: GEN Edge)

San Diego-based biotechnology company Capstan Therapeutics announced the successful closing of a $175M oversubscribed Series B financing. The Series B financing was led by RA Capital Management, with participation from new investors Forbion, Johnson & Johnson Innovation - JJDC, Mubadala Capital, Perceptive Advisors, and Sofinnova Investments. Capstan’s existing investors Alexandria Venture Investments, Bristol Myers Squibb, Eli Lilly and Company, Leaps by Bayer, Novartis Venture Fund, OrbiMed, Pfizer Ventures, Polaris Partners, and Vida Ventures, also participated in the round. Capstan focuses on vivo reprogramming of cells through RNA delivery to combat autoimmune disorders. Founded in 2021, the company says it has raised $340 million. (source: Business Wire)

San Diego-based biotech startup Engrail Therapeutics locked up a $157 million Series B co-led by new investors F-Prime Capital, Forbion and Norwest Venture Partners to help expand offerings to combat those problems. Engrail focuses on neuropsychiatric and neurodevelopmental diseases and will use the fresh cash to advance its pipeline through clinical development. Since being founded in 2019, Engrail has raised over $220 million, per the company. The success of the $157 million fundraise was due partly to a groundswell of interest stemming from Big Pharma's buyouts late last year, according to President and CEO Vikram Sudarsan, Ph.D. (source: Fierce Biotech)

San Diego-based oncology biotech Alterome Therapeutics raised a $132 million Series B led by Goldman Sachs Alternatives. Alterome says its machine learning platform for drug discovery — Kraken — is helping it advance a pipeline of small molecule therapies targeting a spectrum of oncogenic targets. The company has focused on approaches designed to specifically target cancer cells over normal cells. Founded in 2021, the company has raised $231 million. (source: Crunchbase)

PRIVATE FUNDING ROSE IN Q1

Private funding for biotechnology startups rose during the first three months of the year, suggesting some of the sector’s momentum has translated to stepped-up investment in young drugmakers. Twenty-six companies closed private fundraising rounds worth more than $100 million in the first quarter, according to data from HSBC Innovation Banking shared with BioPharma Dive. While venture rounds have grown in size in recent years, $100 million is typically viewed as a significant threshold. (source: BioPharma Dive)

WHAT I’M CONSUMING AND ENJOYING

Biotech Acquisitions by Year and Total Value Paid Upfront

📊 BioPharma Dive is tracking M&A activity. Click here to see their database, which shows drugmaker buyouts that have happened since 2018 and were valued at $50 million or more in upfront consideration. I also recommend the summary tables (the chart above is one of the tables).

📈 Most trends articles lack heft, but this Ropes & Gray dealmaking trends and outlook piece is a well-researched deep dive into what’s happening and what looks like will happen in Life Sciences. I highly recommend it. Here’s a quick tease: It has been reported that the top 18 pharmaceutical companies have over $500 billion in “firepower” (a metric used to determine a company’s potential capital resources) available to fund transactions compared to $411 billion in October 2020.

👨‍🔬 Many promising small molecules have lost significant investment appeal as a result of lopsided incentives favoring biologics in 2022’s Inflation Reduction Act. This BioSpace article gives some ideas to what’s at stake and how to reverse the curtailing of investment.

🎂 And, lastly, happy 30th birthday to Pasadena-based Alexandria Real Estate Equities. The company, which specializes in the development of life science, agtech, and advanced technology mega campuses, has played a pioneering role in transforming life science real estate into a mainstream asset class across the United States.

Thanks for reading. If you want me to look into something or have some ideas for the newsletter, reach out, and I’ll get right back to you.

And, as always, we're here to help you with your real estate needs.

Ted Simpson
Founder and CEO
Commercial Real Estate Advisors
(c) +1 310.384.6512
(e) [email protected]
CA DRE License #0109718