LA's Biotech Microclusters

I come bearing good news. After a dull few years, the biotech market has started picking up. Below, I share a few articles on biotech’s resurgence as well as some personal anecdotes, with (mostly) all signs pointing ⬆️.

I also include some available lab space, commentary on the microcluster nature of LA’s biotech landscape, and much more.

Enjoy!

FEATURED AVAILABLE LAB SPACE

Happy to tour you through either of the below opportunities if you’re interested.

101 South Marengo, Pasadena, CA

Located in the heart of historic Old Pasadena, 101 South Marengo offers a unique opportunity to grow a community and foster innovation.

Originally built in 1974, Atlas Capital Group has transformed this building into an inviting, forward-thinking workspace that matches Old Pasadena's vibrant urban fabric.

Why You Might Be Interested:

• Flexible spaces ranging from ±20,000 to ±315,000 square feet.

• Over 80,000 square feet of activated outdoor space, a new interior courtyard, and a 10,000 square foot fitness center with locker rooms

  Current power:

• 12K amps of 277/480 V normal power

• Additional 2000kW/2500kVA of standby power is available to lab areas

• 35 VA/GSF Normal Power available

• 10 VA/GSF Additional Standby power for lab areas

Timing: A full lab build-out would take about two to two-and-a-half years if you started space planning today.

Lab Launch@ATX: 3191 Casitas Ave, Los Angeles, CA (Atwater Village)

Why You Might Be Interested:

Designed for biotech companies needing startup, scale-up, and growth space. Located in Atwater Village, just minutes from DTLA, it is a turnkey and customizable lab space for growth-stage biotech companies.

Lab Launch offers suites between 800 and 3600 square feet, plus operational support.

• Customizable labs with on-site design services

• Casework, cold storage, and hoods provided

• Backup power

• Support for up to BSL2+

• Facilities management

• Operational services: lab waste removal coordination, lab coat cleaning, receiving

• Coworking amenities

ZONING CHANGES IN PASADENA

ICYMI, in my last newsletter, I mentioned the zoning changes in the city of Pasadena that were approved at the end of 2023 and are intended to help life science companies. It’s a pretty big deal, so I thought I’d mention it again. Here’s a link to the full announcement. A summary of the major solutions is below.

The revised zoning regulations encompass adjustments that streamline the process of establishing and expanding life science facilities in the City. With eased restrictions on parking and conditional use permit requirements and greater allowances for building heights and the use of roof space for equipment, these changes aim to facilitate the creation of state-of-the-art research centers, laboratories, and biotech facilities, fostering an environment for scientific breakthroughs and job creation. The changes also simplify the current definition of research and development (R&D) in the City’s zoning code, removing distinctions between office and non-office uses, which will be key to life science companies, whose facilities commonly combine labs, offices, and other research spaces together to fulfill their unique business needs.

PROMISING SIGNS IN THE BIOTECH MARKET

Prior to 2024, biotech had spent more than two years mired in one of the worst downturns in its history, a financing crunch that caused a number of companies to restructure or close altogether. Yet, according to BioPharma Dive and other industry publications, a recovery could be underway. An upturn in deal-making, the prospect of interest rate cuts, and the continued climb of the SPDR S&P Biotech ETF — which recently reached $100 for the first time since January 2022 — have combined to lift the value of biotech stocks.

According to an analysis from investment bank Jefferies, biotechnology companies raised close to $10 billion in follow-on stock offerings in January and February, the latest sign of renewed sector optimism. Jefferies published data showing biotech is on pace to post its highest quarterly total in three years, potentially exceeding the $11 billion companies raised in follow-on stock offerings in the first quarter of 2021. The average size of those financings increased from $167 million in January to $191 million in February, the report said. (source: Biopharma Dive)

Here’s Endpoint News’ list of all the biotech companies that have filed an IPO this year.

Here’s Bisnow’s take on the recent uptick in activity across the biotech sector. This caught my eye: Stifel analysts predict that somewhere between 25 and 40 biotech IPOs might happen in 2024, a significant rally. And a few potential blockbusters, including Kallyope and Rivus, which focus on the hot anti-obesity market, are yet to come. In 2021, there were 102 life sciences IPOs, versus just 20 last year.

WORD ON THE STREET

This is a small sample size, but about a week ago, when setting up a tour for a biotech client, I kept hearing the same thing from landlord reps: their vacant life science spaces had recently seen a surge in activity and interest. At first, I was skeptical, but every landlord rep I spoke to said the same thing. While a small sample size, I was happy to see the above articles corroborate my real-world experience.

Additionally, Eli Lilly has a big requirement in the Pasadena market by way of its Protomer Technologies acquisition in 2021.

NOTABLE FUNDINGS + HIGHLIGHTS

Los Angeles-based Bionaut Labs has raised an extension round, which involved the Mayo Clinic, along with existing investors Khosla Ventures, Upfront Ventures, and OurCrowd. Fortune has also learned that Bill Gates’ Gates Ventures has invested, per two sources familiar with the matter. To date, Bionaut has raised over $70 million, Fortune can confirm. In 2022, the company closed its Series B, led by Khosla, bringing the total the company had raised to $63.2 million, according to Crunchbase. Bionaut declined to disclose the valuation. (source: Fortune)

Torrance-based Athos Ther­a­peu­tics secures $35M in Series B funding to develop AI-based precision small molecules for autoimmune diseases and cancer treatment. The lead asset targets inflammatory bowel disease (IBD) with a focus on inflammation and mucosal healing. About $10 mil­lion of the ex­pect­ed haul will go to­ward the lead as­set, an in­flam­ma­tion and mu­cos­al heal­ing-tar­get­ed treat­ment for in­flam­ma­to­ry bow­el dis­ease, CEO Dim­itrios Il­iopou­los said in an emailed state­ment. The biotech an­tic­i­pates Phase I topline da­ta by March and plans to start a Phase IIa by the third quar­ter of 2024, he added, not­ing the cap­i­tal will al­so fund it through that study. (source: BNN Breaking)

Pelage Pharmaceuticals, a Los Angeles-based hair loss biotech based on research out of UCLA, has reeled in a $16.75 million Series A and plans to start a mid-stage trial later this year. GV led the financing, which also included funds from Main Street Advisors, Visionary Ventures, and YK Bioventures. (source: PR Newswire)

More details on this one we mentioned in our last issue… Culver City-based immunotherapy company ImmunityBio Inc. has received as much as $320 million in financing from New York private equity firm Oberland Capital Management. The company received $210 million of that financing on December 29, bringing the total financing received for last year to $850 million. About $530 million of that total came from company founder and LA’s wealthiest billionaire, Patrick Soon-Shiong. Another $100 million of the financing from Oberland Capital is contingent upon the Food and Drug Administration approving ImmunityBio’s lead drug candidate Anktiva to treat a form of bladder cancer. After an initial rejection, ImmunityBio resubmitted its drug-application data to the agency last summer; the agency is currently reviewing the drug and has given a deadline for its decision of April 23. (source: Los Angeles Business Journal)

Thousand Oaks-based Latigo Biotherapeutics Inc. ("Latigo"), a clinical-stage biotechnology company developing best-in-class non-opioid pain medicines that target pain at its source, announced its emergence from stealth with a $135 million Series A financing. Westlake Village BioPartners ("Westlake") incubated the company. Westlake led the Series A financing with 5AM Ventures and Foresite Capital as co-leads with participation from Corner Ventures. The company has appointed Desmond Padhi, Pharm.D., operating partner at Westlake as interim chief executive officer (CEO) and Nancy Stagliano, Ph.D., CEO of Neuron23, Inc., as chair of the board. Proceeds from the financing will support the continued advancement of Latigo's portfolio of novel pain therapeutics and the growth of the company and its platform. (source: BioSpace)

San Diego-based Boundless Bio, an oncology startup backed by Bayer and Arch Venture Partners, became the first biotechnology company to file for an initial public offering since late January. The San Diego biotech, which has raised $254 million across three private fundraising rounds, aims to use the proceeds to advance a pipeline of medicines for tough-to-treat tumors. (source: Biopharma Dive)

San Diego-based Kenai Therapeutics emerged from stealth and announced its arrival on the biotech scene with $82 million in Series A financing to fund an investigational asset designed to treat Parkinson’s disease. According to Kenai, which was formerly known as Ryne Bio, the funding was co-led by Alaska Permanent Fund Corporation, The Column Group and Cure Ventures. The round also saw participation from Saisei Venture and Euclidean Capital. (source: BioSpace)

Santa Ana’s Autonomous Medical Devices Incorporated (AMDI) has received a National Institutes of Health (NIH) RADx Tech award from the National Institute of Biomedical Imaging and Bioengineering (NIBIB), part of the NIH. Up to $5.2 million in funding will be used by AMDI to complete development of its Fast PCR System, a CLIA-waivable RT-PCR point-of-care system that can detect up to 32 targets per sample in less than 10 minutes. The funding will also be used to complete the first test panel for the Fast PCR system, targeting detection of multiple respiratory viruses: Influenza A and B, respiratory syncytial virus (RSV), and SARS-CoV-2. (source: PR Newswire)

Convergent Research announced a new $14 million funding commitment from former Google CEO Eric Schmidt to Forest Neurotech, an initiative designed to create next-generation brain-computer-interfaces (BCIs) for individuals with neurological injuries or diseases. In addition to support from Eric Schmidt, Forest Neurotech has received funding from Griffin Catalyst, the philanthropic organization of Citadel CEO Kenneth C. Griffin, the Riley & Susan Bechtel Foundation, and James Fickel. (source: Business Wire)

MAPS: LA’S MICROCLUSTER BIOTECH LANDSCAPE

From time to time, I like to feature maps to remind us where the biotech businesses are clustered. In a recent Los Angeles Business Journal, reporter Howard Fine wrote an in-depth report explaining why and how the microcluster landscape of the Greater Los Angeles biotech scene came to be.

Fine segmented the microclusters as follows:

1. The 101 Biotech Corridor that has sprouted around Thousand Oaks-based Amgen Inc.;

2. The Santa Clarita Valley, which was the preferred location for the late serial biomedical entrepreneur Alfred Mann to place his companies and eventually a foundation that’s now called HuMannity;

3. Westwood/Santa Monica on the Westside, with UCLA as its driving force; and

4. The San Gabriel Valley, between Caltech in Pasadena and City of Hope in Duarte.

5. Two more microclusters are trying to emerge: one around Cal State Los Angeles and its new bioscience incubator just east of downtown Los Angeles, and the other in the South Bay around the Lundquist Institute/Harbor UCLA Medical Center. But so far, these two areas lack the critical mass of significant companies to qualify as clusters.

Fine also interviewed Dan Gober, the new executive director of the Los Angeles chapter of the statewide industry resource and advocacy group Biocom California. They discussed Gober's goal of boosting the region's bioscience industry and local microclusters.

If you’re looking for a - much - more detailed overview of the LA Bioscience lay of the land, I suggest spending a few minutes with the below…

This interactive asset mapping tool is a comprehensive and searchable resource with information on the LA region’s bioscience companies, educational institutions, incubators/accelerators, hospitals, and much more. The virtual tour unleashes the region's potential by utilizing proprietary data so the user can easily find and share analytics to better understand LA's vibrant, innovative bioscience ecosystem.

STATS: TOP RESEARCH HUBS FOR NOVEL DRUG APPROVALS

Some takeaways:

• The FDA approved 55 novelty drugs in 2023, the most since 2018 when 59 drugs were approved. Over the last 10 years, the FDA has approved 45.6 novelty drugs on average per year.

• Greater Boston and the Bay Area play host to the two largest commercial lab/R&D inventories in the United States, accounting for 39% of the inventory nationally.

• Of the 55 novel drug approvals in 2023, 44% were granted to companies with primary R&D locations in the Greater Boston Area, Bay Area, or both.

WHAT I’M CONSUMING (AND ENJOYING!)

🔬 Here’s a great primer on what to include in your laboratory design if you’re a biotech startup + another primer on things to consider when signing your first commercial real estate lease. Both of these primers are from Lab Launch and although aimed at startups, much of the advice is applicable to many different stages of a life science business.

💻 An informative video from Biotech TV showcasing Terray Therapeutics' CEO, Jacob Berlin, on designing computational and experimental platforms to supercharge small molecule discovery.

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

Ted Simpson
Founder and CEO
Commercial Real Estate Advisors
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