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In Brooklyn, An Incubator Perseveres As Biotech Perks Up in the City

Xconomy New York — 

Ask a New Yorker where to find an affordable apartment, and one of the most popular answers these days is Brooklyn. A SUNY Downstate Medical Center professor named Eva Cramer has been trying to prove for years that the old borough is the answer for the city’s lab space problem too.

It hasn’t been an easy task. The trials and tribulations of Cramer’s brainchild, the SUNY Downstate Incubator in Prospect Lefferts Gardens, and its larger sister facility at the Brooklyn Army Terminal, known as BioBAT, have been well documented: Downstate reportedly butted heads with its partners at the New York City Economic Development Corp. early on over the direction of the project, which was the area’s first biotech startup incubator when it opened for business 11 years ago. Filling up BioBAT, in particular, has been a tall order. And both facilities are far from many of the city’s academic institutions, making it a challenge to recruit scientists from the area who want to turn their work into companies.

That’s why Cramer, soft-spoken yet passionate about the project, says she was often dismissed by folks who would say, “It can only happen in Manhattan.” It’s also why, despite Cramer’s efforts, the lab space crisis is still talked about ad nauseam as New York biotech’s number one problem.

“One of the things that amazed me was that [people] didn’t mind being insulting right to my face—they weren’t doing it behind my back,” she says. “They’d say, ‘It can never happen, you’ll never attract the scientist from the universities in the city.’”

Cramer (pictured above) is the vice president for biotech and scientific affairs at SUNY Downstate and a professor of cell biology. In 2000 she saw that some of the university’s professors wanted to start companies—there was just nowhere remotely close to put them. That’s how the project started, and as time went on it became broader in scope, becoming a haven for companies not just from Downstate, but other universities and even outposts for international organizations like the International AIDS Vaccine Initiative (IAVI). Cramer spearheaded an effort to raise money from city and state sources like Empire State Development’s NYSTAR, and Downstate used the cash to buy space adjacent to the school and build an incubator in phases as more money would come in. Cramer first raised enough money for an 11,000-square-foot facility, and built that up. Then came another 13,000-square-foot piece. Just a few weeks ago, the incubator more than doubled in size, as a new 26,000-square-foot space was officially opened to potential tenants.

Along the way, in 2006, Cramer hatched BioBAT, a joint venture between Downstate and the NYCEDC. It’s a much larger facility meant for companies that become successful, outgrow the incubator, and need more space for things like manufacturing. The space is significant; it’s part of the Brooklyn Army Terminal, a giant concrete complex built some 100 years ago and originally used to help ship soldiers and supplies over to Europe. The city bought it back from the Department of Defense over 30 years ago, and it’s since become home to a number of local businesses. (Check out this report from Business Insider for some examples and photos of the complex’s transformation.)

Like the incubator, BioBAT has been built in phases, the first being 38,000 square feet and the second an additional 85,000. All told, it could end up at 524,000 square feet once completely built out. But it’s a hike. The Brooklyn Army Terminal is close to Bay Ridge in south Brooklyn, a ways away from Manhattan (a subway ride from Columbia University, for instance, would take more than an hour). As with any apartment in New York, tenants are trading convenience to Manhattan for affordability and space.

“It’s very expensive in Manhattan—you could do this much more reasonably in Brooklyn,” Cramer says. “We could therefore be able to keep the rents very low. And that’s really important, especially for these early stage companies.” (The incubator charges about $40 per square foot per year for rent, and BioBAT rent is somewhere in the $30s-per-square-foot range, Cramer says.)

Yet luring those companies has been a chore. As a report from the Wall Street Journal last year noted, there were “bitter disputes” between Downstate and the NYCEDC about managing the project; there were delays in construction at BioBAT as well, the report said. Cramer notes that initially there was conflict over where to build BioBAT—Downstate preferred Brooklyn, whereas its partners at the NYCEDC “were geared more towards Manhattan.” But after raising $90 million in federal, state, and city funds over the last decade and steadily increasing the size of the project, Cramer says that the incubator now houses 21 companies, many of which are “from all the various universities.”

“The best way to describe this whole experience is a jagged line that goes up and down and up and down—but is constantly going up,” she says. “We’ve been very successful in renting despite the naysayers.”

Three companies—anchor tenant IAVI, tissue engineering firm Modern Meadow, and a Brooklyn vaccines startup called Avatar Biotechnologies—lease out large spaces within BioBAT. A fourth company, IRX Therapeutics, which has been operating out of the Downstate incubator, will move in to BioBAT in the spring, Cramer says.

“The space we have has really worked well for us and allowed us to grow,” says Sarah Sclarsic, Modern Meadow’s business director.

One thing in Cramer’s favor: Hipster jokes notwithstanding, Brooklyn has undergone a renaissance. Young professionals looking for apartments within earshot of Manhattan have flocked to a number of its neighborhoods. Travel most anywhere in Brooklyn and you’ll see construction underway on new luxury apartment buildings and commercial spaces. “We were just very lucky that it became very popular,” Cramer says.

And lucky that it’s tougher to find options for lab space in Manhattan. Currently, there are only a few places available for biotech entrepreneurs. like the city’s lone biotech incubator, Harlem Biospace, which opened in 2013 and occupies a 2,000-square-foot floor on 127th St. in West Harlem.

Harlem Biospace, as founder Samuel Sia told Xconomy in 2013, is equipped for biotech startups that are taking “baby steps” out of a university and need to take the next step. It’s got workstations and shared equipment that suit the needs of a one- or two-person biotech startup. There isn’t much available to Manhattan biotechs that outgrow that space, however. The Alexandria Center for Life Science, a sprawling complex on the city’s East Side, has the space and the facilities for more mature companies, but it’s too expensive for many smaller biotech startups to afford. It’s manned with outposts for large companies like Roche, Pfizer, and Eli Lilly’s ImClone unit, and well-funded startups, like Sam Waksal’s Kadmon Corp., and Kallyope, which just raised a $44 million round—one of the largest financings in recent memory for a New York startup biotech.

Cramer says startups at Downstate can get anything from just a desk or bench to upwards of 4,000 square feet of space. In a way, it’s a middle step for companies that may start out at Harlem Biospace: move to Downstate, grow, and eventually set up shop in BioBAT. (IRX didn’t start out in Harlem Biospace, but it is going from Downstate to BioBAT.)

Cramer is hoping for more cases like EpiBone, a startup spun out of Columbia and partly funded by Peter Thiel’s Breakout Labs. EpiBone is developing a way to use stem cells to regenerate bone tissue, which if successful would be a potentially safer alternative to bone grafts or cadaver bones to repair a bone fracture. The startup had been working in Harlem Biospace but “it was time to graduate,” Nina Tandon, EpiBone’s CEO, says. Sharing a lab with 15 other companies “is not really an option for a company that we’re trying to move towards clinical trials,” she says.

Tandon looked around Manhattan and saw a lab space “housing crisis.” EpiBone didn’t need 10,000 square feet, just a few thousand. Where could it go? BioBAT, Tandon says, was too far away. The Alexandria Center wasn’t affordable for EpiBone. So, on the advice from Modern Meadow—the two share investors, among them Breakout Labs—Tandon was introduced to Cramer. The location worked, as Downstate is a block or so from the subway. EpiBone could get the space it needed with the ability to scale up to a few thousand square feet. It could access the animal testing facilities at Downstate for its preclinical work. In addition, by joining up, EpiBone could apply for Start-UP NY, a program that gives new businesses the chance to operate tax-free for 10 years. The startup moved into Downstate in November. “It certainly is a commute,” Tandon says, ”but it’s a step up for New York city to have a space like this.”

The progress has emboldened Cramer. She’s thinking of a future when water taxis can shuttle entrepreneurs from BioBAT to various locations up the East River, like the Alexandria Center or Weill Cornell’s new campus on Roosevelt Island. She’s now got conference space at the Downstate incubator to hold events and run a mentorship program (called “the next milestone”) to help startups progress and network. She wants to get contract research organizations to set up shop in BioBAT and interact with, and presumably help, local biotechs. A teacher at heart, she wants to build entrepreneurship into the fabric of the educational system, putting programs in place not just for graduate students but young children as well.

“I feel like my role is to build the ecosystem,” Cramer says.