[Updated, 1:12 pm ET, see below] It’s no secret that one of the biggest things holding New York City’s biotech ecosystem back is lack of lab space for startups. The problem will take a broad effort to solve, not just a few buildings or incubators. But one of the city’s biggest real estate players, Alexandria Real Estate Equities, has announced a plan today to help out.
[Updated w/ comments from Joel Marcus] Alexandria (NYSE: ARE) disclosed two new New York City initiatives: what’s being called “Alexandria LaunchLabs at the Alexandria Center for Life Science—New York City,” and an associated seed fund. LaunchLabs will be a 15,000-square-foot lab and office space that will effectively serve as a startup incubator inside the Alexandria Center, a sprawling campus on Manhattan’s East Side. The seed fund, meanwhile, will put $10 million to $25 million into the startups that are selected for LaunchLabs, as well as others in New York City, according to Alexandria CEO Joel Marcus. (Alexandria has already announced plans for LaunchLabs outposts in Maryland and North Carolina over the past year.)
“The most palpable source of momentum across New York City’s life science cluster is from new entities spinning out of the city’s leading academic medical institutions,” said Jenna Foger, senior principal of science and technology of Alexandria, in a statement. “As the quality of science and entrepreneurship is reaching new heights, it is our collective responsibility to solve the funding bottleneck that local seed-stage companies currently face in order to catalyze innovation and strengthen this important segment of the New York City community.”
The seed fund will be backed by Alexandria’s venture arm, Alexandria Venture Investments, and other unspecified “strategic and financial life science investors.” Marcus says Alexandria is in the midst of raising the fund, and views $10 million as the minimum required to pull it off. The size of each investment in a startiup will vary, but will typically be between $50,000 to $1 million either via convertible note or equity funding. Tenants at LaunchLabs will have “priority access” to the seed fund, Marcus says, but the cash will be open “to the entire [New York City] community.”
Alexandria is currently taking applications from startups, and aims to open LaunchLabs in the summer of 2017 with a capacity of anywhere from 25 to 40 seed-stage companies depending on their size, Marcus says. Each will pay as little as $1,995 per month, according to the announcement, which will include a workstation and a bench in a shared suite. Options are varied: Tenants can rent a single desk or a private lab suite, depending on their needs.
LaunchLabs would diversify the Alexandria Center. The campus, which opened in 2010, currently houses some of the most ambitious biotech startups in New York, not to mention some outposts for pharma companies like Roche and Pfizer and more established biotechs like Cellectis (NASDAQ: CLLS) and Intra-Cellular Therapies (NASDAQ: ITI). Still, it’s been too expensive for many smaller biotech startups with modest financial backing.
LaunchLabs would seemingly open the Alexandria Center’s doors to more of those startups, and add to a growing number of biotech incubators around the city. Harlem Biopsace in West Harlem is meant for the one to two person startup, and SUNY Downstate Medical Center’s incubator and BioBAT in Brooklyn are more geared towards the larger entities that are further along. (Harlem Biospace charges about $995 a month for a workstation, while Eva Cramer, who runs SUNY Downstate Medical Center’s incubator, told Xconomy last year that her incubator charges about $40 per square foot per year.)
Still, many say these few incubators aren’t nearly enough for the city to achieve the change that it wants in life sciences. As New York City Economic Development Corp. president Maria Torres-Springer said at NewYorkBio’s annual gathering last month, there is no “silver bullet” for the real estate problem. It’ll take facilities across the city’s five boroughs to change the perception that biotechs can’t be built in New York City, and to close the wide gap between New York and other much more established biotech hubs like Boston and San Francisco.
It’s crucial for the city to put new real estate plans into action now given the recent influx of early-stage life science investors like Flagship Ventures, Arch Venture Partners, and Versant Ventures. Arch and Flagship back the NYCEDC’s $150 million life sciences fund, and Versant has set up an outpost in Chelsea to start biotechs. Those firms have added to the momentum in New York’s biotech scene, but it’s a fragile momentum, as outgoing Rockefeller University president Marc Tessier-Lavigne noted at the NewYorkBio meeting.
“It can’t be too difficult to overcome [the real estate] hurdle,” he said. “If it is, we’ll find that the people who’ve been drawn here to start things will pack up their bags and go back to places where it’s easier to do it.”
Presumably LaunchLabs will help. One of the big pluses for LaunchLabs is its location. The Alexandria Center is right next to NYU Langonne Medical Center and a few subway stops from some of the other research institutions on New York City’s East Side, like Rockefeller and Weill Cornell Medical College. Some of the recent startups to emerge from Rockefeller and Weill Cornell—like Lodo Therapeutics and Petra Pharma, both formed by Accelerator Corp.—are housed within Accelerator’s office in the Alexandria Center.
“Nothing like this exists in New York City,” Marcus says. “The platform is fully integrated and offers unparalleled opportunities for collaboration and growth in a prime location.”