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Lack of Lab Space

T he growing number of emerging biotech companies in the Conejo Valley has created the need for wet laboratory space in the local real estate market. In response specialized developers – who understand the technical and business needs of biotech startups – have moved into the region, as well as life science tenants with a do-it-yourself approach. Hatchspaces LLC, a Los Angeles company that curates “creative spaces for emerging life science companies,” has started work on a wet lab complex at 1525 and 1535 Rancho Conejo Blvd. in the Conejo Spectrum development. The real estate startup created a joint venture with Singerman Real Estate in Chicago for the project, although financial terms of the agreement were not disclosed. Together, the two buildings total 160,000 square feet and are currently 70 percent occupied by Amgen Inc. and other companies. The Hatch team is marketing the remaining 30 percent to biotech tenants. It’s roughly 45,000 square feet broken up between 18,000 square feet of office and 25,000 square feet for research and development. Allan Glass, chief executive of ASG Real Estate in Los Angeles and co-founder of Hatchspaces along with Agoura Partners’ Howard Kozloff, said the office space is ready to go, and lab space is expected to be move-in ready by the end of the first quarter. “Hatch is intended for the science startup community that has either, from a scientific perspective or financial perspective, outgrown the incubator model, meaning the ‘rent by the bench’ model,” said Glass. “We’re not trying to focus on a particular area of the sciences. We feel like the industry will develop itself around the talent and that will direct the specialty areas that will end up becoming tenants in our buildings.” The term “wet lab” means there are sewer lines and access to water in the space, along with varying types of filtered water, Glass said. Dry lab space is more commonly seen with companies developing medical devices or computational models for medicine. In addition to water, biological R&D space may require its own air circulation system and enhanced security for each lab space, as each has its own intellectual property to protect, along with hazardous materials. Some biotech startups have needs that are more chemistry driven, while others work in cell therapy labs requiring full gowning and a clean environment. Others may even need green houses for agriculture-based research. Glass believes the Conejo Valley’s deep pool of talent and its anchor company, Amgen, will attract a fair amount of drug discovery and pharmaceutical startups, but for the space, the team doesn’t want to limit itself to just one type of lab for a specific purpose. Instead, a ‘one-size fits all’ mentality was adopted for the R&D space. Company size was taken into account too, with the HatchCampus able to accommodate biotech companies fresh out of seed round funding to those that have garnered the attention of local venture capital firms like Westlake Village BioPartners and are ready to grow their team. “You can build in a specific amount of infrastructure that is going to be universal across lab space and then you can choose to bring in the capacity of, say, wet lab space versus just dry labs,” explained Glass. “There are going to be different ways that the flow of work happens within a fixed workspace.” DIY demand For A2 Biotherapeutics, an Agoura Hills company currently developing oncology drugs, the clock was ticking to find adequate wet lab space last year. While searching for its first brick-and-mortar location, the company’s research to treat solid tumors was fast approaching the clinical trials stage. A2 has secured $57 million in Series A funding, and management wanted to use a portion of that capital to build a manufacturing facility. With spaces like HatchCampus still under construction, the team decided to build what they needed themselves, converting office space into an office-lab hybrid at 30301 Agoura Road and purchasing the building next door for manufacturing. “We wanted to have control of the space, in the best and most efficient way that works for the type of science that we’re doing,” said David Lucas, vice president of operations at A2. “We wanted to be able to manage the cost of doing such a build and we wanted to have control on the speed of when we could get it done.” Lucas and the rest of the team at A2 worked closely with the landlord, and with the city to ensure they had the right permits and made authorities aware of specialized vendors that would be dropping off biologic material for research. The conversion from office to office and lab space took 12 weeks, added Lucas. “Other tenants may get paper and soft drinks and a photocopier, but we have liquid nitrogen,” Lucas explained. “It’s important to work with your landlord to establish a good process for large scientific deliveries that isn’t going to block off their entire parking structure but also works for when these types of materials can be delivered.” When it came to the HVAC system, A2 hired an architect and engineer before having a long discussion with the landlord. “We cut some really big holes in the roof, I mean really, really big. You have to have landlords that are comfortable with you doing something different,” said Lucas. “The engineer in particular is going to need to understand how the air handling should be done. You want to have a certain amount of air flowing through the lab, and you don’t want to be having other tenants sharing your air. You make sure you’ve got specific air for the laboratory.” Growing in place Prior to its Agoura Hills office, A2 had a preliminary space they subleased, a luxury the company noted helped them get off the ground quickly. The ability to grow from a smaller company getting its seed round funding to a more mature company with VC backing, and not having to move during the process, helps the biotech startup focus more on the science than the logistics. “It’s difficult to take these science experiments and live cultures you’re working on and move them across the hall from one lab of a particular size to another lab twice that size, let alone pick up all that information and work and move it out of one facility and into another,” said Glass, the agent at HatchCampus. “The ability to anticipate growth patterns and allow these companies to grow in place or as close to in place as possible is very important.” HatchCampus’ space features two models: HatchX and HatchLabs. The “X” is for acceleration, Glass said, to accommodate companies as they build their workforce and grow out their science platform. These companies are usually expected to grow exponentially over the course of three to five years. HatchLabs are more for the early companies with a couple scientists that need a place to work for a one- or two-year period. Lab security Overall, life science real estate developers want their tenants to mix and foster new ideas. Spinoff companies in the Valley region spawning from collaborations with former Amgen, Atara and other biopharmaceutical companies are at the same time stimulating and fiercely competitive. Given the race to bring drugs to market, an open, inviting campus can sometimes clash with a company’s need to keep its intellectual property private. Hatch aims to strike a balance by building “collaboration zones,” areas that are meant to foster interaction between companies like a shared kitchen or conference room, something the team has already done at a development in East Los Angeles. “You get to a position, strategically or within your business, where you really have to start getting concerned about who has access to your intellectual property,” explained Glass. “You don’t walk into an open bench among other scientists. You walk into a controlled space that is your own, behind a card reader, that your company controls access to.” Safety for scientists is another consideration when biotech companies decide where they will settle, Lucas added. Scientists work long, late hours, and the safety of a place such as Agoura Hills is reassuring to workers. Also, the labs contain equipment and research results potentially worth millions of dollars, again putting a priority on security. Looking ahead Glass expects the life science and biotech market in Southern California to grow, with the caveat that some clusters will mature faster than others. One region with potential to grow at a rapid rate is Conejo, Glass added, citing an interest from venture capitalists and the fact that Amgen executives and experienced scientists already live in the area. Glass hopes the biotech industry will come to see Los Angeles as one cohesive cluster, rather than separate hives of scientific research. He isn’t concerned about a potential disruption in growth from a recession or overbuilding. “There aren’t a lot of developers that are rushing to be in this area,” he noted. “It’s very specialized and takes a very specialized skillset.” Moreover, he thinks biotech funding will continue regardless of macro-economic trends. “This is the industry that feeds, fuels and heals us. Regardless of the economic condition, we still have a need for that,” Glass explained. “What the industry has shown in past recessions is that like other industries, it suffers a bit, but it suffers less than most other industries, and continues to grow during a recession.”

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