The pandemic led to an explosion of interest in biotech. While a cooling economy has slowed it slightly, the industry is still booming. Demand for lab space was at an all-time high in the Bay Area last year, and the industry is expected to increase its footprint locally by 30% this year.
Along Oyster Point Boulevard in South San Francisco, bulldozers clear industrial warehouses. Huge construction crews busily replace single-story factories with skyscrapers.
“As you can see, all the skin of the building is ripped down,” says Marc Pope, executive managing director for Cushman & Wakefield, a commercial real estate company. “You can see the steel going up.”
What was once a neighborhood of cream-colored single-story businesses is now a glistening alley of biotech companies. Pope points to the headquarters of AstraZeneca, Jlabs and 23andMe. Each building is decked out with concierge services, spas, day cares and fitness centers.
“All these amenities are recruiting tools,” says Pope. “There is so much competition to get the best of the best.”
The pandemic has been very good for business.
“It put the market on steroids,” says Pope. “Capital markets have been cooperative. [The] venture capital community has been very cooperative. COVID really put a spotlight on things.”
Last year investors spent nearly three times more than usual on the life sciences in California. South San Francisco City Manager Mike Futrell projects these companies will double their footprint from 12 million square feet to 25 million square feet within the next few years.
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“Diagnostics for a long time was [much less marketable to investors than] the biotech industry,” says Joe Panetta, president and CEO of Biocom in California, a trade association for the life sciences. “You couldn't raise money for a diagnostic to save your life, literally.”
But all those COVID rapid tests changed that. And companies want to get ahead of the next novel virus — so there’s a lot of venture capital focused on infectious diseases.
“Those new companies are not only growing themselves,” says Panetta. “But they're attractive to large multinational pharmaceutical and biotech and medical device companies, many of which are headquartered in California.”
And then there’s obviously the pandemic success of mRNA vaccines. Two of the COVID vaccines used mRNA — or genetic medicine — to trigger an immune response to combat the virus. Now companies like ReCode Therapeutics plan to use mRNA to treat other respiratory diseases. “What we're doing is building on all that great innovation from the vaccines to go beyond vaccines,” says Shehnaaz Suliman, company CEO.
The company just opened a lab in Menlo Park. Suliman points to a small handheld nebulizer that looks like a flying saucer releasing a fine mist.
“That allows the medication to be deposited in their airways and go directly into the cell types that we want to affect,” she says. A patient can inhale the medicine into the lungs where the mRNA will hopefully correct the genetic errors that cause ciliary dyskinesia or cystic fibrosis. Instead of shots, every few days patients can use the nebulizer to keep their disease in check.
Suliman says mRNA technology could eventually target numerous diseases that have stumped researchers for years. “Imagine the possibilities if you could undo a gene that was responsible for Alzheimer's,” she says. “Imagine the possibilities if you could get into a tumor cell because you were able to deliver a genetic medicine directly into the cell that was responsible for that cancer. This is the range of possibilities.” Her list goes on and on.
Even though daily headlines continue to warn Americans of a pending recession, ReCode has raised $200 million in venture capital funding. They have nearly doubled their staff since January.
“In our ecosystem, the entrepreneurs are salivating because this is a great time to be in biotech,” says Suliman. “And it's a great time to be accessing capital to develop great science.”
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