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Posted Aug 8, 2008, 11:20 PM
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Join Date: Jun 2006
Location: San Francisco & Tucson
Posts: 24,088
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Friday, August 8, 2008
How San Francisco caught Pfizer
City, UCSF, old relationships drew drug giant to Mission Bay
San Francisco Business Times - by Ron Leuty
Over a restaurant table at Farallon last fall, Corey Goodman gave his new boss, the CEO of the world's largest drugmaker, his vision of Big Pharma's future.
It was the start of a 10-month journey, one that would lead from the upscale San Francisco financial district restaurant through San Francisco City Hall, UCSF's latest campus and, ultimately, to a dusty patch in Mission Bay -- across from the University of California, San Francisco -- with pilings sticking out of the dirt.
That is where Goodman, Mayor Gavin Newsom and Alexandria Real Estate Equities Inc. CEO Joel Marcus formally announced Aug. 5 that Pfizer Inc.'s Biotherapeutics and Bioinnovation Center, or BBC, will call Mission Bay home. The center is expected to spearhead the giant pharmaceutical firm's efforts to reinvigorate its drug pipeline through closer collaboration with biotech scientists and startups.
Pfizer will take 100,000 square feet at the corner of Third Street and Mission Bay Blvd. South -- nearly the entire west wing of the five-story complex -- with an option for 50,000 square feet of the east wing. With a 15-year lease, it will start moving 100 employees there in early 2010.
The deal underscores Pfizer's belief in the BBC and Goodman's vision of marrying academia and biotech under the traditionally chemistry-focused canopy of Big Pharma. Goodman is looking at stem cells, peptides, proteins and emerging technologies like RNA interference and new ways of delivering vaccines.
But Pfizer's success with the BBC, like the deal that brought the unit and Pfizer's Rinat Neuroscience from South San Francisco to Mission Bay, may depend as much on longstanding relationships as it does location.
'Hub of action'
Seated at Farallon with Goodman, Pfizer CEO Jeff Kindler and other Pfizer officials was Reg Kelly, director of QB3, the University of California's three-campus plan to drive biomedical research off academia's shelves into industry and the bodies of patients.
Goodman and Kelly had been colleagues in and out of the UC system for years. Now -- a mere four days after becoming head of Pfizer's new effort to transform its moribund drug-development process -- Goodman wanted Kindler to listen to Kelly and see how they could forge a brave new drug-development world.
Pharmaceutical companies, Goodman said, must be near academic centers -- physically as well as philosophically. Instead, traditionally, they have sequestered themselves from new ideas while building multibillion-dollar blockbuster drugs.
Academic-industry collaborations typically take nine months just to bring lawyers together, Goodman said. By that time, researchers "don't remember what the heck experiments they wanted to do in the first place."
But at UCSF, Chancellor Michael Bishop and the School of Medicine's executive vice dean, Keith Yamamoto, have promoted new approaches to collaboration. Kelly's Mission Bay-based QB3, the California Institute for Quantitative Bioscience, is evidence of that.
QB3 had already helped UCSF land a master agreement with the granddaddy of biotech, Genentech Inc., and its Garage incubator was helping academic scientists and researchers craft their innovations into businesses. In June, Pfizer and QB3 would finalize a $9.5 million, three-year collaboration deal.
So when it came to finding a permanent home for the BBC, Goodman knew he wanted to be near UCSF.
"We did look around and realized it wasn't about price. The issue is about culture," said Goodman, who is an adjunct faculty member at UCSF and founded Exelixis Inc. and Renovis Inc. in South San Francisco. "We want to be in the hub of action."
City connection
San Francisco city officials were already familiar with Goodman. When Renovis' main stroke drug had a successful Phase III trial, Goodman started scouting locations for what he anticipated would be a much larger company.
Mayor Newsom had already focused economic development policy on biotech and Mission Bay. The 303-acre former landfill, Southern Pacific rail yard and warehouse wasteland started its transformation to a biotech hub under Mayor Willie Brown, but Newsom's team zeroed in on baseline issues like parking and a biotech payroll tax exemption.
Newsom and other city officials met with Goodman in February 2006, but after the failure of Renovis' stroke drug in a late-stage trial by partner AstraZeneca at the end of 2006, the company laid off 40 of its 100 employees.
Goodman worked out a deal, finalized last September, to sell the company to German biotech firm Evotec AG for $152 million. And Goodman, who knew Pfizer leaders as a result of a Renovis research deal, started Oct. 4 at Pfizer.
Jesse Blout, who at the time headed the city's economic development efforts, sent a congratulatory email in November. By March, Pfizer and city officials like Todd Rufo sat down for their first meeting.
"We thought there was a significant possibility that they could stay (in South San Francisco)," said Jennifer Matz of San Francisco's Office of Workforce and Economic Development.
The city outlined the payroll tax exemption Pfizer could use for its 100 employees in Mission Bay as well as state enterprise zone benefits, which could cut the company's state tax on equipment and could give it a sales tax credit of up to $2 million.
City officials said no special incentive deals were pitched to net Pfizer.
Goodman had based the BBC, at least in the short term, at Rinat Neuroscience, the South San Francisco company that Pfizer bought in 2006. He brought in Skip Whitney and James Bennett from GVA Kidder Mathews and Randy Scott from Cornish & Carey Commercial in December, and they began scouting for a permanent home in South San Francisco or Mission Bay.
Among the buildings explored was China Basin Landing, where McCarthy Cook & Co. and RREEF were in the final stages of a unique 175,000-square-foot expansion atop 185 Berry St.
UCSF's epidemiology and biostatistics department and its imaging center are at China Basin Landing, and the space was only a couple months away from move-in condition. Plus, it is a 15-minute walk -- or five-minute shuttle bus or Muni rail trip -- to the Mission Bay campus.
But, Goodman said, he wanted to be even closer to UCSF. "For collaboration, there is no better place to do it," he said.
Steps away
Goodman leaned toward Alexandria, which had built 1700 Owens St. and leased space there to tenants like Merck & Co., biotech pioneer Bill Rutter, a handful of small biotechs and a cadre of biotech-related venture capital firms.
That building is on the other side of UCSF's Mission Bay campus.
There too a longtime relationship came into play: Alexandria handled Pfizer's first research space lease in Cambridge, Mass., 10 years ago, Alexandria's Marcus said.
"Real estate is real estate," Marcus said. "Location is critical, but it's the ability to put the pieces together that makes a difference."
By early May, Pfizer had signed a letter of intent with Alexandria.
That same month, Pfizer inked a research and equity deal with Five Prime Therapeutics Inc., located next door to 1700 Owens in the J. David Gladstone Institutes building. What's more, Five Prime President and CEO Gail Maderis is a friend of Goodman and is on Mayor Newsom's biotech task force.
City officials were in full lobbying mode. Newsom and Goodman, who had met almost 1½ years before to talk about Renovis moving to the city, had another meeting in April. The mayor called Goodman at least two times in May.
"The city was responsive, cordial and available," said Bennett of GVA Kidder Mathews.
In the end, Goodman said, he chose the Alexandria site for what it could mean long term for academic-industry relationships. Those few steps between UCSF, QB3 and Pfizer's BBC could go a long way toward breaking down traditional barriers, he said, and the location also could allow the BBC to forge new, creative arrangements with venture capitalists.
"We can collaborate," Goodman said. "We can make it where it's only a few steps away."
rleuty@bizjournals.com / (415) 288-4939
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Source: http://www.bizjournals.com/sanfranci...ml?t=printable
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