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CRISPR Drug Highlights Fluid Connection Between Drug Approvals And Real Estate

For the biotech industry, 2023 ended with an exceptionally bright spot amid a difficult year. A CRISPR treatment for sickle cell anemia by Vertex, the first example of this technology getting Food and Drug Administration approval, showcased the potential for new technologies to bolster the industry. 

The Dec. 8 approval garnered headlines and excitement over the future of a new technology. What it didn’t immediately lead to was a vast expansion of Vertex’s real estate footprint or plans for new leases.

The established firm had already embarked on a significant expansion last year, with plans to open a 344K SF research and manufacturing facility in Boston’s Seaport, near its existing lab and research space, by 2025. When the door opens to the new facility, a $400M project with Related Beal, Vertex will take up 1.9M SF across five Boston sites.

“These buildings represent a further significant investment in our unique R&D strategy, to transform the lives of people with serious diseases, like sickle cell disease and Type 1 diabetes, using cutting-edge genetic and cell-based therapies,” CEO Jeffrey Leiden said in a statement last year.

Vaccine-maker Moderna inked a deal for a new Kendall Square HQ in 2021 after seeing its mRNA vaccine take off.

The case of Vertex presents one of the most recent and high-profile examples of the often challenging-to-predict connection between milestones and approvals and lab real estate. The first clearly leads to the second, but companies and startups tend to differ around when they make these kinds of decisions.

Often, biotech firms will have a successful funding round, and then anywhere from 12 to 18 months later, they will need more real estate, Newmark Director of Life Sciences Research Liz Berthelette said.

But there isn't necessarily a fixed schedule or easy generalizations, she added, as the time of real estate deals varies depending on the company and its growth stage. Sometimes, firms have positive clinical data before approvals, and the board may sense it is advantageous to make a move before the formal approval. 

The big decisions around growth and expansion tend to happen when a drug hits Phase 2 trials and there is more evidence to help plan for eventual success, said Matt Gardner, leader of CBRE's advisory life sciences practice. He called this the build, buy or partner phase: Startups need to determine if they are going to manufacture the drug themselves, hire a contract manufacturer or partner with another company.

Each potential path means different types of real estate moves and investments. Firms may decide to become fully integrated biopharmaceutical companies and control everything from biomanufacturing to marketing and sales, or they may find it makes more sense to partner with other firms for various stages of the production and distribution process. 

Vertex may have had a sense, based on clinical results, that it had promising cures in place, a catalyst for last year’s expansion.

The forthcoming cell and gene therapies research and manufacturing facility, named Leiden II after the firm’s CEO, will house 500 employees. A similar strategy was behind a biomanufacturing play by Vertex. Based on promising prospects for its experimental cell therapy for Type 1 diabetes, it partnered with Lonza to build out a 130K SF biomanufacturing plant in Portsmouth, New Hampshire, to help scale production.  

Other firms, like Moderna, saw their footprints expand dramatically post-approval. The coronavirus vaccine was a unique case, with plenty of federal funding tied to proving the efficacy of the immunization. But once FDA approval underscored the potential of mRNA technology, Moderna spent big on new research facilities. They include a flagship building in Boston and increased manufacturing capacity, which has since been dialed back as booster demand has waned

With expectations for an increased number of FDA approvals in 2024, especially early in the year, there will be many firms facing similar decisions. Berthelette said that firms making expansion plans will take a more conservative approach in the next 12 to 18 months in reaction to market uncertainty. 

“I think a lot of life science companies will be a lot more cautious,” she said. “Real estate decisions will probably still take some time due to the nature of the current market.”