Pharma Company Atreca Terminates 100K SF Lease At Alexandria-Owned San Carlos Property
Cancer drug company Atreca terminated a nearly 100K SF lease in a San Carlos, California, property owned by Alexandria Real Estate, according to a press release and a filing with the Securities and Exchange Commission this week.
Atreca signed a lease for the space at 835 Industrial Road in San Carlos in 2019 and moved into its headquarters in 2020, SEC filings state. But the company will end its lease 10 years earlier than the previously stated lease term, which was to run through 2033.
“The agreement to terminate our lease agreement dramatically reduces our ongoing operating expenses and helps to extend our cash runway through the first quarter of 2024,” Atreca CEO John Orwin said in the release. “Alexandria Real Estate Equities has been an excellent real estate partner for Atreca and we are extremely grateful for their willingness to help us to address this significant obligation, which will facilitate the Company’s evaluation of strategic transactions.”
The early termination of the lease will cost Atreca $5M, but save the company roughly $13M per year in rent expenses, per the release. Atreca will vacate the property by Nov. 30.
The building at 835 Industrial Road spans six stories and 278K SF, according to a CompStak listing. Life sciences real estate in the Bay Area, and in many cities across the country, was on a hot streak until earlier this year when it began cooling slightly due to a decline in venture capital spending and a spike in new product delivery.
Still, the Bay Area life sciences market is popular and relatively stable, with rents dipping slightly on a quarterly basis to $6.66 per SF in Q2, though still roughly $1 per SF higher than a year earlier, according to a Newmark report.
Alexandria has already gained traction in its leasing efforts.
“We are in negotiations to re-lease the entire space,” Alexandria Executive Chairman and founder Joel Marcus told Bisnow in an email Thursday.
Atreca, meanwhile, is in the middle of a broader cost-cutting effort that saw it lay off 40% of its staff last month. The company also stopped work on its most promising drug in a massive pivot, Fierce Biotech reported. Once a favorite partner of Big Pharma giants like Johnson & Johnson, Novartis and Pfizer, Atreca has been troubled financially for a couple of years, according to Fierce Biotech.
The company's release also announced the departure of Atreca Chief Financial Officer Herb Cross.
Pharma in general is slowing from its pandemic-era blitz. Even companies like Moderna and AstraZeneca are reporting falling revenues, although some of that can be attributed to a reduction in Covid-19 vaccine demand.