Mission Bay Hatches Biotechlets

An occasional series on Mission Bay

Across the street from dormant landfill and ratty fennel plants, in line sight of the bay, UC San Francisco’s new campus is growing. Nestled among the other sparkling and massive developments of Mission Bay, the California Institute for Quantitative Biosciences building — part of an initiative that also has sites on the UC Santa Cruz and UC Berkeley campuses — provides 96,000 square feet of research facilities to scientists.

It is within this space, in the smaller, windowless heart of Byers Hall, that the university-affiliated institute is nurturing six baby biotech companies.

“It’s way exceeded our expectations,” said Douglas Crawford, the institute’s associate executive director.

The “Incubator Network,” or “Garage,” was initially launched in 2005, when the building was completed and ready for tenants. Now, tiny companies can cut their teeth here, paying $5.50 per square foot to rent lab and office space from the California Institute for Quantitative Biosciences, commonly called QB3. The name “Garage” draws its inspiration from Silicon Valley lore, when entrepreneurs like David Packard and William Hewlett began their computer companies in the garage.

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In return for lab space, these biotech entrepreneurs can absorb all UC has to offer, like access to some of the world’s most elite biology research groups, 2,600 academic journals in the library, conferences, and let’s not forget, millions of dollars of really  nifty high-tech equipment like cutting-edge nuclear magnetic resonance facilities, cell culture, bioinformatics, atomic force microscopy and many others.

A hallway’s walk from the incubator takes Crawford to the adjoining Genentech Hall and then into “a roomful of toys,” he describes, pointing to microscopes and all shapes and sizes of instruments used by UC San Francisco’s researchers. For the incubator’s entrepreneurs, “every toy in here has an hourly price tag.” For example, using the standard fluorescence microscope costs them $55 per hour, a bargain when compared with the purchase price of a cool quarter million dollars, according to Crawford.

The Garage has hosted 12 companies so far. Four have moved on, and two failed. Six are still in the building. The program is full currently; Crawford turns away as many as four inquiries a week. As a result, neighboring biotech FibroGen has recently begun an affiliated incubator at its six-story building on Illinois Street, kitty-corner to UCSF.

The QB3 Garage’s first tenant, Fluxion, began by using Small Business Innovation Research funding. Eventually that lead to $6.8 million in venture capital, and Fluxion moved out to South San Francisco, expanded from three to 23 employees, and is shipping three products.

Another former tenant, True Material, began as a solitary employee using just 120 square feet of the Garage. Two years and eight more employees later, Affymetrix Inc. bought the company for $25 million.

At the QB3 incubator, scientists share pleasant — though windowless — bench space: long black counters beneath shelves packed with buffers, pipet tips, and a smattering of other supplies and chemicals.

One of these groups is Omniox Inc. The company has a whole host of advisers but its core is just four: a scientist, research associate, chief operating officer, and chief financial officer. Greg Kapp, the scientist, has been working in the lab since May. He was a postdoctoral researcher at UCSF before starting here and is happy to continue working in a place where he can soak up the academic benefits of UCSF.

If the company had been located in some other place, “it would be so … not boring, but isolating,” Kapp said. Instead, he can spend the morning in the lab and then step out into the Mission Bay campus and rub elbows with researchers working on any number of life science topics.

Omniox emerged from research completed at UC Berkeley on oxygen-delivery proteins. Kapp said the wider significance is most brain tumors are hypoxic, meaning they lack oxygen, and that the degree of this deficiency correlates with tumors’ resistance to radiation and chemotherapy. Kapp is studying protein stability and safety, precursors to further development of therapies and eventual trials in live subjects.

Incubators have been around for years. The State University of New York’s University of Buffalo has had a technology incubator since 1988, and they’re planning another one for their new cardiovascular hospital.

“Incubators really do work,” said Woody Maggard, University of Buffalo’s associate vice provost. He said the real efficacy of incubators lies in limiting the financial risk, and that across the incubator industry, 87 percent of businesses registered with the National Business Incubators Association are still operating, according to the association’s numbers.

That survival rate is far better than average. The U.S. Small Business Association estimates that of all small companies started in 2000 with fewer than 500 employees, roughly half failed within five years.

However, prestigious schools like MIT and Stanford have resisted including incubators in their research facilities. “The thought is, our guys don’t need it,” Crawford said, implying that top-ranked schools assume their intellectual capital will get into the market without extra help. U.S. News and World Report ranks UCSF in the top 10 schools for graduate-level biosciences, but the school still decided it was a good idea, and included it in their plan with QB3.

The project is a little piece of a much larger plan begun in Mayor Willie Brown’s time when Mission Bay was just an empty railroad yard, or 300 acres of undeveloped bayside property. “The city offered us 43 acres,” Douglas Crawford said, and UC San Francisco began its Mission Bay campus, planned to be a three-sided approach to bringing more life science research to fruition by placing research, biotech companies and a hospital all within a stone’s throw of one another.

“We don’t see any loss of scholarship or scholarly attainment by being involved in a business,” Maggard said when asked about fostering a relationship between profit and academia. Instead he said the bigger pitfall is in the financial models of baby bio companies, which require a long time to start up and careful mentorship. Failure is likely if entrepreneurs have “unrealistic expectations” of financial returns, he said.

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