South San Francisco claims to be the home of the largest biotech cluster in the world. Genentech, the biotech that helped launch the industry, began life in the area and today is joined by more than 200 other companies that occupy 11.5 million-square-feet of facility space.
Horizon is among the area’s latest residents. Recently, Horizon opened a 20,000-square-foot facility in the biotech hotspot that will feature space to perform formulation and process development for its manufacturing operation. Bioanalytical method development will also take place at the site.
The facility is covered by a lease that runs through to January 2030. Horizon has not said how much it is paying for the facility, but the nature of the South San Francisco property market means it is likely to have been able to find similar space in other cities for less money.
Cushman & Wakefield, which provides real estate services to biopharma, puts the average price of a square foot of lab space in San Francisco at around $60. The figure has increased almost 68% over the past decade.
To put the figure in context, lab space in Seattle, a two-hour flight north of San Francisco, is around $26. At a little over $18, New Jersey has the lowest per-foot rent of lab space of the cities tracked by Cushman & Wakefield.
Shao-Lee Lin, chief scientific officer at Horizon, explained why the company wants to be in South San Francisco on a recent conference call with investors to discuss the business’ third quarter results.
Lin said, “Given that South San Francisco is an R&D talent hub, our presence there will further enhance our ability to attract talent to support our expanding capability in pipeline.”
While Horizon will perform formulation and process development at the South San Francisco site, it will continue to outsource the task of manufacturing the materials themselves to other companies.
That approach has caused Horizon some difficulties in recent quarters. Specifically, a “technical issue” at BASF’s facility in Bishop, Texas, has disrupted the supply of the ibuprofen direct compression blend used in Horizon’s (ibuprofen and famotidine).
BASF told Horizon the issue would prevent it from renewing its supply agreement for 2019, forcing the company to rely on its existing inventory of Duexis to meet demand. There are now signs that the bottleneck is set to clear, with BASF providing Horizon with a limited amount of the ibuprofen blend and signalling its intent to return to full supply.