Silicon Valley / San Jose Business Journal -- Life science leaders and city officials want to bring a contract manufacturing organization to San Jose to help solidify the biotechnology cluster in Edenvale Technology Park.But key questions need to be resolved first about who would be interested in running it, where to put it and how it would be financed.
The facility would target producing drugs for pre-clinical testing as well as early-stage clinical and clinical trials required by the U.S. Food and Drug Administration as part of its approval process.
However, Richard Keit, the San Jose Redevelopment Agency’s director of neighborhood and business development, said, “We’re not sure at this point it’s a go. It’s a very important component for the bio cluster, but it’s also a very expensive project.”
The need for such a facility came out of conversations between Mayor Chuck Reed and executives at the San Jose BioCenter incubator, located on Optical Court in Edenvale Technology Park.
The center’s executive director, Melinda Richter, said BioCenter companies say they would benefit from a local contract manufacturer, as opposed to going outside the area or overseas, which can add time and expense to product development.
In January 2008, the redevelopment agency hired a consultant to assess the market for such a facility and recommend the scope and budget for the project, Keit said. The consultant’s study, released in July, indicates the facility would need to be about 25,000 square feet and could cost as much as $23 million.
The study included interviews with 25 life sciences companies, including 10 at the BioCenter such as Aridis Pharmaceuticals LLC and Tacere Therapeutics Inc. The results indicated a strong demand for a contract manufacturer. Redevelopment agency staff also received positive responses and requests for more information from six undisclosed contract manufacturers at the Biotechnology Industry Organization conference in June.
However, a number of companies and biological contract manufacturing services exist in the Bay Area, said Julie Amato, the agency’s senior development officer. They include SRI International in Menlo Park, List Biological Laboratories Inc. in Campbell, Baxter Healthcare Corp. in Hayward and Xoma Ltd. in Berkeley, each offering varying types of services and business models.
SRI spokeswoman Ellie Javadi said the independent, nonprofit contract research company, which operates on 65 acres given to it by Stanford University, would be a perfect fit for the project. SRI already partners with companies such as Xoma in contract manufacturing.
“We’d love to learn more about the opportunity in San Jose,” she said. “It’s in our backyard, and we’d be happy to discuss being a partner in that facility.”
SRI is also familiar with expanding its operations in other U.S. locations to include contract manufacturing, and with the process of working with government entities, she said.
Tacere Chairman Mike Catelani said his company has some materials made in Philadelphia because of the expertise of a facility there. Tacere develops therapeutics for the treatment of hepatitis C, he said, and having a contract manufacturer nearby could be beneficial.
“Things always get done better face to face,” he said.
While Catelani said he likes the idea of a local manufacturer, he also questioned whether it would be cost-effective to have one in San Jose and whether it could meet the demands of local biotech companies. Bringing in a contract manufacturing organization with the intent to attract more biotechnology companies might not be the way to go.
“If you want to attract biotech, attract biotech,” he said. “Build another BioCenter if you want to attract biotech.”
Aridis President Dr. Eric Patzer said he has received quotes from $1 million to $3 million in his search for contract manufacturing services. Patzer said Aridis, which is developing technology that targets infectious diseases in children as well as cystic fibrosis in adults and children, needs to keep such costs under $1 million. He suggested supplementing the process with his own laboratory staff to reduce costs, but that makes Aridis less attractive to the manufacturer compared with big companies that can pay more.
“It’s hard to get their attention if you’re a small company,” Patzer said.
Keit said space for the contract manufacturer has not been proposed, but space is available throughout the city and especially in Edenvale.
“We do have 25,000-square-foot spaces available on Optical Court, east of the freeway,” Keit said. “There’s a good amount of availability and vacant land. They may want to build their own facility.”
Given the $23 million price tag, Keit said the agency would need federal and state funding. The agency would also contribute to construction and equipment costs, and the contract manufacturer would, too.
