Wet Lab Space, Entrepreneur Support Cement Chicago as Serious Biopharma Hotbed

As a leading biotech hub, the second city still ranks far below many other U.S. locations. That is starting to change, however, as new companies move into the heart of the BioMidwest region.

Although Chicago is the third largest city in the United States, when it comes to its position as a leading biotech hub, the second city ranks far below many other U.S. locations. That is starting to change, however, as new companies move into this heart of the BioMidwest region.

Chicago and its collar communities are home to a number of legacy companies, including AbbVie, Astellas, Abbott Biolabs, Horizon Therapeutics and Exicure.

Over the past several years, others have moved into the area, taking advantage of new wet lab spaces that have been or are being built, as well as lower-cost real estate options. John Conrad, president and chief executive officer of Illinois Biotechnology Innovation Organization (iBIO), told BioSpace the area is “seeing exponential growth” in new business and a 33% increase in the talent pool.

Wet Lab Space Expansion

Conrad pointed to multiple projects across the region that have expanded wet lab space over the past several years. These include the Fulton Labs and Portal Innovations facility which is designed to support startups. Fulton Labs is also the home of iBIO.

Other recent wet lab expansions across the area include the 125,000 square foot, five-story Lincoln Park building under development by Sterling Bay. The facility includes state-of-the-art wet lab space and other facilities to house life sciences companies. Before the announcement of the new facility dubbed The Labs, there had not been a new wet lab space built in the city since 2012.

“The buildout of the lab space is critical. We’ve added about 1 million square feet,” Conrad said, adding that lab space is “at a fraction of the cost of either coast.”

Earlier this year, real estate firm Mark Goodman & Associates closed on a 1.5-acre space in Chicago’s Fulton Market neighborhood that will become the site of a new 16-story life sciences facility. The 400 N. Elizabeth St. property is billed as the “first purpose-built lab and research and development building in Chicago designed to specifically accommodate the rapidly growing life sciences and biotechnology industry.”

Goodman told BioSpace the company is completing its marketing materials for prospective tenants. Once an anchor tenant is secured, he said construction will begin on the facility. Goodman speculated the anchor tenant will need to take up no less than 150,000 square feet before construction, which he noted is “a challenge in this market.” Still, he is hopeful such a tenant can quickly be found.

“I love this market. I want to see it succeed,” he said.

It is these new sites that are attracting the attention of companies from outside the region, Conrad said. He explained that businesses, particularly smaller companies located on the West and East coasts who are concerned about the rising costs of real estate, are looking to Illinois for potential relocation.

New Companies Move In

Conrad pointed to Xeris Biopharma, which moved to Chicago from Texas in 2020, and Talis Biomedical, which came to the city from California in 2021. Both companies moved into spaces at Trammell Crow Co.’s Fulton Labs development.

The Chicago community “shares the same vision and passion for the potential that life sciences, healthcare, technology and innovation can have on society at large,” Brian Coe, co-founder and former CEO of Talis, said in a statement last year. This allows the company to tap into the “vast talent pool that represents the city’s startup and innovation ecosystem,” he added.

Conrad agreed with Coe’s assessment.

“It’s really exciting for us. It shows proof right away that companies are looking at this space,” he said. Without disclosing much, Conrad noted that a large pharma company has been in conversation with iBIO about potential business development or partnerships within the region.

With its rich history, strong universities and multiple cultural attractions, Conrad said Chicago is a great location for companies to set up R&D facilities. He predicted companies will continue to recognize that and consider the region in their business plans.

In addition to the development of wet lab space by development companies, state government has also thrown its weight and financial resources behind this effort.

In 2021, Gov. JB Pritzker announced a $15.4 million investment in a wet lab capital program that supports the development of eight new spaces across the state. The investment will fund $90 million worth of wet lab expansions across Illinois, the governor’s office announced.

The 2021 financing built on $9 million pledged by the same office in 2020. The grants support the development of wet lab spaces, with projects at universities and in incubators. Rosalind Franklin University in North Chicago received $2 million to support a build-out of its Innovation and Research Park site. This site includes space for researchers working on projects funded by the NIH, as well as collaborations with industry partners.

Other Chicagoland recipients include Back of the Yards Algae Sciences (BYAS) in Chicago, the Illinois Institute of Technology, Northwestern University and NuMat Technologies in Skokie.

Internal Growth

Even as the additional wet lab space is drawing the eyes of business development officers outside Illinois, other efforts to support entrepreneurship are encouraging the launch of new companies from the area universities.

That’s a reversal of the situation just a few years ago when cutting-edge research from the universities was out-licensed by interests outside the state.

One such company is Vanqua Bio, which launched last year with $85 million in Series B financing. The startup is focused on developing next-generation medicines for neurodegenerative diseases, including Parkinson’s disease, Alzheimer’s and ALS. Vanqua’s technology platform is based on research conducted by Dimitri Krainc, chairman of the department of neurology at Northwestern University’s Feinberg School of Medicine and head of the Krainc Laboratory.

Conrad said the universities are investing in leadership and educating first-time entrepreneurs, which is boosting the startup landscape.

Other startups include Oxalo Therapeutics, which is developing a therapy to safely remove oxalate from the body and prevent recurrent kidney stones. Oxalo launched with assistance from an innovation fund at the University of Chicago.

The fund also supported the launch of Onchilles Pharma, a preclinical-stage oncology company. In addition to that fund, Chicago has also benefitted from the establishment of a fellows program by the Chicago Biomedical Consortium (CBC) that will support entrepreneurs.

Michelle Hoffmann, executive director of CBC, said at the time, “We believe that this will be able to grow and change the biotech ecosystem in Chicago.”