2.4 MSF of dormant industrial space undergoing adaptive reuse development as a biomanufacturing center in the heart of Philadelphia. Do we have your attention? Cell and gene therapy companies, CDMOs, Big Pharma: All are welcome to the renaissance
Louis Garguilo, Chief Editor - Outsourced Pharma, 10/22/2021
Perhaps 2.4 million square feet of idle industrial space undergoing adaptive reuse development in any major U.S. city will grab your attention - no matter the industry involved.
That it's all aimed at biomanufacturing - cell and gene therapy (CGT) companies, and CDMOs - certainly expands our allurement.
Add a bit of narrative: A powerhouse plant, once turning tons of steel into auto bodies and rail cars, sitting eerily dormant for decades, suddenly transforms into expansive advanced manufacturing space.
The city is Philadelphia, the former business was the Budd Company, the transformation is called Budd Campus, and the "sudden" is no exaggeration.
Announced in July, phase one of this massive undertaking - deemed Budd Bioworks - could be ready for tenant buildouts as soon as the end of this year.
It’s this speed as well as the scale that Joseph Fetterman, Executive Vice President, Colliers Life Sciences, wants to talk about. (Colliers is responsible for bringing in tenants and the leasing aspect of the endeavor.)
“What excites me the most is we have 150,000 square feet of a heavy-duty manufacturing facility – slab on grade – ready to go,” he says in a measured cadence that can’t belie raw enthusiasm. “We can accommodate virtually anything in terms of what a biopharma customer needs to put in place.”
Fetterman projects build-out for initial tenants could begin end of fourth quarter, or early first quarter 2022.
Let’s start by looking at that biomanufacturing demand, current capacity supply, and what a major campus like this might do for our CGT industry – in Philadelphia and elsewhere.
Swallow Up Philadelphia
Some numbers: total of 2.4 million square feet for the entire complex, 450,000 square feet for Budd Bioworks, phase one of the project, and 150,000 square feet as the initial segment of phase one.
The entire adaptive reuse plan includes 6 existing buildings on 25 acres. And again, located in a major metropolitan area.
Despite these expansive figures, Fetterman iterates the project is meant to serve Philadelphia predominately. The city has seen enormous growth in the CGT industry, and the greater Philadelphia area has been dubbed “Cellicon Valley.”
Nonetheless, I raise a mild editorial skepticism with Fetterman:
You could swallow up every CGT company existing and many to come in Philadelphia, and still have space.
“Well, I’ll start by speaking directly to demand in the Philadelphia market,” he replies.
“We're already seeing in the vicinity of a million and a half square feet of demand combined for lab and manufacturing space. I would say some 35% of that is pure biomanufacturing.
“And as you look at the trajectory of these companies, more and more are eyeing manufacturing earlier.”
He adds some key dynamics fueling the trend:
“The definition of IP has become increasingly blurred as you get into these more personalized, advanced therapeutics, such that the process is every bit as important as the initial discovery, or the individual molecule a scientist is working with. Companies are much more concerned about keeping the entire process under their control.
“Then we're also seeing more companies confident enough of their early results that they are willing to set up for manufacturing earlier.”
The problem, he points out, is today the amount of time it takes to actually build out and gain FDA validation can easily reach 36 months.
Another editorial interjection at this point: Despite this new IP outlook and early confidence, this is exactly where the CDMOs come into play. Fetterman isn’t as sure of that as he once was.
“So a third factor I'm watching with great interest,” he says leaning closer to the monitor, “we’re seeing the valuation of companies has increased to the extent that they are vertically integrating their manufacturing.”
“We're starting to see VC, private equity, and those doing IPOs, are assigning greater value to CGT companies that have manufacturing as part of their ecosystem.
“Somewhere between anecdotal and a trend, companies today are becoming very deliberate about controlling the manufacturing, and not relying so much on outsourcing."
But CDMOs Welcome
But let’s not get too carried away here.
“We're talking to every CDMO and every CRO that could have facility requirements,” Fetterman says, shifting gears.
“Their space is constrained. Whenever I’m in a discussion, I hear biopharma companies are being turned away by CDMOs because of their own capacity challenges.”
This despite CDMOs continuing to get bigger via M&A and service add-ons to keep up with demand. Unfortunately, at the same time, customers – like CGT companies – get smaller, resulting in a market mismatch.
“Agreed,” says Fetterman, “and so some of those CDMOs could either create a targeted division or spin out a new entity that addresses the disconnect – we have the space for them.”
So Fetterman could run the gamut of biomanufacturing entities.
Since “Big Pharma” is now also “Big Biopharma” and doing more CGT, they’d be a customer to potentially come in and take a large chunk of space for lease, in order to serve their own targeted development/biomanufacturing needs.
Fetterman also believes organizations looking to expand their incubator accelerators could take sizeable footprints to add more companies to their portfolios, and as importantly, add biomanufacturing capabilities to their offerings.
And we’ve saved the most specific target market for last: CGT companies themselves. They are wrangling with how to get processes in shape, manufacturing started quickly, and IP protected – and often have raised more money than their predecessors could ever have dreamed.
Perhaps some Outsourced Pharma readers find this most intriguing. Or who knows? Perhaps some of you will be working with a CDMO at Budd Bioworks in the not-too-distant future.