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HowtoChoosetheRightHeadquartersfor YourBiotechS tartup

BYM ARKZIPKIN 05/10/2021-6MINUTES

Choosingwheretoplantyourbiotechcompany'sr ootsisa fundamentalquestiondrivenb yaccesstocapital,talent,and infrastructure.Butthepandemicisacceleratingadecentralization movement,changingthewaycompaniesthinkaboutheadquarters.

RegionsliketheBayAreaandBostonintheUS,ortheUK'sg olden triangleremainhugedrawsforbiotechcompaniesbecausetheyhave self-containedecosystemswithalltheingredientsthatf oundersneedfor success.Hubslikethesehavealreadybuiltcriticalmass,spawninga virtuouscycle:thesemagnetcitiesdrawacademicfounderswithan entrepreneurialspirittolaunchtheircareersbecausetheyarep lacesthat drawotherentrepreneurialacademics.

"Peoplecometotheareabeforetheyhaveajob,"AdamSciambisaysof theBayArea.Sciambiisaco-founderofSouthSanFrancisco-based MissionBio,whichmarketssingle-cellanalysistechnology.

Oncethey'rein,it'shardtoconsiderleavingtheareains earchofabetter placetolaunchacompany.SciambicametotheBayA reaforhisPhD workatStanfordUniversity,thendidhispostdocinthelabofA damAbate atUniversityofC aliforniaSanFrancisco,whereMissionBiowasborn.

"Wewereworkingoffo flabmoneywitharesearchgrant,thenspunout intoanincubatorinSanFrancisco," Sciambitoldme.Likemanybiotech hubs,SanFrancisco'sspinoutsceneisbuttressedbyincubatorslikeMBC BioLabs,whereMissionBiostarteduntilitoutgrewthespace.

Havingthelocalresourcesandguidancetodevelopthecompanystepwise wasimpactful,butthereareothermeaningful--iflesstangible-- benefitsofb einginabiotechstartupecosystem." Grabbingcoffeewith someoneelsestartingacompanyisalsoveryvaluable."

Andalthoughthecompanyeventuallydrewonabroaderpoolofinvestors, Sciambisaystheinitiala ccesstoBayAreaVCswasimportantinMission Bio'searlydays.

Accesstoprivatecapitalalsopushedcancerimmunotherapycompany ImmuteptomovetoSydneyfromMelbourne,whereitsmanagement lived,saysCEOMarcVoigt."Wefeltitwouldsuitthecompanybetter, fromaninvestorpointofview.Sydneywastheplacetobeatthetime."

In2014,theAustralianparentcompanyacquiredtheoriginalImmutep, foundedbyFrenchacademicFr?d?ricTriebelandheadquarteredoutside Paris.Voigts aysthata sthecompanygrew,itwaseagertobeaglobal playerandwantedtoestablishEuropeanheadquarters.ButAustraliaoffers a43.5%refundableR&Dtaxincentive,andisaneasyc ountrytolaunch clinicaltrials.Ultimately,thecompanykeptitsheadquartersinAustralia, butitslargestofficeisnowinBerlin,whichofferslogisticaladvantagesin termsofaccesstomanufacturing,partnerships,publicfunding,andtalent.

Thequestionofwheretolaunchabiotechcompanymaystillloomlarge forfounders,buttheconceptischanging." Whatdoes`headquarters' mean?"a skedVoigt."IsitwheretheCEOsits,wherethecompanyis registered?Attheendoftheday,it'sjustanadministrativeact."

DespitetheimportanceoftheUSmarketandthedrawofhubslikeBoston andSanFrancisco,VoigttoldmeImmutephasnotconsideredrelocating there." SomeofthecostsinthemajorUShubsareprettyprohibitiveto findandrenttherightspace."Voigtdidn'truleoutbuildingaUSpresence inthefuture,butforthetimebeinghesaysthecompanyhashadno troublehiringqualifiedstaff--evenUScitizens--oraddressingtheUS market.

ForM issionBio,it'sclearthecostsarejustified,Sciambisays."It'sthe priceyoupaytobeinanareawherepeoplearedrawn.AndIwonderif thetalentwouldbeasgoodelsewhere."

Costsaren'ttheonlyintimidatingelementaboutheadquarteringinbig hubs:thesuccessofthebiotechindustryintheseregionsisacatch-22, saysHarpreetSingh,CEOofGermancelltherapycompanyImmatics. "BostonandtheBayAreaaregreatbiotechclustersbutextremely competitive.Accesstotalenthasbecomeincreasinglydifficult.F orcertain areaslikec ellularmanufacturing,thetalentpoolhasbeendiminishingon theWestandEastcoasts."

ImmaticsspunoutofUniversityofT?bingen,anditsh eadquartersand largestsiteremainnearby.Butthecompanyincorporatedinthe NetherlandsbeforelistingontheNasdaqin2020.Thecompanyhasa substantialpresenceinHoustonandMunich,withseniorandmid-level leadershipspreadoutatthesesitesaswellasinNewY ork.

Houstonisn'tthelargestbiotechecosystemintheUS,butSinghsaidit hadseveralsellingpoints,includingaccesstoGMPmanufacturing

facilitiesandexpertisefordevelopingthecompany'scelltherapies.Italso housesstrongacademicpartnersinMDAndersonCancerCenterand UniversityofTexasHealth.Additionally,thecompanyreceivedagrant fromthestateofTexas.

Evenbeforethepandemic,manybiotechcompaniesrecognizedthat top-downmodelsnolongerm adesense,whichhasgiventhemgreater latitudeindecisionsaroundlocatingheadquarters." Theactualmeaningo f `headquarters'intheoldsensenolongerappliesinamodernworld. Decision-makingisdoneatthesemanagementlevelsacrossallsites," says Singh.

Voigtagrees." Therelativeimportanceofcentralizedheadquarters,based onourexperience,hasb eengoingdown,relativetothetechnical capabilitiesandinfrastructure."

Post-pandemic,theoverallcalculusmaychangeevenmoreforsome companies,relegatingthenotionofheadquarterstomoreofapaperwork technicality.Whilebenchscientistsstillneedtospendtimeatthebench, that'snolongertrueforeverypositionatacompany.Sciambi,whois SeniorDirectorofTechnology&SystemsatMissionBio,saysh eworks fromhomethreedaysaweek,butstillseesvalueintheimpromptu conversationsandbrainstormingthatcomeseasierinthephysicaloffice.

Companiesfoundedduringthepandemicofferhintsofwhatthebiotech headquarterslandscapemaylooklikeevenonceit'ssafeforfull-time returnstooffices.Ane xampleisFlareTherapeutics,astartupbasedin Cambridge,US,thatw asfoundedin2020totargethard-to-hit transcriptionfactors.Theheadquartersdecisionwasdrivenlargelyby proximitytoBoston-basedThirdRockVentures,whichwasamajor investor,saysFlare'sChiefScientificOfficer,RobertSims.

Butthatwasn'ttheonlyfactor." There'salottolike,obviously.It'sthe world'sepicenterasitrelatestotalent,"Simstoldme.Theacademic ecosystem,ledbytop-flightinstitutionsliketheMassachusettsInstituteof Technology,theBroadInstitute,andHarvardUniversity,meansalevelof connectivitywithtopemergings cienceaswell,hesays.

Still,thepandemicchangedthelandscape,Simssays.Small,y oung companiesmaybeespeciallysuitedtoleverageexternalresourcesand accesstalentanywhere." Wehavefolksthatarevirtual,anddon'tlivein Massachusetts--someoneisinCanada.Youcantapintoworld-class expertisewithouthavingtobuildinternally."

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