City’s strategy fueling biotech boom

Companies that reinvent and retool the building blocks of life — including proteins, DNA and human tissue — are driving a bricks-and-mortar construction boom in Mission Bay.

“When we started four years ago, we had one biotech company,” Mayor Gavin Newsom proudly announced at a press conference earlier this month about The City’s fiscalsituation. “Now there are 44.”

The convergence of 12 venture capitalists in San Francisco with biotech portfolios, including five in Mission Bay, has helped the sector grow, according to Jennifer Matz, deputy director in the Mayor’s Office of Economic and Workforce Development.

The industry’s growth, however, has been driven largely by UC San Francixco’s biomedical research facility in Mission Bay and the more than 300 acres of surrounding land that was specially zoned to cater to the needs of life-sciences companies, according to Matz.

“Mission Bay is developing out as the hub of the life-sciences community in San Francisco,” Matz said. “It’s drawing talent and researchers and dollars from the surrounding Bay Area.”

More than 630,000 square feet of private office and research space has been built for biotech companies in Mission Bay since the redevelopment began in 2000, according to San Francisco Redevelopment Agency project manager Kelley Kahn. Another 1 million square feet is under construction and an extra 1.6 million square feet is in the pipeline, Kahn said.

In 2005, The City began offering certain biotech companies an exemption from its 1.5 percent payroll tax. Seven companies employing 215 people applied for the exemption last year — up from six companies and 162 employees the year before, according to data from the San Francisco Office of the Treasurer and Tax Collector. They earned average salaries of $99,000.

Global trends in the industry have led to the outsourcing of specialized functions such as research and sales, said Matt Gardner, president of Bay Bio, a Northern California industry group.

“A company with a research headquarters can be a white-collar operation, and that’s opened up lots of opportunities for San Francisco to expand its biotech base rapidly,” he said.

Protein- and antibody-research company FivePrime moved from South San Francisco to Mission Bay in 2005, according to its CEO, Gail Maderis. The company aims to start testing its products on patients later this year, she said.

Maderis said the company employs about 90 people from around the Bay Area, and that The City’s decision to waive the payroll tax for certain biotech companies helps it compete with surrounding counties, which don’t charge such a tax.

jupton@sfexaminer.com

By the numbers

How the biotechnology industry is building a home in San Francisco:

3: Biotech companies in The City in 2004

44: Biotech companies in The City today

3: Private biotech buildings opened in Mission Bay, 2005-08

4: Private biotech buildings planned to open in Mission Bay, 2008-09

6: Private biotech buildings planned to open in Mission Bay after 2009

7: Biotech companies receiving payroll tax exemptions in 2007

$319,123: Payroll tax waived for biotech companies in 2007

Sources: Mayor’s Office of Economic and Workforce Development; S.F. Redevelopment Agency; S.F. Office of the Treasurer and Tax Collector

Major players

Some of the biotech businesses headquartered in San Francisco:

Established in The City

» The Gel Company

» Presidio Pharmaceuticals Inc.

» Prosetta Corp.

» Vaxart Inc.

» Wave 80 Biosciences Inc.

Moved to The City

» Celgene Corp.

» FibroGen Inc.

» FivePrime Therapeutics Inc.

» Osprey Pharmaceuticals USA

» Sirna Therapeutics Inc.

Source: Mayor’s Office of Economic and Workforce Development

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