A space where biotech can grow

Dr. Satya Reddy was working in the neonatal unit at Women & Infants Hospital and researching the role of vitamin D in soft bone disorders among children when he and friends from Brown University’s chemistry department decided to start a company.
Reddy and his team launched Epimer Inc. in 2003, aiming to develop safer drugs for cancer and other diseases using vitamin D as a base molecule. They set up shop in a small laboratory in the business incubator the Slater Technology Fund set up on the East Side four years ago.
“This is almost a divine intervention in my case,” Satya said. “This company would not have been possible for me without this facility being there.”
The 7,500-square-foot incubator in the Richmond Square complex provides space to new biomedical ventures coming out of research labs at Brown, Lifespan and other universities and health care institutions.
The incubator typically houses anywhere from three to eight startups, said Richard G. Horan, Slater’s managing director for life sciences and health care. It offers inexpensive lab space, as well as interaction with other scientists and entrepreneurs, services that complement its core focus, to grow the state’s information and life sciences sectors through its publicly financed investment fund.
Slater, which holds the master lease on the space, sub-leases to startups for about $25 per square foot – just enough to cover its own costs, Horan said.
The young companies would otherwise face the challenge of paying for an independent lab facility, which would cost at least hundreds of thousands of dollars and in many cases more than a million, he said.
At the same time, occupying space in the incubator makes the companies eligible to receive federal Small Business Innovation Research money – a critical funding source for biomedical startups that requires recipients to have an independent facility.
“As these companies spin out of the university setting, they need a place where they can set up and rent just what they need, on a lease that runs month to month,” Horan said. “Once in that setting, they can do critical proof of principal experiments and they can also obtain SBIR funding.”
Besides Epimer, startups currently housed in the incubator include NABsys, a company developing a cheaper method for gene sequencing; Genome Corp., which is developing an entirely different gene sequencing technology; Crystal Clear Research, which works in protein crystallography; InCytu Inc., a tissue engineering and regenerative medicine company; LCT BioPharma, which is developing cell-based therapeutics; and Myomics/CellCure, which hopes to do drug discovery for muscle-based diseases.
Most companies that set up shop in the incubator stay, on average, 12 to 18 months, Horan said. A few, like Epimer, have been there for several years. Others have cycled through, including Epivax Inc., a pharmaceutical company developing new vaccines that operated in the incubator for a year before moving to its own, larger facility in the Jewelry District.
Four Richmond Square, the building that houses the incubator, has been a biotech hub since Cytotherapeutics Inc., one of the state’s first biotechnology companies, established its headquarters there in the late 1980s.
Several years later, when Cytotherapeutics moved its operations to Lincoln and Smithfield, the space was leased by two other biotechnology firms. Cell Based Delivery Inc., a drug development company founded by researchers from Brown Medical School, occupied the building’s top floor from 2000 to 2003. Sention Inc. another Brown Medical School spinoff focused on memory and learning disorders, leased lower floors in the building from 2002 to 2005.
Slater established its incubator in the building’s top floor when it acquired the space that Cell Base Deliveries occupied and all of the company’s lab equipment, as part of a liquidation of the firm after its product failed in clinical trials.
Slater spends about $100,000 to $125,000 annually to run the incubator – a sum that represents about 5 percent of its annual budget, Horan said.
“It was never the intended to make money,” he explained. “The idea was to pass our costs through, and it was expected that because of the ups and downs of the occupancy that we would incur a net loss.”
Looking ahead, Horan said Slater hopes to move the incubator out of its Richmond Square location and establish a substantially larger incubator in the Jewelry District, where a regional hub for biomedical activity is expected to coalesce in the coming years.
The move would require a financial partnership with other stakeholders in the new biomedical district, including Brown University, Lifespan and the City of Providence, he said.
“Richmond Square has served the purpose well – I mean, it was the original locus of biotechnology activity here in Rhode Island,” Horan said. “It’s becoming increasingly apparent that the locus of activity for bioresearch in Providence is in the Jewelry District – you’ve got Brown moving down there, you’ve got Lifespan moving in there – and a very important feature of the incubator strategy is close proximity with the founding scientists.
“One of the things we feel we need to do now is take it to a next level,” Horan continued. “As you walk around here, what you’ll see is a handful of small companies with anywhere from two to six employees, and as they succeed, they either want to dominate the facility, which would run counter to its purpose, or they need a larger place.” •

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