Alexion to bring 80 jobs to plant after upgrades
It was the building.
Rhode Island's Market Has Changed. Developers, Builders, Investors and Sellers Must Change With It.
By Emilio DiSpirito IV License Partner | Engel & Völkers Oceanside Leader | The DiSpirito…
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Alexion Pharmaceuticals Inc. searched New England and beyond for a site to make its new drug that treats a rare genetic blood disorder. It considered building a new facility, yet found its best option in an existing plant in Rhode Island.
“We were fortunate enough that the facility was available,” said David Keiser, president and chief operating officer of Alexion. “That puts us in a preferred situation from a timeliness standpoint, versus just taking a shell of a building somewhere … or starting from ground zero.”
The drugmaker from Cheshire, Conn., paid Dow Chemical Co. $13 million for its biopharmaceutical facility and land in Smithfield, according to town records. The building has capacity and equipment that Alexion couldn’t find anywhere else.
“Connecticut, for example, doesn’t have a similar type of facility available for purchase,” Keiser noted.
The property includes a 57,676 square foot plant, on 13 acres, and a separate 21 acre parcel with enough space for a 500,000 square foot expansion, according to CB Richard Ellis-New England, which represented Dow in the sale.
Alexion plans to use the facility to make Soliris, a treatment for “paroxysmal nocturnal hemoglobinuria,” which attacks red blood cells and affects about 10,000 people in North America and Western Europe, according to a company filing with the U.S. Security and Exchange Commission.
The company has reported “positive” results in its latest trials of Soliris, but needs final approvals from the U.S. Food and Drug Administration to sell the drug.
“Yes, we don’t have approval for the drug,” Keiser said, “but what [buying the building] does signal is that we have a level of confidence that that will occur.”
Alexion plans to retrofit the former Dow Chemical building with two 10,000-liter bioreactors, purification systems, and a pilot plant. The work will meet the codes of both the FDA and the European Medical Agency.
Keiser said the company plans to begin operations at the facility in 2008, by which time it expects to have the needed approvals to market Soliris. Any future facility expansion would depend on the success of the drug and other treatments the company has in development.
Alexion already makes limited amounts of Soliris at Lonza Biologics in Portsmouth, N.H., where it said production will continue after the Smithfield facility goes into operation.
The company refused to comment on the financial details of the purchase. Smithfield town records say the company received a $26 million loan, with a 10-year term and variable interest rate.
Rhode Island officials have lauded the company for choosing to do business in the state and to bring about 80 jobs here, once its new facility begins to operate.
Legislative leaders pointed to the tax incentives they passed this year as a main factor in Alexion’s decision.
The Assembly amended the state’s Jobs Growth Act to allow biotechnology companies to take advantage of investment tax credits for up to 15 years, if they increase their work force by at least 9.5 percent over four years. California-based drugmaker Amgen plans to use the tax credits to add 450 workers at its plant in West Greenwich by the end of the year.
Saul Kaplan, executive director of the R.I. Economic Development Corporation, said legislators have taken a “leadership” position, shaping the state’s tax structure to attract businesses. Yet the tax code was not on his short list of reasons Alexion opted to invest here.
“I think the drivers of their decision to locate here were the site and our work force – the site, especially,” said Kaplan, who has spent most of his career in the pharmaceutical industry.
“Any time you can shorten the time to market for any company, but especially a biotechnology company, you’re going to add a lot of value,” he added.
In the early 1990s, the state sold $30 million in bonds to help finance the construction of the Smithfield plant for Alpha-Beta Technologies, which went bankrupt after its anti-infection drug failed in trials, according to the EDC.
Earl Queenan, director of accounting and finance for the EDC, said the state recouped $25 million of its debt when New York’s Collaborative Corp. acquired the property for that amount in 1997. (Dow assumed the debt and ownership of the facility in 1999.) Yet that left the state the balance of the original debt.
Wes Cotter, a spokesman for Gilbane Inc., said the Providence-based developer builds offices for $200 to $250 per square foot, compared with $400 to $450 per square foot for biotech facilities. “I don’t know how much of that kind of space would be built on spec,” he said. “I can’t imagine how much money you would lose if you couldn’t get somebody in there.”
For that reason, pairing biotechnology firms with facilities in move-in condition, as in the Alexion purchase, is a rarity, state officials and developers say.
Kaplan, of the EDC, said the state should rely on market forces to spur biotechnology, but it also needs to create a good list of available sites.
“We need to piece together what is the current inventory, what could we do to enhance it, and what is the appropriate role of public-sector financing,” he said.
