Acceleron Pharma Invests in Bricks & Mortar When Virtual is In Vogue

12/10/09Follow @xconomy

Acceleron Pharma had to be kidding, I figured, when it scheduled me to visit their labs and offices a few weeks ago in Cambridge, MA. They insisted that I take a walking tour of their biotech drug factory.

Why is that unusual? Quite a few biotech startups are pinching pennies, and operating in a “virtual” mode where they hire a skeleton crew of senior managers and outsource darn near everything else. Drug development is so expensive and risky, it doesn’t make sense for most biotechs to invest in infrastructure when they can hire someone else who already has. That means there isn’t much to show off at the head office, like there may be at an established player like Biogen Idec or Genzyme.

But Acceleron, which is developing genetically engineered drugs to treat anemia, bone loss, and other conditions, is doing things differently than most startup biotechs in town. The company, founded in 2004, announced back in May it was adding 20,000 square feet of lab, office, and manufacturing space on Sidney Street, where ImmunoGen used to be before it moved to the suburbs. While others have been cutting jobs, Acceleron has been hiring to build a staff of 155 people. It has secured a big partnership with Summit, NJ-based Celgene (NASDAQ: CELG), and it has raised $87 million from a syndicate that includes Advanced Technology Ventures, Bessemer Venture Partners, Flagship Ventures, MPM Capital, OrbiMed Advisors, Polaris Venture Partners, Sutter Hill Ventures, and Venrock Associates.

But even though the company has cash, that doesn’t necessarily explain why they should spend it on manufacturing. So I put on the blue plastic booties and white lab coat required for a walking tour of Acceleron’s space to see what this was all about. Steven Ertel, the company’s vice president of corporate development, and Mauricio Barazza, a manufacturing manager, showed me around.

First off, Acceleron isn’t saying how much this space cost, but Ertel characterized it as a “meaningful” investment that’s comparable to what some companies spend on a Phase II clinical trial. This isn’t a huge facility: it has room to make biotech drugs in a 1,000 liter vat, and just a handful of employees managing the processes. Without knowing much about the capital and operating costs, it’s hard to say how this pencils out financially, but Ertel did explain why Acceleron considers this a practical use of its investors’ money.

For one thing, small biotech companies often face delays when dealing with contract manufacturers, who aren’t always so nimble, and have a lot of other clients to take care of. A contract manufacturer can’t just snap its fingers and start making new drug at a moment’s notice for a biotech company, and stop making another.

“You don’t have as much flexibility with a contract manufacturer,” Ertel says. “Part of the whole point of being a biotech company is that we are supposed to have speed and agility.”

New equipment has also made it possible to grow the cells … Next Page »

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